An Analysis of Production of Worsted Sales Yarn [Reprint 2016 ed.] 9781512808971

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INDUSTRIAL RESEARCH WHARTON

SCHOOL

OF

DEPARTMENT

FINANCE

AND

COMMERCE

UNIVERSITY OF PENNSYLVANIA

RESEARCH STUDIES VII

ANALYSIS OF PRODUCTION OF WORSTED SALES YARN

LIST OF RESEARCH STUDIES OF THE INDUSTRIAL RESEARCH DEPARTMENT \ Earnings and Working Opportunity in the Upholstery Weavers' T r a d e in 25 Plants in Philadelphia, by Anne Bezanson Collective Bargaining Among Photo-Engravers in Philadelphia, by Charles Leese T r e n d s in Foundry Production in the Philadelphia Area, by Anne Bezanson and Robert G r a y Significant Post-War Changes in the Full-Fashioned Hosiery Industry, by George W . T a y l o r Earnings in Certain Standard Machine-Tool Occupations in Philadelphia, by H . L . Frain An Analysis of the Significance and Use of Help-wanted Advertising in Philadelphia, by Anne Bezanson

A N A L Y S I S OF P R O D U C T I O N OF

W O R S T E D SALES YARN A Study Based on Data for the Years 1911-1913 and 1919-1919, Supplied by Spinners Owning 90 Per Cent of the Active Sales-Yarn Spindles in the United States

BY

ALFRED H. WILLIAMS, PH.D. Professor of Industry

MARTIN A. BRUMBAUGH, PH.D. Assistant Professor of Statistics

HIRAM S. DAVIS, M.S. Research Associate, Department of Industrial Research A L L OF T H E W H A R T O N S C H O O L OF F I N A N C E A N D U N I V E R S I T Y OF P E N N S Y L V A N I A

P H I L A D E L P H I A U N I V E R S I T Y OF P E N N S Y L V A N I A

1929

PRESS

COMMERCE

Copyright, 192.9, by the UNIVERSITY

or

PENNSYLVANIA

PKBSS

FOREWORD The purpose of this study is to chart the course of production, chiefly since the W o r l d W a r , in one branch of American industry. During the years under scrutiny, important changes have occurred in the industry, but exact information as to the nature and extent of these changes has hitherto been lacking. Some of the markets of the industry have collapsed, others are stagnant, still others are expanding, and all are interacting on each other. This report was planned by the Industrial Research Department of the Wharton School of the University of Pennsylvania to measure and interpret some of these changes. It is hoped that the results may not only furnish students of industry with additional knowledge of the structure and history of wool manufacturing, but also suggest the basis for more intelligent competitive policies on the part of manufacturers. So long as American manufacturers faced a sellers' market and could, broadly speaking, dispose of all they could produce, the problem of balance between production and productive capacity on the one hand and demand on the other was not of overshadowing importance. For a variety of reasons, the reverse condition has set in and gives evidence in certain industries of being a persistent phenomenon, hence the importance of bringing about such a planning of production policies f o r each industry as will make f o r a better coordination between production and demand, should become clear alike to owner, manager, and worker. Without it, such wastes as instability of operation and irregular employment, and their usual concomitants, low profits and low wages are inevitable. In the past, we have usually assumed that the matter might be left to the wisdom of each individual producer based upon his experience in the market. The inadequacy of such a practice to meet present conditions is apparent V

vi

FOREWORD

in the persistent "depressions" which obtain in many industries. W e cannot turn, as might be done in Europe, to some political authority to control fluctuations in production for those industries not classed as public utilities. Instead we have the task of making more intelligent the planning by individual producers of their production and sales policies so that the total result of such individual planning will constitute a better program for the whole industry. The first step in making such individual planning more sensitive to general conditions is to furnish individual producers currently with the facts which show trends and tendencies in the whole industry. Evidence of the recognition of the need for such service is seen in the efforts of the Department of Commerce and certain trade organizations to collect and supply this information at regular intervals. Messrs. Williams, Brumbaugh and Davis, by bringing together the facts for one branch of the wool industry over a comparatively long period have thrown into sharp relief those trends which have occurred since the war and of which manufacturers should be currently informed if their individual planning is to be quickly sensitive to general changes. Students of industry, as well as manufacturers, are interested in discovering these general tendencies. Such collaborative research efforts as those which the authors have initiated between the worsted spinning industry and the Department of Industrial Research, may be suggestive of a type of collaboration between national organizations of producers and the research institutes of universities of which we may hope to see much further development. The authors desire to acknowledge their debt to Mr. J. P. Bursk, Instructor in Statistics at the University of Pennsylvania, who has been responsible for the preparation and drawing of all charts. Their thanks are also due to Miss Mary Hungerford for painstaking assistance in the entire study. JOSEPH H .

