The Business of Going Broke

Inside Republic Textile Equipment’s 60,000-square-foot warehouse, industrial-scale knitting equipment stands beside fabric-testing paraphernalia, which is next to printing machines and countless bins of spare parts. All of it, the remnants of factories and businesses gone bust, belongs to Mike Diamond, who has spent last 50 years making a living in an industry that, for lack of a gentler term, might be called the going-broke business. On a recent morning, Diamond was leading a tour of his facility for a client named Gamal Omar, who had traveled to York, S.C., from Egypt for, among other things, some discount shopping. Omar owns a fabric-and-apparel-manufacturing business in 10th of Ramadan City, and like virtually everyone in the apparel business, he struggles with competition from Asia. Buying new machinery is out of Omar’s budget, but older technologies bring productivity and quality problems. To remain competitive, he needs late-model textile machinery at used-car prices. And so he makes the trip to South Carolina about once each year. Diamond, 73, walked Omar around his warehouse, extolling the virtues and histories of various contraptions. Omar looked at an Italian fabric-cutting machine from Main Knitting, a Montreal-based company that was once Canada’s largest producer of men’s underwear. Then Diamond showed him knitting equipment from a shuttered Vanity Fair lingerie factory. There was dyeing machinery from a shuttered South Carolina facility belonging to Delta Woodside, and a variety of lab equipment that tested everything from yarn strength to colorfastness. After about an hour, they stopped at a dozen or so sewing machines. “Five hundred dollars each,” Diamond said. “I’ll throw in the chairs.” Unlike failed dot-coms or hedge funds, factories don’t vanish overnight. In my years studying the textile industry, executives of failed companies almost always told me that they saw the end coming. And that when it came, they needed help. “Most people don’t have a clue how to go broke,” Diamond told me. “Going broke is a business. You’ve got to know your suppliers. You’ve got to know your customers.” The going-broke business in the textile industry is clustered around the I-85 corridor, from Gastonia, N.C., to Greenville, S.C. Diamond has three major competitors in the area and dozens of smaller ones, but he’s still been able to put five kids through college (“all at the same time,” he says proudly) and acquire a significant art collection. He competes by staying on top of the constantly shifting manufacturing technologies, knowing which machines will have a second life somewhere else and which ones he should sell as scrap metal (…..)



Acerca de ignaciocovelo
Consultor Internacional

One Response to The Business of Going Broke

  1. Professor Uziel Nogueira says: By the end of the 20th century, the US business profit maximization model became a zero sum game. Enterprises –and their rich investors — win handsomely while workers lose.This explains why of sudden the society is divided into 1% winners and 99% losers. The US business model tend to accelerate in the next few years. Manufacturing jobs follow big and fast growing markets. While the US market is shrinking, overseas markets are growing at fast pace, particularly among BRICS countries. The process of moving jobs overseas is entering a more damaging phase for American workers. In the past, manufacturing jobs were lost in textiles, shoes, woodwork, household appliance, automobile and light manufacturing in general. However, profitable activities of R&D, marketing and distribution were kept in the US. Today, the IT technology industry, including Apple, is not only moving manufacturing jobs overseas but R&D, marketing and correlated activities as well. It is just a matter of time before Boeing starts moving airplane manufacturing and R&D to China. Beijing will not accept the role of simple buyer of such sophisticated product with military application. Boeing will oblige. The key question is HOW LONG does the US society continue to support the current business model? the current bipartisan political system will STRONGLY defend the status quo. Without big money no politician is elected in the US. Workers will certainly continue to be the losers.


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