By Bob Davis
SPARTANBURG, S.C.--Milliken & Co., one of the largest U.S.
textile makers, has been on the front lines of nearly every recent
battle to defeat free-trade legislation. It has financed activists,
backed like-minded lawmakers and helped build a coalition of right
and left-wing opponents of free trade.
With Congress now gearing up for another trade fight, this time
over whether to give President Barack Obama authority to negotiate
sweeping trade deals in Asia and Europe, Milliken is in an
unfamiliar place. Its executives are urging lawmakers to support
the free-trade measure.
The about-face by the family-owned company followed the 2010
death of Roger Millken, its chairman and former chief executive, at
age 95. Mr. Milliken, who set the strategy for nearly everything at
the company, had railed for years against what he considered
China's pernicious trade practices.
"The past is the past," says Joseph Salley, 47 years old, the
company's current chief executive officer. These days Milliken is
focusing on building a carpet-manufacturing and textile-research
hub in Shanghai.
The Obama administration faces an uphill battle, especially
among Democrats, to secure congressional approval for "fast-track"
legislation, a linchpin for trade deals in Asia and Europe. The
administration says it could wrap up the 12-nation Trans-Pacific
Partnership in a few months if it had fast-track authority, under
which Congress can vote "yes" or "no" on trade pacts but can't
amend the deals. Senate leaders intend to schedule a vote on fast
track this month and try to approve it by a large enough margin to
give it a boost in the House, where it faces a tougher battle.
Various labor unions and environmental and consumer groups
oppose fast track, arguing it smooths the way for trade deals that
undermine U.S. wages and regulatory standards.
The textile industry isn't among the opponents. The National
Council of Textile Organizations, the industry's main lobbying
group, is working closely with the White House to get Mr. Obama the
votes he needs. Joshua Teitelbaum, the Commerce Department's top
textile negotiator, says "a united textile industry moves our goal
forward."
The support from Milliken and the textile industry reflects a
metamorphosis of modern commerce. Mr. Milliken built his company
into a powerhouse when the U.S. dominated the global economy. Like
other prominent business leaders of his time--among them Lee
Iacocca of Chrysler and Ross Perot of Electronic Data Systems--Mr.
Milliken argued that American success depended on manufacturing. He
fought for trade protection from emerging powers, especially Japan
and then China.
But as business becomes more international, American industries
that once pushed for protection--apparel, automobiles,
semiconductors and tires--now rarely do so. The U.S. Fashion
Industry Association, an apparel trade group that wants to reduce
tariffs, says that half the brands and retailers it surveyed last
year used between six and 20 countries for production. Only two of
the eight members of the main U.S. tire-industry trade group, the
Rubber Manufacturers Association, even have their headquarters in
the U.S.
Intel Corp.'s then-Chief Executive Andrew Grove predicted in
1990 that the U.S. would become a "techno-colony of Japan," and he
wanted heavy tariffs on semiconductors. Now Intel is pushing to
expand an international technology agreement that eliminates
tariffs on high-tech goods.
"There's a new generation of CEOs," says Dartmouth College
economic historian Douglas Irwin. "It's part of their DNA that they
operate in an international environment."
Clyde Prestowitz, president of Economic Strategy Institute, a
Washington think tank launched with funding from Milliken, says the
change at the company has been dramatic. "Roger Milliken is turning
in his grave," he says.
At Milliken's wooded Spartanburg, S.C., campus, the influence of
the former CEO can be seen everywhere. There is a monument to him
called the Innovation Center. His signature is the company's logo.
He even picked the location of the trees planted around the
grounds.
Trade activist
Mr. Milliken had a long history of waging trade battles in
Washington.
In the 1980s, he successfully pushed for legislation requiring
clothing labels to specify where goods were made, over the
opposition of the apparel industry. He and other textile makers
spent heavily to advertise made-in-America clothing, using comedian
Bob Hope as a spokesman.
He opposed the North American Free Trade Agreement, ratified by
Congress in 1993, China's entry into the World Trade Organization
and trade deals with Central America, South Korea and Vietnam. He
lost nearly all the fights. But he helped turn trade into a
populist issue--and a potentially risky one for congressional
lawmakers. In a 2004 Senate primary, he funded an unsuccessful
challenge to then-South Carolina Rep. Jim DeMint , a free-trade
advocate.
Between 1990 and his death in 2010, Mr. Milliken made almost
$700,000 in political donations, almost exclusively to the
Republican Party and Republican candidates, according to the Center
for Responsive Politics, a nonpartisan group that tracks political
contributions.
"Roger Milliken was likely the largest single investor in the
anti-trade movement for many years--as though no amount of money
was too much," said former Clinton administration U.S. Trade
Representative Charlene Barshefsky, who battled with him and his
allies.
When Mr. Millikin felt the textile industry's trade association
wasn't pushing his agenda hard enough, he withdrew from the group
and started a rival association with the acronym Attac--in case
anyone missed his message.
Mr. Milliken, a Republican, invited anti-free-trade activists of
all stripes to dinners on Capitol Hill. The coalition was secretive
about their meetings, dubbing themselves the No-Name Coalition.
Several people who attended the dinners, which continued through
the mid-2000s, recall how International Ladies' Garment Workers
Union lobbyist Evelyn Dubrow, a firebrand four years younger than
the elderly Mr. Milliken, would greet the textile boss, who fought
to keep unions out of his factories, with a kiss on the cheek.