WILLITS

CONTENTS CHAPTER I II

PAGE

B A C K G R O U N D OF THE S T U D Y

I

THE

7

M E T H O D AND L I M I T A T I O N S OF THE I N V E S T I G A T I O N

III

C H A N G E S IN THE E Q U I P M E N T OF THE I N D U S T R Y

12

IV

THE ANNUAL

24

V VI VII VIII

PRODUCTION OF B R A D F O R D Y A R N

T H E C U R R E N T SITUATION IN THE B R A D F O R D Y A R N I N D U S T R Y

47

THE

64

A N N U A L PRODUCTION OF F R E N C H Y A R N

T H E C U R R E N T S I T U A T I O N IN THE F R E N C H Y A R N I N D U S T R Y

82

CONCLUSIONS

98

APPENDIX A

107

APPENDIX

B

108

APPENDIX

C

113

INDEX

115

CHARTS CHARTS

I II III IV V VI VII VIII IX X XI XII XIII XIV

PAGE

Selected Indexes of Manufacturing Production of Bradford Sales Yarn, 1911-1913, 19191928. Percentage distribution each year Permanence and Change in Major Field of Production, 1919-1929. Bradford Sales Yarn Annual Production of All Kinds of Bradford Sales Yarn, 1911-1913, 1919-1928 Annual Production of Bradford Men's-Wear Yarn, 1911-1913,1919-1928 Annual Production of Bradford Outerwear Yarn, 1 9 1 1 1913, 1919-1928 Annual Production of Bradford Plush Yarn, 1911-1913, 1919-1928 Annual Production of Bradford Dress-Goods Yarn, 1911-1913,1919-1928 Annual Production of Bradford Hand-Knitting Y a r n , 1911-1913, 1919-1928 Annual Production of Bradford Carpet and Rug Yarn, 1911-1913, 1919-1928 Annual Production of Bradford Jersey Yarn, 1921-1928 Annual Production of Bradford Hosiery Yarn, 1 9 1 1 1913, 1919-1928 Monthly Production of All Kinds of Bradford Sales Yarn, January, 1927, to March, 1929 Monthly Production of Bradford Men's-Wear Yarn, January, 1927, to March, 1929 vii

2 26 34 38 39 40 41 42 43 44 45 46 54 55

Vili

CHA R TS

(Continued)

CHARTS

XV XVI XVII XVIII XIX XX XXI XXII XXIII XXIV XXV XXVI XXVII XXVIII XXIX XXX XXXI XXXII XXXIII XXXIV XXXV XXXVI XXXVII XXXVIII

PAGE

Monthly Production of Bradford Outerwear Yarn, January, 1927, to March, 1929 Monthly Production of Bradford Plush Yarn, January, 1927, to March, 1929 Monthly Production of Bradford Dress-Goods Yarn, January, 1927, to March, 1929 Monthly Production of Bradford Hand-Knitting Yarn, January, 1927, to March, 1929 Monthly Production of Bradford Carpet and Rug Yarn, January, 1927, to March, 1929 Monthly Production of Bradford Jersey Yarn, January, 1927, to March, 1929 Monthly Production of Bradford Hosiery Yarn, January, 1927, to March, 1929 Monthly Production of Bradford Rayon Waste Yarn, June, 1928, to March, 1929 Production of French Sales Yarn, 1 9 1 1 - 1 9 1 3 , 1 9 1 9 1928. Percentage distribution each year Permanence and Change in Major Field of Production, 1919-1929. French Sales Yarn Annual Production of All Kinds of French Sales Yarn, 1 9 1 1 - 1 9 1 3 , 1919-1928 Annual Production of French Men's-Wear Yarn, 1 9 1 1 1913, 1919-1928 Annual Production of French Dress-Goods Yarn, 1 9 1 1 1913, 1919-1928 Annual Production of French Outerwear Yarn, 1 9 1 1 1913, 1919-1928 Annual Production of French Jersey Yarn, 1 9 1 1 - 1 9 1 3 , 1919-1928 Annual Production of French Underwear Yarn, 1 9 1 1 1913, 1919-1928 Annual Production of French Hosiery Yarn, 1 9 1 1 - 1 9 1 3 , 1919-1928 Annual Production of French Plush Yarn, 1919-1928 Annual Production of French Hand-Knitting Yarn, 1911-1913,1919-1928 Monthly Production of All Kinds of French Sales Yarn, January, 1927, to March, 1929 Monthly Production of French Men's-Wear Yarn, January, 1927, to March, 1929 Monthly Production of French Dress-Goods Yarn, January, 1927, to March, 1929 Monthly Production of French Outerwear Yarn, January, 1927, to March, 1929 Monthly Production of French Jersey Yarn, January, 1927, to March, 1929

56 57 58 59 60 61 62 63 65 70 73 74 75 76 77 78 79 80 81 89 90 91 92 93

TABLES CHARTS

XXXIX XL XLI XLII

ix PAGE

Monthly Production of French Underwear Y a r n , January, 1927, to March, 1929 Monthly Production of French Hosiery Y a r n , January, 1927, to March, 1929 M o n t h l y Production of French Plush Y a r n , January, 1927, to March, 1929 Monthly Production of French Hand-Knitting Y a r n , January, 1927, to March, 1929

94 95 96 97

TABLES TABLES

1 2

3 4

5 6 7

PAGE

Geographical Location of Sales-Yarn Spindles Worsted Sales Y a r n . Production, Number of Spindles and Number of Mills Reported, Compared with the T o t a l in the Industry, 1927 T o t a l Sales-Yarn Spindles and Number and Percentage Reporting Activity of Sales-Yarn Spindles Sub-divided by Fields of Production—1927, 1928 and First Quarter of 1928 and First Quarter of 1929 Percentage Distribution of Bradford Sales Y a r n s Percentage of Bradford Men's-Wear Y a r n Which is M a n u factured b y Exclusive Mills Percentage Distribution of French Sales Y a r n s

5

9 13

19 27 29 66

APPENDIX TABLES I II III IV V VI

Annual Production of Worsted Sales Y a r n , 1 9 1 1 - 1 9 1 3 and 1919-1928. Bradford Annual Production of Worsted Sales Y a r n , 1 9 1 1 - 1 9 1 3 and 1919-1928. French Monthly Production of Worsted Sales Y a r n , 1927, 1928, and First Quarter of 1929. Bradford M o n t h l y Production of Worsted Sales Y a r n , 1927, 1928, and First Quarter of 1929. French Geographical Location of Sales-Yarn Spindles, (detailed) . . Distribution of Mills by Kinds of Production. 1929 . . . .

