Ill effects of industry consolidation
Cone moves from comparing the chain of production and distribution in Latin America to that in the United States to describing the accelerating consolidation of American businesses. Consolidation contributes to market volatility and endangers consumers and employees, because when a big company stumbles, it disproportionately damages the lives of workers and the economy as a whole.
Citing this Excerpt
Oral History Interview with Caesar Cone, January 7, 1983. Interview C-0003. Southern Oral History Program Collection (#4007) in the Southern Oral History Program Collection, Southern Historical Collection, Wilson Library, University of North Carolina at Chapel Hill.
Full Text of the Excerpt
- HARRY WATSON:
-
I wonder if we could get back to that in a minute, and go back to when
you were just starting with the company. What were the general problems
of the textile industry in the late twenties and early thirties?
- CEASAR CONE:
-
I touched on it in this previous recording. The textile industry in this
country—it's true with most
industries—started off… And it was that way in
South America. I took a trip down to Brazil and Argentina just after the
War. We had an opportunity to go in business down there, and I went down
there to look around. We found that the structure down there was about
like I guess it was in this country back in the middle nineteenth
century. The mills would sell their product to big wholesalers. The big
wholesalers would sell the product to small wholesalers. The small
wholesalers would sell the product then to the retail stores.
Practically all the fabric was home-sewn. There was very little needle
industry, and there were no chain stores. Sears, Roebuck was just
beginning to think about expanding into South America. This was right
after the War. Back in the old days in this country, the same thing was
true. The manufacturers sold to a handful of big wholesalers. There were
several tiers between the manufacturer and the
consumer.
[END OF TAPE 1, SIDE A]
[TAPE 1, SIDE B]
[START OF TAPE 1, SIDE B]
- CEASAR CONE:
-
In fact, I know there were attempts on the part of the independent
merchants to try to get state laws passed against chain stores, food
chains, general merchandise chains, because they were afraid it would
put the individual retailer out of business. And it did, because those
chains got to the point where they could buy in quantities big enough so
they'd go direct to the manufacturer and thereby save the
cost of the middleman. When I first went on the road, we had a good many
large dry goods jobbers still in business, but there are no such
anymore; they're gone. In those days, we wouldn't
have thought about selling to retail, even to Sears, Roebuck. We
wouldn't sell to a cutter, the needle trade. Even though
maybe that cutter would buy in sufficient quantities, we'd
sell to jobbers, and the jobber sold to the cutter the cloth he needed.
A good many of the jobbers made their own garments, had their own few
sewing machines to make overalls, work shirts, staple types of garments.
About the time I got on the road in the thirties, those dry goods
jobbers were just beginning to quit. There were several of them in
Pittsburgh, several of them in Buffalo, Utica, Syracuse. Every town had
at least one or two dry goods jobbers. They finally got whittled down to
where about the only business they could still do was in consumer items,
not in piece goods. As a matter of fact, the piece goods business in
this country, pretty much, for staple stuff went to pot, because you
could buy an overall or work shirt, a standard
type of garment, much cheaper than you could buy the fabric at some
retail store and the findings—the buttons, the thread,
etc.— and make it yourself. That was not true in South
America, you see. South America hadn't progressed to the
point where we had, distribution-wise. But the wholesale jobbers went
out of business. As a matter of fact, I doubt if Cone Mills today has as
many customers on its books as it had… It's been
ten years since I've seen any figures, but ten years ago we
didn't, and I guess we've even got less today.
You've got your Blue Bells here, the Wrangler brand,
headquartered here in Greensboro, whose sales are over a billion
dollars. You've got Levi-Strauss and Company out in San
Francisco, whose sales are over two billion, I guess. That was unheard
of when I first got into the business, even. I guess Blue Bell and Levi
were big in those days, because they've been in business for
some years, but I doubt if Levi's sales were over twenty to
thirty million dollars. Five to ten million dollars, maybe. As a matter
of fact, I called on Levi. When I was in Chicago, our salesman that ran
the San Francisco office had a heart attack, and they sent me out there
while he recuperated for some six or eight weeks. They had a few plants,
but there were garment manufacturers all over the country making
overalls, work shirts, staple stuff like that, you see. Anywhere from
twenty-five sewing machines up to maybe a hundred or so was a pretty
good-sized operation. Today I guess Blue Bell's got many
thousands of sewing machines; so does Levi. And as they got bigger, a
lot of our little customers went down the drain. Business has gotten
terribly consolidated, and as a result, in my
judgment, not just textiles, it makes our economy much more volatile. I
mean the peaks and the valleys. If you have your business done by a
great many small customers, you don't give a damn whether you
lose one fellow's business or not. It doesn't
affect you, the manufacturer. Where you've got these big
customers, you can't afford to lose the guy's
business, so he can beat you over the head. On the other hand, if things
get tough and that one big fellow goes to pot, you see what it does to
the over-all economy. As long as our economic activity was spread
out—manufacturing, distribution, whatever—among
many small operations, in my opinion it made the over-all economy much
less volatile. Today, you see, a steel company closes a mill, or an
automobile company, a textile company, and several hundred workers are
put out. Several thousand, maybe. Chrysler Company goes bust; the
government comes along and says, "We can't afford to
let you go bust." Nothing like that was ever necessary back in
the old days when our institutions were smaller.