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PATRICIA RAUB:

Have American companies gotten around lower labor costs to some extent by setting up operations of their own in other countries?

GORDON BERKSTRESSER, III:

To some extent. The eight-o-seven rule on the tariff which allows goods to go out and come back in without being subject to high tariffs has helped in some cases. There are real problems with Americans doing that type of thing. And, again, a lot of it's behavioral. We are just not used to dealing cross-culturally. It's very difficult for us to do that. We don't have the years, the decades of experience other people have. The Japanese in the Pacific basin had several years of experience in dealing cross-culturally. [END OF TAPE 1, SIDE B] [TAPE 2, SIDE A] [START OF TAPE 2, SIDE A]

GORDON BERKSTRESSER, III:

It's difficult for, our people, our management people have not been trained along these lines. There's some truly transnational companies, like a DuPont, a Shell, where the people you know that work for that become almost stateless, because their loyalty is to that transnational country, not to any particular —() But there's still relatively few people in the world that think in those terms. This gets to be real tough. I do not feel that the long-run use of that kind of facility is going to contribute much to the American fiber, textile, apparel industry complex.

PATRICIA RAUB:

Do you think it should basically stay in the United States?

GORDON BERKSTRESSER, III:

I think that some companies have already proven that by tending to your own business and doing a good job here. For example, this recent merger, not merger, the acquisition of Cluett-Peabody by Westpoint-Pepperell. Several years ago when I visited New York, I used to work with Westpoint-Pepperell. I met people there who had recently joined Westpoint-Pepperell from Cluett-Peabody. Westpoint sold a lot of goods to Cluett Peabody. They were starting to work together. They achieved this forward-integration. Cluett-Peabody is probably the most automated shirt manufacturer in the world. They can produce—if you're talking about forward integration, of the fabric and the shirt itself, and the control of costs and taking one profit instead of two, throughout the enterprise. I think that that combination has a very, very high probablity of surviving and being successful, as a manufacturer of men's shirts in the U.S. They're close to the market, the whole bit. The minute you have to start cutting goods here and sending them down to Costa Rica to sew them and then come back in here, you've got another step in this chain that takes you a little bit longer to get to the consumer. If you have to go to Hong Kong, it's just another one that's being added. I really feel that there are adequate ways, both from a technological and from a business structural standpoint, to make improvements in our system so that we don't need a great deal of reliance on this. Certainly, there may be some areas where until we get some technological breakthroughs that using some offshore processes would be good. You come back to talking about making a man's shirt. The pockets today are all made automatically on automated machines. Buttonholes are done that way. Even the sewing of buttons in a predetermined sort of line and way can be done. But when you come down to the final bit of assembling a shirt it takes a person on a machine to finalize a shirt. That is the technological bottle-neck. Old Man Singer invented the machine over a hundred years ago and that's still the same technology. Until you can break through that technological bottle-neck, right at that point, labor becomes very important. Maybe the best thing to do is just put the industry on some barges and float it around to whatever country has the cheapest labor. But in other area where, for example, all of the pattern making—and we have the equipment right here in our apparel lab—that is where you have computers that minimize the waste by cutting out the garment, moving stuff around to see how do you fit these things done by computer, laser cutting of the fabric itself, assemblage of all of the elements into one rack that moves from work station to work station throughout the process, automation of various things. All of that process can be done just as well here as anywhere else in the world, just as efficiently and probably more, to tell you the truth. So, to start looking beyond the borders of the U.S., I think, again, some processes, some elements, but for the majority of them, I don't think it's a viable alternative. The thing to me is that in discussing this and trying to look at it, we keep trying to look at this industry as if it were just one something that is fairly well-defined, and it isn't, it's a jelly-fish. It's got all sorts of things dangling off of it that do things differently. It changes shape and size and everything—it's a dynamic organism. We can study and we can define small markets and small segments of it, but trying to generalize on the whole thing is terribly difficult. Even when you talk about things like automobiles. I recognize that there are a lot of little parts that go into making automobiles but when you come right down to it, you can generalize about automobiles so much easier than you can about the fiber-textile-apparel. You can generalize about steel production, aluminium production, automobile tire production, even you can separate out industrial construction, business construction, you can generalize about those industries so much easier than you can about—. Because anything you come up with in textiles and apparel where you can prove Point A, I will be able to refute it and find an example of B. There's no question. So if we just try to say, hey, these foreign imports are killing us because of low labor coming in here and we need protection, that is assinine because Congressmen are not that stupid. They're pretty dumb, generally, but they're not that stupid. They can look at it and say, hey, wait a minute, it's not this in all cases for everything for ever and ever, amen. And if you try to tell them that, you're wrong.