"He had this uncanny convening power," says Lori Wallach, an
anti-free-trade activist who works for Public Citizen, a group that
lobbies on consumer issues. "He could assemble people who would
otherwise turn into salt if they were in the same room."
Of all the fights Mr. Milliken undertook, he won only one big
one since the Nafta battle, when a fast-track bill went down in
defeat in 1998.
Mr. Milliken stepped down as chief executive in 2006, but
remained chairman--and a powerful presence at the company--until
his death four years later. He didn't, however, try to persuade his
successor to continue his trade battles.
"He couldn't bring himself to take anything but the maximum
position on trade deals," says Thomas Tantillo, a former Milliken
product-development manager. "But he knew he needed someone who
would be able to make the kinds of changes necessary."
Mr. Salley, who has a Ph.D in chemistry from Stanford
University, was Mr. Millken's choice as successor. After taking
over, he scaled back the company's political operation. The firm
slashed its lobbying budget to one-sixth its 1998 level.
He also had the company rejoin the National Association of
Manufacturers, which Mr. Milliken had quit because of the trade
group's free-trade activities. "You want to be part of the
conversation" in Washington, Mr. Salley explains. He contends that
the best way for the company to be involved in politics is to leave
it to the trade associations.
The No-Name Coalition that Mr. Milliken started doesn't exist
any more. Anti-free-trade activists say there is no longer a CEO of
Mr. Milliken's standing who can persuade conservatives,
environmentalists, labor activists and others to work together.
"He was just about the only genuinely big money that was active
in funding trade-policy critics," says Alan Tonelson, a former
senior researcher at the educational arm of the U.S. Business and
Industry Council, a group that opposed trade pacts and lost
Milliken company funding after Mr. Milliken stepped down as CEO.
"It has become a terribly difficult cause to fund."
Since 2000, U.S. textile production has declined by about
one-third, and some of the industry's largest companies have gone
out of business or sold to foreign firms.
Milliken has survived in part by focusing on technology. There
are so few workers manning the looms at its weaving plant in
Johnston, S.C., where a robotic cart transports materials, that it
looks as if workers must be on lunch break. Under Mr. Salley, the
company has developed fabric that snuffs out fires, bandages for
burn victims and a cloth saturated with a powder that turns into
concrete when hosed down. Other Milliken innovations include
chemicals to turn foggy-looking plastic clear and to make
lightweight plastics to replace metal in cars and other
products.
Milliken still benefits from some old-fashioned protectionism.
The company is expanding its military-uniform business, executives
say, because a World War II-era law requires such apparel to be
made in the U.S. Keeping that provision is one of the textile
industry's top goals.
As a private company, Milliken doesn't disclose revenue, saying
only that it has annual sales of more than $2 billion. The
Congressional Research Service, a nonpartisan arm of Congress,
estimated that the company's 2013 revenue was $2.9 billion.
China shift
While Mr. Milliken saw China is a major threat to the
industry--he said in 1999 he was "outraged, totally outraged" by
Congress clearing the way for China's entrance into the WTO--his
successor sees the company's future there. Milliken opened an
industrial-carpet factory near Shanghai in 2007. It has a
research-and-development center there and a laboratory stuffed with
machinery where Chinese customers can check out the latest additive
for strengthening or coloring synthetics.
Mr. Salley says Milliken's researchers in China have come up
with a product the company doesn't make elsewhere: coloring for the
artificial leather used in China for handbags and shoes. The
company also figures China could become a big market for
fire-retardant work uniforms, especially if Beijing passes tough
worker-safety rules.
In 2007, Milliken had around 50 employees in China. It now has
several hundred. The company says it isn't using Chinese labor to
make goods for export back to the U.S., as many multinationals
do--one of Mr. Milliken's red lines on trade.
In 2012, Milliken moved its Asia headquarters from Tokyo to
Shanghai. When Milliken named a new chairman, it announced the news
in both Shanghai and Spartanburg.
Operating in China can be a challenge. The company doesn't
complain publicly that China manipulates its currency to gain a
trade edge, in part, because it worries about possible retaliation,
say some executives. Mr. Salley says retaliation "is not the key
issue." He says the company believes "we can be more effective
speaking with one voice"--through the trade association--"as
opposed to 25 companies speaking with different voices."
The president of National Council of Textile Organizations,
Augustine "Auggie" Tantillo, says the currency fight isn't a top
priority.
The trade bill up for congressional debate this month would give
President Obama "fast-track approval" for trade deals.
Foreign-trade negotiators from other countries have said that
without fast track, they won't offer their deepest cuts in tariffs
and other trade barriers for fear that Congress will rewrite pacts
after they are negotiated.
Lobbying in favor over the bill is a coalition of major
exporters organized by the Business Roundtable, a business trade
group. The coalition includes AT&T Inc., FedEx Corp, Intel and
Microsoft Corp.
On the other side is a coalition of labor unions, environmental
and consumer groups. Conservative political groups such as Phyllis
Schlafly's Eagle Forum also oppose fast track because they believe
it gives the president too much power.
Ms. Wallach, the anti-free-trade activist from Public Citizen,
says the political landscape has changed from the days when Mr.
Milliken was leading the anti-free-trade fight.
"Washington is now so polarized that I don't think you would see
the passionate conservative fast-track opponents and the passionate
progressive fast-track opponents working together," she says, "even
if Roger Milliken were still alive and active."
Write to Bob Davis at bob.davis@wsj.com
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