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The German Textile Puzzle: Selective Protectionism and the Silent Globalization of an Industry

Published online by Cambridge University Press:  24 July 2019

Jan-Otmar Hesse
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Abstract

As in other countries, textile and apparel production in Germany is considered a victim of globalization. Domestic production and employment declined dramatically after its postwar peak in the late 1950s. Research has often attributed this trajectory to the trade liberalization policy of the German governments. However, this interpretation is puzzling. German trade policy was not as liberal as is claimed, nor did the industry disappear. This article addresses the issue using statistical evidence as well as archival material. The West German textile and apparel industry was using outward processing strategies comparatively early and was supported in that by German politicians starting in the early 1960s. As a result, the industry moved up the global value chain of textile production.

Keywords

textile industryapparel industryprotectionismEuropean UnionGermanytradeexportglobal value chainoutward processingGATTEastern Europe
Type
Research Article
Information
Business History Review , Volume 93 , Issue 2 , Summer 2019 , pp. 221 - 246
Copyright
Copyright © The President and Fellows of Harvard College 2019 

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Footnotes

The development of the topic profited from conference presentations at BHC and EBHA annual meetings as well as the Boston WEHC. Furthermore the author wants to thank three anonymous.

References

1 The source quote is from an article in Textilmitteilungen, the weekly journal of the employers’ association of the German textile and apparel industry. Wollenschläger, Dora, “Die Hersteller sind empört,” Textilmitteilungen 38 (1978)Google Scholar, box 208117, Minister of Economics Archive (B 102), Federal Archives of Germany (Bundesarchiv), Koblenz (hereafter, BArch B102).

2 On the German textile industry, see Lindner, Stephan H., “It Could Have Been Worse: The West German Cotton Industry, 1945–1990,” in The Fibre That Changed the World: The Cotton Industry in International Perspective, 1600–1990s, ed. Farnie, Douglas A. and Jeremy, David J. (Oxford, 2004), 307–35Google Scholar; and Den Faden verloren: Die westdeutsche und die französische Textilindustrie auf dem Rückzug (1930/45–1990) (Munich, 2001). On the apparel industry, see the recent work by Schnaus, Julia, “Das leise Sterben einer Branche: Der Niedergang der deutschen Bekleidungsindustrie in den 1960er und 1970er Jahren,” Zeitschrift für Unternehmensgeschichte 62, no. 1 (2017): 9–33CrossRefGoogle Scholar. A parallel path is diagnosed for other countries, Singleton, John, Lancashire on the Scrapheap: The Cotton Industry, 1945–1990 (Oxford, 1991)Google Scholar.

3 Karl Buschman to Otto Graf Lambsdorff, 10 July 1978, box 208117, BArch B102. Unless otherwise noted, all translations are by the author.

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5 Draft by the responsible division chair, Büchner-Schöpf, 24 July 1978, box 208117, BArch B102.

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8 Besides the literature in note no. 6, see for the general trajectory also Baldwin, Richard and Lopez-Gonzalez, Javier, “Supply-Chain Trade: A Portrait of Global Patterns and Several Testable Hypotheses,” World Eocnomy 38, no. 11 (2015): 1682–721CrossRefGoogle Scholar.

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11 Numbers taken from Statistical Yearbook of the Federal Republic of Germany, different years. In general, figures are described in greater detail in Mühleck, Peter, Krise und Anpassung der deutschen Textil- und Bekleidungsindustrie im Lichte der Fordismus-Diskussion (Frankfurt, 1992)Google Scholar.

12 Karl Lauschke, “Strategien ökonomischer Krisenbewältigung: Die Textilindustrie im Westmünsterland und in Oberfranken 1945 bis 1975,” in Bayern im Bund, vol. 3, Politik und Kultur im förderativen Staat 1949 bis 1973, ed. Thomas Schlemmer und Hans Woller (Munich, 2004), 195–280.

13 Boussemart, Benoit and de Bandt, Jacques, “The Textile Industry: Widely Varying Structures,” in The Structure of the European Industry, 3rd rev. ed., ed. de Jong, H. W. (Dordrecht, 1993), 203–35CrossRefGoogle Scholar, esp. 207–9.

