SUMMARY Demoralized markets, low prices, and relatively high costs are causing suspension or curtailment of operations in many of the most reputable mills in the rayon and silk industry. At the same time, serious industrial conflict threatens because of the pressure for the lowering of labor standards. To prevent the degradaiton of labor, and to avoid open conflict, some means must be found to stabilize the labor factors in this competitive situation. Regulation of work assignments, with no attempt to stabilize related wages, not only evades the issue but would inevitably lead to greater strife. The nature of the labor controversies which are arising, as well as the inherent characteristics of the incentive wage systems in the industry, make it necessary that the two factors of wages and work assignment be considered jointly and by a single agency. Studies have demonstrated that, because of great variations in manufacturing conditions, no rigid limitations of units of machinery, nor any other fixed and universal formula for work assignment would be reasonable or just. Nevertheless, through the continuation of these studies, local problems of this sort can be dealt with more satisfactorily and scientifically than is now possible. Establishment of a rayon and silk adjustment board, to be representative of both labor and industry, to have adequate facilities for engineering research, and to have authority to consider questions of work assignments and related wages, will permit handling of this problem in a manner that will promote harmonious industrial relations. Mediation, investigation, and voluntary arbitration of disputes, with a minimum of prohibitions and compulsions, will go far toward the stabilization of labor conditions and the entire economic structure of the industry. We regret having to mention one unfortunate obstacle to the plan. The Cotton Textile Work Assignment Board does not feel that conditions in the cotton textile industry warrant the consideration of wages by the same board which considers work assignment. Its plan, however, would give a cotton board jurisdiction over that part of the rayon and silk textile industry, which is now subject to the cotton textile code. To attempt to stabilize wages for one-half of the rayon and silk industry, but not the other, is obviously as doomed to failure as any "house divided against itself." To treat this problem superficially will be a, serious error and will be to the actual disadvantage of both labor and management. Neither the representatives of employees and employers, nor those whom they represent are willing to subscribe to any plan for work assignment unless its provisions be applicable to all rayon and silk weaving and auxiliary operations, whether the firms carrying on such operations are under the silk textile code, under the cotton textile code, or under any other code. Therefore, if it should prove impractical to apply this plan to the entire competitive field, then this board recommends that no permanent governmental board be organized for the rayon and silk textile industry. Respectfully submitted. W. A. MITCHELL, Chairman. E. L. OLIVER, Employee Representative. J. W. NICKERSON, Employer Representative. SYNOPSIS OF REPORT UPON CONTRACT WEAVING IN THE RAYON AND SILK INDUSTRY 1. During the last 15 years and especially since the beginning of the depression, there has developed in this industry, a condition which closely parallels the sweatshop of the clothing and garment industries; unemployed workers have set up as independent manufacturers, buying old equipment and renting cheap space in dilapidated factory buildings. 2. The size and form of management of these small establishments have made impossible any effective regulation of their wages or working conditions, either by labor agreement, by statutes, or by the Code of Fair Competition for the industry. Standards of working conditions and earnings have not been maintained in these mills. 3. With wages in the rest of the industry more or less stable, and, since 1933, with both wages and hours regulated by the Code of Fair Competition, these shops and the concerns which have handled their product have confronted other manufacturers with a competition which has been ruinous. Indirectly, this competition has forced down the wages and has decreased the employment of the workers in the rest of the industry. 4. The specific recommendations of the board for dealing with this situation are based upon provisions appearing in various codes of fair competition. The clothing industries in particular have built up a technique for controlling a sweatshop which can be adapted to the problem of the rayon and silk industry. Such adaptation, however, will depend upon Government assistance during the period when the new regulations are being introduced. Neither labor, management, nor code authority in the industry is able now to act effectively in such a set-up as is contemplated. 5. The board recommended therefore that the Code of Fair Competition be amended to include provisions for control of contract weaving, and that the rayon and silk adjustment board proposed in the plan for regulation of work assignments should set up and supervise machinery for regulation of contracting until organizations of employers and employees are able to discharge that responsibility. REPORT UPON CONTRACT WEAVING IN THE RAYON AND SILK INDUSTRY In the body of its report upon a plan for the regulation of work assignments in the rayon and silk industry, this Board stated that— "Competitive conditions, which have obviously complicated the problem of work assignment in the rayon and silk industry, were made the subject of a special inquiry. A supplementary report is being filed by the Board, dealing with this inquiry. The study centered upon the practices of commission weaving and converting; questionnaires were drawn up for submission to concerns engaged in different parts of this general section of the industry. All of the converters registered by the Silk Code Authority were called upon, and a fairly high percentage of returns was secured by this method. A mill-to-mill canvass of three typical areas in the Paterson silk district was