109 no m H2 113 114

CHAPTER I BACKGROUND OF THE STUDY General Post-War Expansion in Production. Although it is hazardous to generalize about a subject that is as broad and diverse as American manufacturing, it may be said with some accuracy that the trend of production in this country since the W o r l d W a r has continued upward at an unexpected rate. Increased output has not, of course, been confined to this period, for the United States has always been, with few exceptions, an expanding country. According to measurements made by D a y and Thomas, 1 the United States has expanded the volume of its physical output since the turn of the century at the rate of 4 per cent per annum. It is not within the scope of this study to discuss the many causes of this speeding up of our industrial machine. Scarcity of labor has promoted the introduction of machinery and this in turn has increased wages and consumption} marked improvements in the technique of generating and using mechanical power have aided in the mechanization of industries^ inventory control has aided in lowering costs and prices; European industries have been unable to return quickly to former markets: these and many other causes have contributed in ways that cannot be analyzed here. There have been many laggards on the road that has led to higher production levels. Studies that have been made indicate that the production of standard consumption goods, such as foods and textiles, has not increased at so rapid a rate as that of most goods used in further production, such as iron and steel, cement, etc. Some special types of consump1 Census M o n o g r a p h V I I I , The Growth of Manufactures, ¡899 to 1923, by Edmund E. D a y and W o o d l i e f Thomas, gives the most complete picture that is available o f the g r o w t h in the physical volume of manufactures f r o m 1899 to 1925.

I

2

ANALYSIS

OF

PRODUCTION

tion goods, such as radios and automobiles, have had a phenomenal growth. The textile group of industries has been among those that have lagged in expanding their output. T h e rate of SELECTED

INDEXES OF /»/»• 10* paoaucTioa

nANUFACTURI/16

MO

274 196 140

lOO

100

71 »1 374 196 140

71 51 274 196 140

374 19«

text lie

HO/1 « 3TC.lL nOOUCTIOrt

WOOL

conaunpnon

H0R3TE0 3ALC3 PRODUCTION

Yk&H

100

100

71 il 274 196

71 SI

corro h COHSUMPTIOH

ZÌI

196 140 100

ztntm,

.papîr

'«•

cPRooucrion BRICK

& pumtiHq

GL A S S

71 51 274 19b 140 100

mtovcrièi*.

SILK

COMSVMPTIM .

71

,1 ,1 J 1i' II' 11 7« 17 'M51 « i)I 55 ij ,1 '1I7 it H H H' Ji CHART

I.

growth in total textile production may be compared, in Chart I, with that of iron and steel, clay and sand products, and paper and printing. Of these four types of manufactured articles, textiles have increased at a rate that is much slower than the others. The condition has not been

BACKGROUND

OF THE

STUDY

3

peculiar to the United States; in fact, it is almost a worldwide phenomenon. Textiles have been dull in England, Germany, France and Japan—at least from the standpoint of profits. This fact suggests that the cause may be broad general shifts in consumption that are not limited to a few countries. T h e line on the chart for all textile production conceals trends in individual textile industries that are quite different from each other. It will be seen that the line for cotton consumption follows the line for total textile production very closely. Wool consumption, on the other hand, had a more decided upward trend from 1 9 1 9 to 1923 and then, from 1924 through 1928, less of an upward movement, remaining at an almost stationary level. On the other hand, there have been notable exceptions to the general trend in the textile field. T h e full-fashioned hosiery and the rayon industries may be mentioned. T h e silk industry, shown on the chart, is another. Several considerations determined the selection of the sales-yarn 2 industry for study. Its size is restricted both in the number of companies and the geographical area involved and accordingly it offered the prospect of securing an adequate coverage of all the essential facts. Another consideration was a desire to improve the almost chaotic state of trade relations which existed in the industry and which, during the progress of the study, disrupted the ! Wool manufacturing has two major branches—woolen production and worsted production. T h e technical differences between these branches are described in all standard works on the industry. T h e activities of both branches may be roughly classified in the same way: ( i ) Preparatory processes, of which the major ones are sorting and scouring the raw wool; ( 2 ) spinning-j ( 3 ) weaving; ( 4 ) finishing, which consists of shrinking, dyeing, pressing, and otherwise preparing the woven cloth f o r the market. Plants engage in one, or all, or some combination of these processes. Companies also, as distinct from plants, may so specialize. A worsted salesyam spinner is a manufacturer who produces yarn f o r use outside his company and is to be contrasted with the worsted spinner who makes yarn only f o r internal consumption. T h e spindles of the former are known as "sales" spindles and those of the latter as "consumption" spindles. It is to be borne in mind that some manufacturers spin yarn f o r both their own weaving departments and the outside market.

