Another big loss for N.C. textiles

Hanesbrands will lay off hundreds of workers in the state, a fraction of 5,300 job cuts worldwide

A mainstay of the state's economy - textiles - took a big hit Wednesday when underwear maker Hanesbrands announced it was cutting 11 percent of its work force, including hundreds of jobs in North Carolina.

That news came on the heels of Philip Morris' decision this week to shut down a Cabarrus County plant, a move that will eliminate 2,500 jobs.

"One could say it's more of the same," said N.C. State University economist Michael Walden. "This isn't new."

Walden calculates the "Big Three" industries that propelled the state's economy in the 20th century -- tobacco, textiles and furniture -- accounted for 7 percent of the gross state product in 2005. That's a huge drop from 22 percent in 1977.

The good news is that a new "Big Five" -- technology, pharmaceuticals, food processing, financial services and producing parts for cars and other vehicles -- has ramped up from 9 percent of the state's economy to 17 percent during that span.

But the tobacco, textiles and furniture production workers who lost their old jobs aren't likely to find new jobs in the new growth industries.

"These people don't have the right set of skills to work" at financial services companies, such as Fidelity and Credit Suisse, which have been job engines in the Triangle, said James F. Smith, a finance professor at Western Carolina University.

Moreover, studies show that "the vast majority of displaced manufacturing workers don't get new training," Walden said.

Consequently, even though the N.C. Research Campus being built in Cabarrus County by billionaire David Murdock is expected to create more than 2,000 biotechnology jobs by the end of next year, former Philip Morris production workers from down the road aren't good bets to fill those positions.

Most manufacturing workers who lose their jobs are destined to end up in "low-paying service jobs" and retail jobs, Walden said. "Not that there is anything wrong with that, but their standard of living is going to take a hit."

Manufacturing is the single largest sector of the state's economy, but it's not what it once was. Manufacturers accounted for 19.4 percent of the state's gross domestic product in 2005, down from 30 percent in 1990, according to the U.S. Bureau of Economic Analysis.

Manufacturing jobs have been declining nationwide for decades as well.

The availability of cheaper foreign labor is one reason. Another is related to productivity: Manufacturing workers today produce five times more goods than they did in 1961 because of technologically advanced equipment, Smith said.

That means when new plants are built, they tend to be much smaller -- in terms of jobs -- than the Philip Morris plant in Cabarrus County that employs 2,500.

A case in point: Honda Aircraft broke ground at Piedmont Triad International Airport on Wednesday on a $100 million, 369,000-square-foot headquarters and manufacturing facility. Honda eventually expects to have 350 workers -- including administrative and manufacturing workers.

"That's the future of manufacturing," said Wachovia economist Mark Vitner. "There is going to be a lot of capital investment and relatively few jobs."

Jobs cuts in N.C.

Hanesbrands, which is based in Winston-Salem, said Wednesday that it will cut 5,300 jobs and close nine sewing and assembly plants, mostly in Mexico and the Dominican Republic. But included in that list is a Statesville plant, where 70 workers will lose their jobs.

The cutbacks weren't limited to production workers. Hanesbrands said it would cut 350 management and administrative positions, including 260 in Winston-Salem.

Unlike manufacturing workers, the white-collar workers are likely to find comparable jobs elsewhere, said Mike Helmar, an economist at Moody's Economy.com. "The people working those jobs have more options," he said.

Walden considers it "an economic miracle" that the state's overall economy is prospering despite the decline of the old-line industries that were once so important.

Twenty-five years ago, he said, a blow such as the Philip Morris plant being shut down would have been devastating.

But now, from a macroeconomic perspective, "everyone is kind of taking it in stride."

(News researcher Becky Ogburn contributed to this story.)