Marketing and Manufacturing Services and Margins for Textiles

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Technical Bulletin No . .1062

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Sep:emllt!r .1952

'UNITED STAT.ES DEPARTMENT'O!FAGiRICUI.TURE

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Marketing and ~1anufa('tll rill g'­ Services and lVlargins for Textilesl ~

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By L. D. HOWELL, aY1'icultu'tUl e(~ol1om'ist Bureau of ;igl'it'1Litum/ Economics

INT]{O[)lfCTIO~

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Cotton and wool produced in the United States are confronted with greatly increasr~c1 competition.. Market outlets for textiles during the l'ecent i\ al' and postwar pori ods werc adequate to ab­ sorb, at substantially advanced prices, all products made from cotton and 'wool that could be produced. But fol' many year::. }wfol'e World \Val' II, with the large increases in supplies of foreign-grown cctton and wool andl'apic1 expansions in pl'oc1ucti011 oj' synthetic fIbers and other competing products, the cotton aBcl wool industries in the United States were hanclicappetl because of inauility to sell at remunerativc prices all the products that could be produced . When the defense emergency is OVOl', and with further expan­ GiOllS in supplies of competing products in prospect, inadequate market outlets for cotton and wool may again greatly limit the cotton and 'wool industries in this country, unless prompt and efTective action,; are taken to maintain or expand these outlets. Prospective demands for textiles indicate the possibility of main­ taining consumption of cottOll and wool well above prewar levels, j r all potential marll:tlt outlets are fully exploited. To exploit fully these outlets for cotton and wool wouldl'equire: (1) Adequate ane! dependable supplies of suitable qualities of raw cotton and wool readily available to manufactm'ers at competitive prices; (2) a variety of suitable and attractive fabrics and finishes of good quality for USl' in industry and in fabricating apparel and household products; (~n suitable and attractive styling and good construction of apparel and household products made from cotton 81lCl wool fabrics; (d) the education of consumers regarding the quality, variety, and adaptability of these products; (5) timely adjustments in the mallufactul'(? and distribution of these products to meet consumer requirements; and (6) increased efficiency in the entire chain of marketing, manufacturing, and distributing procedures so that a variety of suitable and attl'actiYe J)l'oducts 1

Submitted fOTpublication May Hi, 19fi2. 1

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TECHNICAL BULi.E'1'IN J06:!,C. S. m';PT. 0[" AGRICUL'1'URE

made from cotton and wool can be made rcadily available to con­ sumers at attractive prices. Cotton and ·wool derIve their \'alues almost exclusively from their usefulness as raw materials in the manufacture of textile products. The usefulness ~)f these prociucts to ultimate consumers depends mainly upon their mallufaeture into the forms required and upon the distribution of the products as required. Without this manufacturing and distribution, 0111y a small portion of the cotton and ,vool usually produced ('ouM be sold at even a small fraction of the prices usually paid. But these products are highly important as raw mat('l'ials for use in the manufacture of textile products. The relative importance, from the viewpoint of costs, of market­ ing margins is indicated by data showing that gross mm'gins fOl' assembling and merchanciising raw cotton and wool, manufactur­ ing these products into ~'ams and fabriC's, fabricating apparel and household textiles, al1d distributing the finished l)l'oclucts to ulti­ mate 0OnSUmel'S ae-count on the ayerage fol' about se\'en-eighths of the consumer's dollar paid for aPJ~al'(.l und household textiles made of cotton and wool. It is apparent from the \,'ic1th of these mar­ gins that th('y han> all im])()l'tant bearing upon returns to farm producers, uron eosts of finisht·!l produds to nltimatp consumers, ant! upon ma: percent in 1%0. Similar proportions for manufacturers of apparel and household goods decreased trom almost :n percent in 1930 to slightly more than • 29 percent i11 1950 (fig. ,J). Manufacturers of apparel and household textiles sell large quan­ tities of their products directly to retailers. The costs of these

MARKE'l'ING AND MANUFAC'l'URING lIlARGINS l~OR 'l'EXTILES

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selling services accounted for the fact that margins for these manufacturers were somewhat greater than total margins for manufacturing apparel and household goods. Regular whole­ salel's' margins, which amounted on the average to ,1.9 percent of the retail price in 1939 and in 1950 and to 11.8 percent in 1947

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Where It Goes

THE CONSUMER'S COTTON DOLLAR, BY OPERATIONS OR SERVICES Paid for Apparel and Household Goods, Selected Years

$ 1.Q.Q

754 Manuf. apparel (,. household goods

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