4

ANALYSIS

OF

PRODUCTION

existing manufacturers' association. T h i s condition arose in part from the extremely individualistic attitude of the English and French manufacturers who are so numerous in the trade, and in part from the dearth of facts about the collective aspects of the industry. Another reason for studying this phase of wool manufacturing is the fact that its production may be quickly expanded or curtailed. Every spindle in the country is a potential producer of sales yarn and spindles which are exclusively sales-yarn spindles have to be operated constantly in the light of the large potential capacity which always hangs over the market. It seemed desirable to know how these potential competitors would act when severe depression in their own markets, such as has been experienced since 1924, concurred with depression and expansion in other fields available to them. T h e apprehension concerning excess capacity which exists in many industries may be especially justified in the sales-yarn field. T h e study is further limited in that it is restricted to the production of yarn. (Some information on equipment and operating time has been secured, but it is incidental to the data on the amount of yarn produced.) Volume of production, of course, throws little direct light on profits, which are a result of both volume and price. Changes in production, however, when analyzed according to the type of market, the companies producing the yarn, etc., are quite significant not only in revealing the structure and nature of the industry, but in throwing indirect light on the subject of profits. T h e production situation has been reflected directly in other aspects of the textile industry: a widespread decline in the price of textile securities at a time when stock prices in general have been climbing indicates that the companies have been unable to earn profits; a further indication of the same situation is to be found in the decline in the values of mill properties; price-cutting and the failure of manufacturers' associations to function are other signs that a struggle for survival is in progress.

BACKGROUND

OF THE

STUDY

S

The Study Confined to Production of Worsted Sales Yarn. It has seemed advisable from the standpoint of both the manufacturers and the students of industry to obtain as many facts as possible about the changes that have been taking place. Facts must furnish the foundation on which to erect a group of industries more stable than textiles have been during the past five years; likewise students of manufacturing can obtain an intimate knowledge of industry largely by a close-range study of facts. For these reasons, it was decided to attempt to gather and analyze, in ways that would be significant, data about one phase of one branch of one of the textile industries—the production of worsted sales yarn. Size and Location of the Industry. Worsted yarn is manufactured for sale by approximately one hundred companies. The spinning spindles3 which these companies allot to salesyarn production number 1,304,081 and represent 48 per cent of all worsted spindles in the United States. There is a high degree of geographical concentration of these spindles, as Table 1 shows. Three-fourths of them are about equally divided between Massachusetts, Rhode Island and Pennsylvania. Only one and one-half per cent of them are located outside the northeastern area of the country. Within the states mentioned, the spindles cluster around certain cities. The Providence area contains 122,3 9 1 ; the Philadelphia-Camden area has 341,272; WoonTABLE i G E O G R A P H I C A L LOCATION OF S A L E S - Y A R N

SPINDLES

Number New Jersey Massachusetts Rhode Island Pennsylvania Other Northeastern U. S All other U. S Total

Per Cent

173,012 300,672 329,585 319,760 161,920 19,132

13 3 23.0 25.3 24.5 12.4 1.5

1,304,081

100.0

* T h e spinning of yarn is p e r f o r m e d by a series of spindles. T h e last one in the series is known as a spinning spindle and acts as the "neck o f the bottle" in determining output; hence the capacity o f a mill is roughly determined by the number o f spinning ¿pindles.

6

ANALYSIS

OF

PRODUCTION

socket, 207,194 j Passaic, 1 3 7 , 7 4 4 j and the Lowell area, 160,812. The companies in the industry may be classified broadly as to size into the three groups: ( 1 ) Small companies, owning up to 5,000 spindles. There are 39 of these. ( 2 ) Medium-sized companies, with from 5,000 to 20,000 spindles. These are 4 1 in number. ( 3 ) Large companies, ranging from 20,000 spindles upward, of which there are 20. Only three of these have more than 75,000 spindles.

CHAPTER

II

THE METHOD AND LIMITATIONS OF THE INVESTIGATION In the conduct of any statistical investigation such as the present, the question invariably arises whether to make a complete investigation or rely upon a reasonable interpretation of a sample. T h e worsted sales-yarn spinners are a comparatively compact group, but even so, it was not feasible to collect the information contained in this study from all of the mills. T h e prime requisite of any sample is representativeness, which may be obtained either by the collection of facts f r o m a few well-chosen cases, perhaps constituting no more than 1 0 per cent of the total being investigated, or by the use of the extensive method, which involves the collection of information from as large a part of the total as possible. Either method may be used on occasion, but f o r the investigation of sales-yarn production, the extensive method is distinctly preferable because too little general information was available in advance of this study to make possible the selection of a small number of firms which would portray the conditions of the entire industry. In other words, an extensive sample was the only one which could be considered in any sense representative. E v e n an extensive sample, however, presents difficulties. Chief of these is the fact that it is impossible to get reports from identical mills over a period of years such as we are studying in the present case. Variations in the number of mills may arise f r o m three sources: 1. A new mill may be established during the period. 2. A mill may go out of production during the period. 3. A mill which was in production during the entire 7

8

ANALYSIS

OF

PRODUCTION

' period may find it possible to report for only part of the period. The first two of these do not distort the picture of the industry. These cases are the exact equivalent of a mill which adds new spindles to its equipment or retires spindles from use. The third case is different from either of the others because the production of yarn in such a mill would be included at one time whereas the production of the same spindles would be excluded at another. This variation means that the competitive picture would be distorted by the inclusion of mills whose reports are incomplete. From this point of view it has seemed advisable to exclude from the long-run picture covering the period 1919 to 1927 all mills which were in production for the entire period, but reported for only a part of the period. It was not advisable to carry this argument to its logical conclusion by excluding all mills which failed to report for the pre-war years, 1 9 1 1 , 1 9 1 2 and 1 9 1 3 . The sample of the pre-war years is not comparable with that of the post-war years. This fact must be taken into account in the interpretation of the charts which appear in connection with later chapters. The size of the sample studied is indicated by Table 2. This shows that 69 per cent of the companies in the industry filed schedules. In the French branch of the industry, 85 per cent reported, as contrasted with the Bradford branch, in which 66.7 per cent reported. The French producers owned 90 per cent of the sales-yarn spindles in that branch of the industry, whereas the Bradford companies owned 78.7 per cent of the spindles in their branch of the industry. We therefore have a report of 83 per cent of all sales-yarn spindles. These same mills produced 82.4 per cent of the total sales yarn according to an estimate based on the Census of Manufactures for 1927. 1 It may be noted from the table 1 I f the sample of this study had been used to estimate the total production of sales yarn f o r all mills, using the spindles reported as a basis, the result would have been 7 5 , 1 5 0 , 0 0 0 pounds. T h e difference of +50,000 pounds on an estimate of 75,600,000 pounds is extremely small and offers f u r t h e r proof of the representativeness of the sample collected in the study.