undertaken by the Board's staff. One hundred and fifty separate mills were visited, and report forms filled out for each mill. One member of the staff was assigned to the study of methods of control of contracting in the clothing industry, to determine whether or not the technique developed there could be adapted to commission weaving." As a result of th s study, the Board has reached the conclusion that no plan for the regulation of work assignments can be successful unless it includes or is accompanied by measures for the correction of the serious abuses which exist in the converting and commission-weaving section of the rayon and silk industry. During the last 15 years and especially since the beginning of the depression, there has developed in this industry a condition which closely parallels the sweatshop of the clothing and garment industries; unemployed workers have set up as independent manufacturers, buying old equipment and renting cheap space in dilapidated factory buildings. The size and form of management of these small establishments have made impossible any effective regulation of their wages or working conditions, either by labor agreement, by statutes, or by the code of fair competition for the industry. Standards of working conditions and earnings have not been maintained in these mills. With wages in the rest of the industry more or less stable, and, since 1933, with both wages and hours regulated by the code of fair competition, these shops and the concerns which have handled their product have confronted other manufacturers with a competition which has been ruinous. Indirectly this competition has forced down the wages and has decreased the employment of the workers in the rest of the industry. With one form of industrial organization thus evading regulation, to add further control to the rest of the industry could only result in forcing still more of the production into the substandard shops.1 I. CONVERTING AND COMMISSION WEAVING Converting as defined in the Code for Fair Competition for the Silk-Textile Industry, is "the business of owning unfinished or greige goods for the purpose of having same processed for one's own account, having same bleached, dyed, or printed, and subsequently selling same to the jobbing, cutting, or retail trade." There are two major divisions among the converters in the rayon and silk industry-first, those who buy greige goods outright, and second, those who contract 1 Much of the report which follows has been quoted practically verbatim from reports submitted by members of the Board's staff. The Paterson study was made by Gladys R. Friedman and Paul V. Friedman, and the converter study by John P. Lamb. with weaving mills to weave greige goods at some definite price per yard, from raw materials furnished and owned by the converter. Approximately 40 percent of the converters under the Silk Textile Code Authority have cloth woven for them on this contract or commission basis. Practically all converters maintain their principal offices in New York City. The mill weaving cloth for converters on the contract basis is known as a commission weaver. Raw materials are furnished commission weavers in a form usually requiring only one or two processes preliminary to weaving. The commission weaver makes no investment in raw materials, and is not concerned with selling his product; he weaves cloth only to order. The mill which typically buys its raw material, and sells its finished or semifinished product, is known as a "stock-carrying" mill, as distinguished from the commission weaver; but many stock-carrying mills are also doing some commission weaving. Paterson, N. J., is the center of the commission weaving mills (table 1). It is in this field of commission weaving, and the corresponding part of converting operations, that the serious competitive situation referred to has arisen. II. PRICES PAID COMMISSION WEAVERS It is a common practice for converters desiring to place contracts for weaving of greige goods to communicate with several commission weavers or their agents. The weavers are requested to bid for the contracts; this competitive bidding naturally forces prices down to the lowest possible level. The results of the use of these business methods by many of the converters, as well as by some of the stock-carrying and commission weaving mills who contract out part of their weaving, is to be found in the lists of the number of commission weavers used by individual converters or mills. Of 79 converters for whom information on this point was secured, 63 used more than one commission weaver in 1934 (table 2). There were only 24 who reported using more than three commission weaving establishments, but some of these 24 used what seemed an unnecessarily great number. Thirteen of them had 10 or more commission weavers apiece, 5 had more than 30. One concern actually let out commission weaving in 1934 to 73 separate establishments. The Paterson survey indicates that these multiple mill relationships are not limited to the converters. Of the commission weaving establishments in Paterson for which information was available, 84 shops worked for other mills in the city. Financial arrangements between the converters and the commission weavers working for them were of various kinds. Ten percent of the converters helped finance commission weavers by loans. Sometimes the converter held a mortgage on the commission weaving equipment, or held the insurance policy that the commission weaver had taken out on his equipment. Converters usually paid the commission weaver every week, or every 2 weeks, but assumed no responsibility for the payment of wages or maintenance of working conditions in his shop. Many of the converters reported that they had arrangements with individual commission weavers by which the converter had preferential or exclusive right over the production of the commission shop. Prices paid to commission weavers as reported by the converters, covered a very wide range. Twenty-three million yards were woven at prices which were below 10 cents per yard and averaged 7.7 cents per yard. The total production by commission weavers reported from these converters was 78,000,000 yards during the