Martin Textile
closing Case Martin's Textiles
August 12, 1992, was a really bad day for John Martin. That was the day Canada, Mexico, and the United States announced an agreement in principle to form the North American Free Trade Agreement. Under the plan, all tariffs between the three countries would be eliminated within the next 10 to 15 years, with most being cut in 5 years. What disturbed John most was the plan's provision that all tariffs on trade of textiles among the three countries were to be removed within 10 years. Under the proposed agreement, Mexico and Canada would also be allowed to ship a specific amount of clothing and textiles made from foreign materials to the United States each year, and this quota would rise slightly over the first five years of the agreement. "My God!" thought John. "Now I'm going to have to decide about moving my plants to Mexico."
John is the CEO of a New York-based textile company, Martin's Textiles. The company has been in the Martin family for four generations, having been founded by his great-grandfather in 1910. Today the company employs 1,500 people in three New York plants that produce cotton-based clothes, primarily underwear. All production employees are union members, and the company has a long history of good labor relations. The company has never had a labor dispute, and John, like his father, grandfather, and great-grandfather before him, regards the work force as part of the "Martin family." John prides himself not only on knowing many of the employees by name, but also on knowing a great deal about the family circumstances of many of the longtime employees.
Over the past 20 years, the company has experienced increasingly tough competition, both from overseas and at home. The mid-1980s were particularly difficult. The strength of the dollar on the foreign exchange market during that period enabled Asian producers to enter the US market with very low prices. Since then, although the dollar has weakened against many
August 12, 1992, was a really bad day for John Martin. That was the day Canada, Mexico, and the United States announced an agreement in principle to form the North American Free Trade Agreement. Under the plan, all tariffs between the three countries would be eliminated within the next 10 to 15 years, with most being cut in 5 years. What disturbed John most was the plan's provision that all tariffs on trade of textiles among the three countries were to be removed within 10 years. Under the proposed agreement, Mexico and Canada would also be allowed to ship a specific amount of clothing and textiles made from foreign materials to the United States each year, and this quota would rise slightly over the first five years of the agreement. "My God!" thought John. "Now I'm going to have to decide about moving my plants to Mexico."
John is the CEO of a New York-based textile company, Martin's Textiles. The company has been in the Martin family for four generations, having been founded by his great-grandfather in 1910. Today the company employs 1,500 people in three New York plants that produce cotton-based clothes, primarily underwear. All production employees are union members, and the company has a long history of good labor relations. The company has never had a labor dispute, and John, like his father, grandfather, and great-grandfather before him, regards the work force as part of the "Martin family." John prides himself not only on knowing many of the employees by name, but also on knowing a great deal about the family circumstances of many of the longtime employees.
Over the past 20 years, the company has experienced increasingly tough competition, both from overseas and at home. The mid-1980s were particularly difficult. The strength of the dollar on the foreign exchange market during that period enabled Asian producers to enter the US market with very low prices. Since then, although the dollar has weakened against many