LIMITATIONS

OF THE

INVESTIGATION

9

10

ANALYSIS

OF

PRODUCTION

that seven producers are engaged in both the Bradford and French branches of the industry. Some of the individual returns are estimates because of lack of information as called for by the schedule. Since the estimates are made by the men who produced the yarn, it may be assumed that they are reasonably accurate ; furthermore, the estimated poundage is a small percentage of the total and the margin of error is believed not to affect the general picture and that the errors in one direction tend to offset those made in the other direction. A limitation more serious is the fact that it has been impossible to take into consideration the "count" of the yarn produced. 2 Obviously, the mill which produces ioo,ooo pounds of 6o's yarn has a different output from the mill which produces 100,000 pounds of 30's yarn. Likewise, a change in absolute production may not indicate a change in machinery activity or employment or profits. I f the records of the mills had enabled them to show the amount of yarn produced in each count, it would have been possible to make all the returns strictly comparable by converting the outputs to a common count. Since this was not possible, the trend of the count in each trade and each mill is not known. It is felt, however, that the trend toward finer counts is offset by the trend toward coarser counts in many of the trades. It will be noticed that the approach to the data throughout this report is the market approach. It has been adopted consciously with a view to increasing the significance of the interpretation. In a very real sense, manufacturers compete only in a market. And markets constantly change. T o lump together the production of hand-knitting yarn and dress-goods yarn with that intended for the automobile trade is to conceal significant differences and give a total 2 Yarns are classified a c c o r d i n g to their size, the unit o f measurement b e i n g k n o w n as a " c o u n t . " N o . i count worsted y a r n contains 560 y a r d s in each pound. N o . 32 y a r n contains ¡2 times j 6 o y a r d s in a pound. The trade practice is to r e f e r to the yarns as 82's, 26's, 6o's, a c c o r d i n g to the count.

LIMITATIONS

OF THE INVESTIGATION

11

that may be true of none of the parts which compose it. A manufacturer who specializes on yarn for the knitted outerwear trade is interested only to a very limited extent in the statistics of other branches; nor can he place much reliance on the figures which show what has been going on in the trade as a whole. This attitude cannot be maintained at all times, for the changes that are occurring elsewhere may predict what is to happen in a particular field. But on the whole, it may be safely maintained that the more detailed and thorough the analysis of a general situation, the easier it is to group the parts in combinations that are significant. The principal markets of the industry, which were determined before the questionnaires were devised, furnish the key to the study. The purpose is to ascertain what changes have occurred in these markets, to note the interactions between them, to trace the experiences of the individual companies, and to relate these experiences to each other. Before that is done, information concerning changes in number of spindles during the period will be presented in Chapter I I I . It must be remembered, in interpreting the production trends, that a decline in a given field may be due not to a decrease in the consumption of yarn, but to the consumers' making their own yarn. It is quite possible, also, that an increase in the production of sales yarn may similarly be due, not to expanding consumption, but to the fact that a consumer may feel that he can buy his yarn from a salesyarn spinner more cheaply than he can produce it himself. T h e situation where the consumer of yarn buys spindles of his own and thereby retires as a purchaser of sales yarn is more likely to have occurred during the period under study because of the fact that machinery could be purchased at prices greatly below cost.

CHAPTER III CHANGES IN THE EQUIPMENT OF THE INDUSTRY As was suggested in the preceding chapter, the collection of information concerning the equipment of the sales-yarn spinning industry was somewhat incidental to the major purpose of acquiring information on production. Likewise most of the material presented in this chapter is well known to the members of the trade. In spite of these facts, it was felt that a great deal could be gained by bringing together in one place all of the available information concerning physical equipment and its use. Changes in Number of Spindles. The data collected on the number of sales-yarn spindles in use before the war were incomplete and the reporting of them in this study has been likewise somewhat abridged 5 consequently no attempt will be made to compare post-war with pre-war spindlage. In the post-war analysis, three years were considered sufficient to show the general tendencies. The questionnaires which were filled out by the spinners show the number of spindles in the mills as of January 1 of the years 1 9 1 9 , 1928, and 1929. In the tabulation of this information the facts regarding the two recent years are compared with those of an early year and also with each other. A further division has been made according to the kind of yarn produced, so that for each of these three years the number of spindles producing Bradford and French yarn is known. Table 3 shows that there was considerable increase in spindles from 1 9 1 9 to 1 9 2 8 ; in fact, the increase was 36 per cent in Bradford spindles and 13 per cent in French spindles, or an increase of 27 per cent in the total spindlage. 12