year 1934; the completeness of the coverage of the Board's study is indicated by the fact that calculations from other sources show that approximately 90,000,000 yards were woven on a commission basis for all converters under the Silk Code in 1934. These figures indicate that approximately 12 percent of all cloth of all qualities woven on this basis in 1934 was at 8 cents per yard, or less, and 30 percent at less than 10 cents per yard. It is difficult to separate out data for any one kind of cloth; the study did show, however, that 3,674,000 yards of 50/64s and 48/64s were woven by commission weavers for these converters at prices below 9 cents per yard. Of this total, 2,390,000 yards were woven at prices under 8 cents per yard and averaging 71⁄2 cents per yard, and 73,000 yards were woven at between 5 cents and 6 cents per yard. These figures must not be considered as a complete picture of the commission weaving of this kind of cloth, since the form in which the records of converters were kept made it impossible to get a complete separation of any one construction. This type of cloth is one of the simpler weaves and is produced in large quantities for undergarment manufacture. TABLE 1.-Geographical distribution of 524 commission weavers used by 84 converters during 19841 1 Taken from a survey of converters in New York City made during February and March 1935. TABLE 2.-Distribution of commission weavers by converters for whom they worked during 19841 1 Taken from a survey of converters in New York City, made during February and March 1935. The study made in the Paterson mills corroborates the converter study. Of a total of 704,000 yards produced in 1 week in the mills covered, 294,000 yards were 50/64's or 48/64's; 63,000 yards of this total were contracted for on a basis that included warping and winding, 91,000 on a basis that covered weaving only (table 3). Details for the rest of this yardage were not available, but of the 91,000 yards, 86,500 yards were woven for 6 cents or less per yard, excluding warping and winding. Of the contracts let to include warping and winding, 34,000 yards, more than 50 percent, were at prices of 7 and 74 cents per yard. These figures were for only 1 week in 1935 and prices had apparently declined somewhat from 1934 levels. There is no way by which the total annual production at these low prices can be calculated but these figures for approximately one-quarter of the Paterson mills indicate that the annual total would be very large. It is only necessary to compare these prices with the actual costs of mills operating under standard conditions to realize that it is impossible for such mills to meet this competition. The code authority for the industry has records showing the manufacturing costs of standard mills upon the 50/64 quality referred to above. Total manufacturing costs inclusive of winding and warping range from 102 cents per yard to 12.2 cents per yard for nine typical establishments. Inquiries made by the Board members informally substantiate these cost figures. For weaving without warping and winding costs, an estimate of approximately 14 cents per yard less would be very nearly correct. Our study indicates, therefore, that a very large amount of commission weaving is being done in the industry and especially in the Paterson area at prices that are from one-third to one-half below the actual costs of mills operating under standard conditions. 56725-36-9 Figures published by the Textile Foundation, Inc.,' indicate that 406,000,000 yards of broad silk were woven in 1934; 40 percent of this total yardage was woven on a commission basis. The studies made by the Board's staff indicate that not less than one-third of this yardage produced by commission weavers was woven at prices ranging around and averaging 7.7 cents per yard. If these figures may be taken as being roughly accurate, there were produced in 1934, 50,000,000 yards of broad silk at prices 33 to 50 percent below the normal costs reported by typical mills. The volume of commission weaving and the proportion of it done at prices below standard costs are sufficient to demoralize completely the market for goods within those classes which can be produced in the price-cutting commission weaving establishments. III. EFFECT UPON THE INDUSTRY The effect of the competition of the commission weavers upon the industry generally has been disastrous. Stock-carrying mills, unable to compete with the prices for which the contract weavers will work, are being forced defensively to contract out their own weaving, even to buy greige goods from converters. Some stock-carrying firms have gone completely out of business as manufacturers, and supply their market entirely with goods purchased indirectly from commission weavers. Other mills, and this is especially true in Paterson, have sold or rented their equipment to weavers able to evade the purpose of code regulation, and the mills can now get the greige goods, woven on their own former equipment, at a price lower than their former costs. That section of the industry which seeks to continue operations on the normal, stock-carrying basis is trying desperately to find some means of lowering costs to a point where competition with the commission weaver is possible. Wage reductions and increases in work assignment are two avenues through which these attempts at lower costs are being made. Because of the effect of this competition, directly upon legitimate mills, and indirectly upon labor, therefore, some means of regulation must be found. IV. WORKING CONDITIONS IN COMMISSION WEAVING MILLS The effect upon labor of this system of contracting out of weaving is by no means confined to the general tendency toward wage reduction. The study of the Paterson silk mills has revealed that the conditions existing in the mills weaving cloth at the extremely low prices quoted are of the very worst. TABLE 3.-Number of yards and prices paid for manufacturing 50/64's and 48/64's in Paterson commission weaving shops1 • Production and Distribution of Silk and Rayon Board Goods, by M. T. Copeland and W. H. Turner, the Textile Foundation, Inc., and the National Federation of Textiles, Inc., New York, 1935, p. 87. |