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17 A more recent dissertation in economics examined the business strategies in a branch study. André Schneider, “Internationalisierungsstrategien. Eine empirische Untersuchung anhand der deutschen Textil- und Bekleidungsindustrie” (PhD diss., Munich, 2004).

18 European Commission, The Moving Frontier: The Changing Geography of Production in Labour Industries (Project CIT2 – CT2004-001695, Luxembourg, July 2005).

19 For a detailed history of the emerging alliance of entrepreneurs and trade unions in the field see Gertschen, Alex, Klassenfeinde – Branchenpartner? Unternehmer und Gewerkschaft der westdeutschen Textilindustrie vor der Herausforderung der Internationalisierung, 1949–1979 (Baden-Baden, 2013)Google Scholar.

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21 Finley and O'Rourke, 489–93. See also Douglas Irwin, “The GATT's Contribution to Economic Recovery in Post-War Western Europe,” in Europe's Post-War Recovery, ed. Barry Eichengreen (Cambridge, UK, 1995), 127–50; and Chad P. Bown and Douglas A. Irwin, “The GATT's Starting Point: Tariff Levels circa 1947” (NBER Working Paper 21782, Cambridge, MA, Dec. 2015).

22 Aggarwal, Liberal Protectionism; Jürgen Wiemann, Selektiver Protektionismus und aktive Strukturanpassung: Handels- und Industriepolitische Reaktionen Europas auf die zunehmende Wettbewerbsfähigkeit der Entwicklungsländer am Beispiel der Textilpolitik der EG (Berlin, 1983).

23 See especially Neebe, Reinhard, Weichenstellung für die Globalisierung: Deutsche Weltmarktpolitik, Europa und Amerika in der Ära Ludwig Erhard (Cologne, 2004), esp. 127–28Google Scholar, 308–310.

24 Bown and Irwin, “The GATT's Starting Point,” 21.

25 Text of the General Agreement on Tariffs and Trade (1947; Geneva, 1986), 36.

26 Kaoru Sugihara, “International Circumstances Surrounding the Post-War Japanese Cotton Textile Industry,” in Farnie and Jeremy, Fibre That Changed the World, 521–51, esp. 527; Rivoli, Travels of a T-Shirt, 193.

27 See “Summary of the Trade Policy towards Japan,” 3 June 1969, box 153900, BArch B102. On the LTA, see Rivoli, Travels of a T-Shirt, 193–96.

28 Wiemann, Selektiver Protektionismus, 122–27.

29 Rivoli, Travels of a T-Shirt, 193–207.

30 Rivoli; Wiemann, Selektiver Protektionismus, 125–26.

31 Coppolaro, Lucia, The Making of a World Trading Power: The European Economic Community (EEC) in the GATT Kennedy Round Negotiations (1963–1967) (Farnham, UK, 2013)Google Scholar, esp. 6; Wiemann, Selektiver Protektionismus, 121.

32 K. D. Nehring, “Note on a Conversation with the Textile and Cloths’ Trade Union 20 Dec. 1965 in Düsseldorf,” 21 Dec. 1965, box 110043, BArch B102. Alex Gertschen found documents in which outward processing was referred to as business strategy in 1964. Gertschen, Klassenfeinde – Branchenpartner?, 192.

33 Minutes of a meeting of the minister of economics and the trade union of the textile and apparel industry (Gesamttextil), 13 Mar. 1970, box 110043, BArch B102.

34 Minutes of a meeting of Helmut Schmidt, minister of economics, with Karl Buschmann, chair of the textile and apparel trade union, 23 Aug. 1972, box 163945, BArch B102.

35 The paragraph on outward processing was deleted from a manuscript for a speech by Friderichs at the annual meeting of the textile entrepreneurs’ association, 4 Dec. 1974, box 163938 BArch B102; and Friderichs to Richard Uhle, Neunkirchen, 3 Feb. 1975, box 163938, BArch B102.

36 Speech by the chair of the association of the apparel industry, Dec. 1982, quoted in Gertschen, Klassenfeinde – Branchenpartner?, 296.