THE EQUIPMENT

OF THE

INDUSTRY

1+

ANALYS/S

OF

PRODUCTION

The situation in 1929 was quite the reverse, a small decline being shown in both Bradford and French spindles. Changes in the Individual Mills—Bradford Producers. A further analysis of the changes in spindles from 1 9 1 9 to 1928 shows that in the Bradford branch of the industry 29 mills made no change, 34 mills increased and one mill decreased. Of the 34 mills which increased, 19 made an increase of 50 per cent or more. In a few mills the spindles were increased two or threefold over the 1919 number. There were only 10 mills in this branch in 1919 operating more than 15,000 spindles and six of these remained constant until 1928. When the same analysis is made for 1929 in comparison with 1928, it is found that 76 mills made no change in spindles, eight mills decreased and one large mill made a small increase. Of the 14 mills which were operating 15,000 spindles and over in 1928, 10 made no change in 1929. There were 21 new mills which entered the Bradford field between 1 9 1 9 and 1928 and nine of these were out of production on January 1 , 1929. There were four others in this group whose production has been at a low level during the past year. French Producers. The increase in spindlage from 1 9 1 9 to 1928 was less marked in the French branch. This fact is reflected in the changes in individual mills. There were 12 mills which showed no change in spindles; two large mills showed an increase, one of over 50 per cent and the other of less than 50 per cent; and one large mill showed a decrease. Four mills entered the French field between 1 9 1 9 and 1928. In comparing 1929 with 1928, we find that 16 mills made no change in spindles, two large mills made slight increases and one large mill decreased. These changes in spindles have a very important bearing on the history and present position of the two branches of the sales-yarn industry. Some index numbers of spindles

THE

EQUIPMENT

OF

THE

INDUSTRY

15

and production may aid in showing the nature of the changes that have occurred. INDEXES THE

Year

OF

BRADFORD T R A D E

Spindles

Production

INDEXES THE

FRENCH

Spindles

OF TRADE

Production

1919

100.0

100.0

100.0

1 9 28

136.4

112.2

113

1

100.0 85.8

1 9 29

134.9

98 .6

112

8

91.5

These indexes show clearly the over-expansion of spindles in the Bradford trade. There is no evidence of undercapacity in 1 9 1 9 ; consequently the conclusion must be that spindles have entered this branch of the trade between 1 9 1 9 and 1928 at a rate not warranted by the expansion of the demand for yarn. T h e decline of the index in 1929 arises from the scrapping of spindles by several mills in excess of those added by two or three other mills. The decline in the number of spindles is readily explained by noting the rather marked decline in production. A 12 per cent decline in production may be met without many visible signs of distress by a manufacturer who is firmly intrenched in his field, has a steady sale for his products, and is making a fair return on his investment. Such a decline, however, produces a condition verging on panic among the manufacturers who have been operating 011 small margins of profit. This last point will be dealt with more f u l l y at a later point in the chapter when the idle mills are studied. Conditions in the French, branch of the industry are not much better than those in the Bradford branch. T h e increase in spindles of only 1 3 per cent would have placed the French spinners in an excellent position had they been able to expand their production to the same extent as the Bradford group. But an increase in the number of spindles when production has not reached the 1 9 1 9 level in any year since 1 9 2 3 produces a much less favorable outlook. The conclusion seems to be that, although the capacity of the French mills has expanded less, their production has not increased, or has even decreased, so that on the whole their

16

ANALYSIS

OF

PRODUCTION

position is little better than that of the Bradford branch. It is important, however, to note the increase in the index of production in 1 9 2 9 1 in comparison with 1928. This increase takes on added significance when it is compared with the decline in the Bradford index for the same period. T h e reader is asked to bear this point in mind very particularly in connection with a section in the concluding chapter, which deals with competition between the French and Bradford markets.

Spindles Reported in the Present Study.

In Chapter II

the number and percentage of the spindles in the industry for which production is reported in the present study were given. This information has been expanded somewhat in Table 3. It will be noted that in the Bradford branch of the industry 63 per cent of the spindles were reported in 1 9 1 9 and 79 per cent in 1928. T h e drop to 68 per cent in 1 9 2 9 was caused by the failure of several mills to supply the current information. 2 In the French branch of the industry the reporting has been more constant. For 1 9 1 9 , 78 per cent of the spindles were reported, and for 1 9 2 8 and 1929, 88 per cent. The regularity with which the mills in the French branch of the industry have provided information has largely eliminated the need for adjusting their data in the preparation of this study. T h e purpose of this section is to show that the conclusions of this report are based upon a large and representative sample of the production in the worsted sales-yarn industry. This is true to nearly an equal degree in the French and Bradford branches of the industry. It may be well to 1 Tills index is, of course, not based on the whole year 1929. If our estimate of what the year will show is faulty, the index will need to be revised accordingly. ' This variation in the number of mills reporting from year to year has been adjusted in the preparation of the data presented in graphic form in succeeding chapters, so that it is hoped that the curves of the charts represent facts which are comparable.

THE

EQUIPMENT

OF

THE

17

INDUSTRY

add that the markets according to which production has been divided are presented in proportion to their importance.3 The Mills which are out of Production. T h e information concerning idle mills covers the years 1928 and 1929. All of the mills reporting in this study which were out of production earlier than 1927 are known, but the same information is not obtainable for the mills not reporting. There were 23 mills out of production on January 1, 1928. These mills had 118,105 spindles and all of them were producers of Bradford yarn. As to size they were distributed as follows: Small mills (less than 5,000 spindles) M e d i u m mills (5,000 to 20,000 spindles) L a r g e mills (over 20,000 spindles)

12 10 1

23 It is very significant to the trade to note that, whereas the average number of worsted spindles in a Bradford mill in 1927 and 1928 was about 14,300, the average size of the mills which were out of production was 5,135 spindles. The evidence seems to show that the small producer has not been able to survive the period of stress which has developed in the past three years. The situation as of January 1, 1929 was somewhat intensified. There were 27 Bradford mills out of production having a total of 137,181 spindles. T h e average size of the idle mills was reduced to 5,081 spindles, which means that four more small mills went out of production during 1928. Non-re for ting Mills out of Production. There were 16 mills among the out-of-production group above which failed to report in 1928 and 1929. There were 30 mills not reporting on January 1, 1928; consequently only 14 active mills with a spindlage of 93,276 were omitted from the 3 T h i s conclusion is based m a i n l y on the n u m b e r o f m i l l s r e p o r t i n g p r o d u c tion f o r the v a r i o u s markets. T h e details c a n n o t be •presented w i t h o u t disc l o s i n g confidential i n f o r m a t i o n .

18

ANALYSIS

OF

PRODUCTION

Bradford branch of the industry. As the average number of spindles of the mills omitted was 6,700 as compared with an average size of 14,300 spindles in this branch of the industry, the active non-reporting mills were rather small. These facts are presented in order to give further evidence that the sample which has been studied is representative of the sales-yarn industry. No French Mills out of Production. The mills in the French branch of the industry are larger than those in the Bradford branch. The 17 mills engaged in producing French yarn have an average of 28,675 spindles. The average French mill is just twice as large as the average Bradford mill. It is interesting to note that none of these French units are out of production. It might be assumed that their larger volume gives them added stability and enables them to continue production through a period of stress such as the present. The pressure of idle capacity in the French mills will be quite apparent in the section which follows. Activity of Spindles in the Mills. In this section an attempt has been made to relate the actual spindle hours reported on the questionnaires to the capacity of the mills. This comparison should give, of course, the ratio of actual operation to capacity or full-time operation. Although a number of the mills were unable to report their spindle hours, the sample is sufficiently large to portray fairly accurately the spindle activity of the entire industry. But, assuming that the mills included are representative, there is another drawback to this analysis. The method is totally inadequate because it takes no account of variations in the "count" of the yarn which is being spun. The results presented in Table 4 may be taken as a very crude approximation to spindle activity, but under no circumstances should they he considered as anything more than that. In defense of presenting this section at all, it may be stated that variations in "count" from time to time in the same mill, as well as variations from one mill to another, have a ten-

THE EQUIPMENT

o >. ft

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20

ANALYSIS

OF

PRODUCTION

dency to offset each other unless they are accompanied by widespread style changes. T h e authors would like to suggest that an accurate study of mill activity should be made without delay. This could be made by reducing all production to the same "count" and comparing this reduced production with capacity production of the mills in the same "count." 4 In T a b l e 4 the ratio of actual operation to capacity has been computed for the industry as a whole, for the Bradford and French producers separately, and for the Bradford producers of men's-wear and outerwear yarn exclusively, covering the years 1927 and 1928 and the first quarters of 1928 and 1929. T h i s was as much detail as could be obtained from the information submitted on the questionnaires. In addition to the ratio to capacity, the table gives the number of mills, their spindles, and the actual and capacity spindle hours. T h e method of computing capacity spindle hours should be explained. Take as an example a mill with 6,000 spindles working a 54-hour week. Its capacity would be 324,000 spindle hours per week. Using 50 weeks' operation as a normal year, this plant would have a yearly capacity of 16,200,000 spindle hours. T o carry the example to its conclusion, if its actual operation proved to be 13,284,000 spindle hours, the ratio to capacity would be 82.0. A repetition of this same computation will enable any mill to determine the relation of its spindle activity to that of all of the producers in its field as given in the table. Table 4 shows that f o r all producers the ratio to capacity was slightly higher in 1927 than it was in 1928, but that the first quarter of 1929 witnessed some recovery in comparison with the first quarter of 1928. As a general observation, this is quite satisfactory, but the situation revealed in the Bradford and French branches of the industry is of much greater importance. In the French branch the ratio to 4 R e c o r d s are k e p t in this f o r m b y one m i l l w h i c h reported in the study. It w o u l d require v e r y little e f f o r t to make the same i n f o r m a t i o n available f o r a l l mills.

THE

EQUIPMENT

OF THE

INDUSTRY

21

capacity dropped from 61.8 to 56.4, a drop of 5.4 points from 1 9 2 7 to 1928. The first quarter of 1929 has brought a partial recovery in activity, the ratio being 5.2 points above the first quarter of 1928 and within one point of the 1927 rate. In an earlier place in this chapter it was pointed out that idle spindles in the French branch of the industry were just as prevalent as idle spindles in the Bradford branch, but the fact remained concealed when idle mills only were studied. The low ratio of actual operation to capacity is offered in substantiation of this contention. In the Bradford branch the ratio is materially higher, being 81.8 in 1927 and 83.9 in 1928. The first quarter of 1929 brought a decline of 2.2 points as compared with the same period of 1928, but the activity was greater in 1929 than it was for the year 1928. T h e high level of activity in the Bradford field must be interpreted carefully. For obvious reasons, none of the mills out of production have been included. In spite of this omission, it is very interesting to find that the active Bradford mills are operating so extensively. There were two mills working overtime on one shift and two mills that were working a night shift. The Bradford spinners have been further subdivided into those making men's-wear yarn exclusively, those making outerwear yarn exclusively, and a third group consisting of all of the other Bradford producers. T h e activity of those who produced men's wear exclusively dropped 5.3 points in 1928 compared with 1927, but increased slightly in the first quarter of 1929 compared with the same period of 1928. The exclusive outerwear producers have been operating at or above capacity during the entire period and their ratio is continually increasing. T h e explanation of this fact is to be found in the general expansion of the outerwear market. When these two groups of exclusive producers are eliminated, it is found that the remaining Bradford producers