37 Gillingham, John, European Integration, 1950–2003: Superstate or New Market Economy? (Cambridge, UK, 2003), esp. 60–72CrossRefGoogle Scholar, on the “empty chair crises” in 1965.

38 Bundesverband Bekleidungsindustrie, Bekleidungsindustrie in der BRD (Frankfurt, 1963).

39 Gillingham, European Integration, 59–62

40 The January 1969 Bandt report, “The Textile Industry of the EEC: Perspectives until 1975,” is documented and intensively commented upon in box 92351, BArch B102.

41 Boussemart and De Bandt, “The Textile Industry,” 203–35, esp. 211.

42 Internal comment on a meeting of the workgroup “Sectoral Structural Policy” within the Committee for Medium-Term Economic Policy, European Communities, Brussels, 5 Sept. 1969, box 134128, BArch B102. For background, see also Gillingham, European Integration, 60–61.

43 Mühleck, Krise und Anpassung, 183.

44 “Die Lage der Textilindustrie,” report, Minister of Economics, 12 Aug. 1966, box 110043, BArch B102.

45 Gross, Stephen G., Export Empire: German Soft Power in Southeastern Europe, 1890–1945 (Cambridge, UK, 2015)CrossRefGoogle Scholar.

46 On this aspect, see Rudolf, Karsten, Wirtschaftsdiplomatie im Kalten Krieg: Die Ostpolitik der westdeutschen Großindustrie 1945–1991 (Frankfurt, 2004), esp. 238–40Google Scholar, 282–310; however, Rudolf focuses only on the big business from the Ruhr rather than SMEs and textiles.

47 See the telex in the files of the Bundeskanzleramt (similar to the White House in the United States). “Daily announcements by the Ministry of Economics,” 12 Jan. 1967. See also the telex by Martin Adolff, 10 Oct. 1967, and the note on the Romania contract from 24 Oct. 1967, in box 7742, Bundeskanzleramt (B 136), BArch (hereafter, BArch B136).

48 Rembert van Delden to Chancellor Kurt Georg Kiesinger, 7. Aug. 1969, box 7742, BArch B136.

49 This is the main topic of Gertschen, Klassenfeinde – Branchenpartner?, esp. 202. Gertschen dates the starting point of closer relationships in the mid-1960s to the head of the trade union addressing the employees of the Adolff company on an anniversary.

50 Fäßler, Peter, Durch den “Eisernen Vorhang”: Die deutsch-deutschen Wirtschaftsbeziehungen 1949–1969 (Cologne, 2006), 263–68Google Scholar.

51 The most recent research on the GDR textile and apparel industry does not mention subcontractor relations to West Germany and shows a much faster decline of the branch than in the FRG. Heimann, Christian, Systembedingte Ursachen des Niedergangs der DDR-Wirtschaft: Das Beispiel der Textil- und Bekleidungsindustrie 1949–1989 (Frankfurt, 1999)Google Scholar.

52 Fröbel, Heinrichs, and Kreye, Die neue internationale Arbeitsteilung, 252

53 Kukić, Leonhard, “Socialist Growth Revisited: Insights from Yugoslavia,” European Review of Economic History 22, no. 4 (2018), 411CrossRefGoogle Scholar.

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55 The German concept is, surprisingly, “passive Lohnveredelung.” For the legal background, see Fröbel, Heinrichs, and Kreye, Die neue internationale Arbeitsteilung, 116–22.

56 “Activities of the German government for increases of imports in textile and apparel markets,” 30 Apr. 1969, box 7742, BArch B136.

57 “Note for the Secretary of State on the Protests of the Textile Industry,” 12 Aug. 1969, box 7742, BArch B136. Unfortunately, research on the East European side of the chain is sparse and usually focuses on the post–1989 period; see, for example, Smith, Adrian, “Power Relations, Industrial Cluster and Regional Transformations: Pan-European Integration and Outward Processing in the Slovak Clothing Industry,” Economic Geography 79, no. 1 (2003): 17–40CrossRefGoogle Scholar.

58 Report of the division head for foreign trade, Friedrich, to the head of the department for economic policy, reflecting the negotiations at the EEC, 30 June 1969, box 92351, BArch B102.