22

ANALYSIS

OF

PRODUCTION

have been operating at a lower level. T h e changes in operation were, of course, in agreement with those of the entire Bradford branch as stated in an earlier paragraph. From the standpoint of the ratio of actual operation to capacity, it would appear that the exclusive producers are maintaining something of an advantage over the remainder of the trade. SUMMARY

1 . T h e increase of spindles in Bradford mills has greatly exceeded the increase in French mills from 1 9 1 9 to 1928. T h e trend of yarn production has been downward in the French field and upward in the Bradford field. When this difference is taken into account, the over-expansion of equipment presents a problem which is equally acute in both branches. 2. T h e change in spindles from 1928 to 1929 has been negligible, but Bradford production has declined while French production has expanded. As this is being written, it would appear that a continuation of the 1929 tendencies will place the French producer in a more favorable position than the Bradford producer in the near future. 3. T h e average number of spindles in Bradford mills is 14,300. T h e average number in French mills is 28,800. 4. The mills reporting in this study own over 70 per cent of the Bradford spindles and nearly 90 per cent of the French spindles in the industry. T h e completeness of the reporting assures the representativeness of the sample. 5. There were 23 Bradford mills out of production on January 1 , 1928. This number had increased to 27 on January 1 , 1929. Most of these were small mills, the average number of spindles being approximately 5,000. 6. There were no French mills out of production in 1928 or 1929. 7. T h e ratio to capacity is lower in French mills than in Bradford mills, being, in 1929, respectively 61 and 85. This difference must be interpreted in the light of the

THE

EQUIPMENT

OF THE

INDUSTRY

23

fact that idle Bradford mills are not included in the tabulation. 8. Exclusive producers of men's-wear and outerwear yarn have a higher ratio to capacity than other Bradford producers.

C H A P T E R IV T H E ANNUAL PRODUCTION OF BRADFORD YARN T h e trend in production of Bradford sales yarn is shown in Chart IV. Although the production of all mills is not shown, it is believed that the chart pictures accurately the trend of total production, since it includes only comparable figures. In order to make the post-war years comparable, some mills have been excluded that were in production throughout the period, but whose complete reports were unavailable, and other mills have been included that were not in constant production, because their complete experience was known. Included in the latter group are newcomers who came into production after the period opened and also the mills that ceased production before the period ended. Comparison between the various years may accordingly be accurately made. T h e post-war production of Bradford yarns rose from 1 9 1 9 to 1924. During this period it grew from 3 1 million pounds to 40 million pounds annually. Then came two years of recession, 1924 and 1925, when production slumped to less than 34 million pounds. The years 1926 and 1927 were times of increase and, in the latter year, the production was 37 million pounds. The year 1928 was one of moderate decline, with a production of 3 5 ^ million pounds. But the picture of the total situation is of only moderate value because it conceals what was happening in the several branches of the Bradford industry. If the two types of yarn that show a definite upward trend are eliminated, namely knitted outerwear and plush yarns, for the remaining production, the picture is altered very materially. There was a four-year period, 1 9 1 9 - 1 9 2 2 inclusive, in which there was only a slight upward trend; a two-year period, 192324

ANNUAL

PRODUCTION

OF BRADFORD

YARN

25

1924 inclusive, in which there was a sharp fall from 24 to 15 million pounds; a five-year period, 1924-1928, of almost stationary production at 15 million pounds. Stated differently, any change in the total Bradford situation since 1924 has been caused largely by outerwear and plush yarns. Changes in the relations of Bradford sales yarns to each other are shown in Table 5 and Chart II. The most important shifts may be summarized as follows: r. Men's wear is no longer the most important item of the total production having declined from 50 per cent before the war to about 35 per cent at the present time. 2. Outerwear has taken first place, representing 46 per cent of the total. 3. Plush is, relatively, three to four times as important as it was before the war and now contributes about 10 per cent of the total. 4. Dress goods has steadily receded until, in 1927 and 1928, it was about one-fifth as important, on a percentage basis, as in 1 9 1 2 and 1 9 1 3 . It represents only 1 per cent of the total Bradford yarn. 5. Hand knitting, after a brief interval of activity, is now back to its pre-war position of being 2 per cent to 3 per cent of the total Bradford yarn. Bradford Men's-Wear Yarn, Chart V. The outstanding fact about the production of Bradford men's-wear yarn since the World War is that it is just about holding its own in number of pounds. Furthermore, it has definitely yielded first place to knitted outerwear yarn as the principal item of business for Bradford producers. If we exclude the year 1923 when production reached 1 ^ / 1 million pounds, production has never equaled the 1919 figure of 14 million pounds. On the other hand, it has not gone below 1 1 million pounds. The trend in the industry since 1 9 1 3 is obtained by comparing the pre-war line with the dotted line since the war. This shows that the production of this group of mills has gone rather steadily downward.

ANALYSIS

26

OF

PRODUCTION

M o r e important, however, than the changes in the figures f o r total production is the analysis of changes in the individual mills. T h e total figures do not tell the whole

PRODUCTION OF BRADFORD SALES YARN. 1911-13,1919*5 PERCENTAU

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story. T h e returns show that 33 mills produce B r a d f o r d men's-wear yarn. A study of the individual production charts of these mills reveals the fact that, whereas the men's-wear branch as a whole has been losing a small amount

ANNUAL

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