59 European Commission, Moving Frontier, 260. For a comparison with the 2000s, see Christel Lane and Jocelyn Probert, “Domestic Capabilities and Global Production Networks in the Clothing Industry: A Comparison of German and UK Firms’ Strategies” (Centre for Business Research Working Paper No. 318, Cambridge, UK, 2005).

60 Gertschen, Klassenfeinde – Branchenpartner?, 190.

61 Mühleck, Krise und Anpassung, 222; Lindner, Den Faden verloren, 168.

62 However, scholars claim that the actual proportion leveled off at around 40 percent in the 1970s, while only 30 percent of total revenue was allowed to receive tariff reductions as “outward processing” by European regulation. Birgit Beese and Brigitte Schneider, Arbeit an der Mode: Zur Geschichte der Bekleidungsindustrie im Ruhrgebiet (Essen, 2001), 116.

63 Gertschen, Klassenfeinde – Branchenpartner?, 192.

64 Figures from Textilmitteilungen, the journal of the textile industry, quoted from Mühleck, Krise und Anpassung, 224; see also Fröbel, Heinrichs, and Kreye, Die neue internationale Arbeitsteilung, 116.

65 Gertschen, Klassenfeinde – Branchenpartner?, 192, 198.

66 Notice on the van Delden Group, 18 Oct. 1978, box 237552, BArch B102; see also Lauschke, “Strategien ökonomischer Krisenbewältigung,” 218.

67 “Lambsdorf übt Kritik an Firmen-Management: ‘Staat darf keine Sterbehilfen geben,’” Delmenhorster Kreisblatt, 16 Sept. 1980, refers to the case of the “Vereinigte Kammgarnspinnerei” in Bremen. Also, the state of Bavaria had helped its local textile manufacturers (e.g., the support of the “Erba AG” in Bamberg) with a state loan of DM 5 million. See Von Würzen to Vorndran, Bavarian minister of economics, 30 June 1981, both in box 237552, BArch B102.

68 Felix Spies, “Staat als Sanierer eine Fehlbesetzung: Van Deldens Kollaps signalisiert dennoch keine Textilkrise,” Süddeutsche Zeitung, 10 Jan. 1981, box 237552, BArch B102.

69 Adolff finally had to close in 1991, and Ravensberger in 1988. On Adolff, see Deposit B114, Wirtschaftsarchiv Baden-Würtemberg, Hohenheim; on Ravensberger, see Deposit F158, Westfälisches Wirtschaftsarchiv, Dortmund.

70 Beese and Schneider, Arbeit an der Mode, 75.

71 Schnaus, “Das leise Sterben einer Branche,” 15.

72 Corporate history, Triumph website, accessed 29 Jan. 2019, http://www.triumph.com/de/de/7487.html.

73 Ferenschild, Sabine, “Verliererinnen und Gewinner: Soziale Konsequenzen der Liberalisierung im Textil- und Bekleidungshandel,” Kurswechsel 4 (2007): 37–49Google Scholar, esp. 46.

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75 Beese and Schneider, Arbeit an der Mode, 127–36, 189–94. The Steilmann Group was bought by an Italian investor in 2013 and became insolvent in 2015. Unfortunately, according to an email from the insolvency administrator to the author, no company archive was found.

76 Clairmont and Cavanagh, World in Their Web, 212; Toms, Steven and Zhang, Qi, “Marks & Spencer and the Decline of the British Textile Industry, 1950–2000,” Business History Review 90, no. 1 (2016): 3–30CrossRefGoogle Scholar, esp. 9.

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79 Clairmont and Cavanagh, World in Their Web, 214.

80 Lindner, Den Faden verloren, 166–71.

81 Lindner, 171.

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84 See Hesse, Jan-Otmar, “Ökonomischer Strukturwandel: Zur Wiederbelebung einer wirtschaftshistorischen Leitsemantik,” Geschichte und Gesellschaft 39 (2013): 86–115CrossRefGoogle Scholar.

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86 Feenstra, Robert C., “Integration of Trade and Disintegration of Production in the Global Economy,” Journal of Economic Perspectives 12, no. 4 (1998): 31–50CrossRefGoogle Scholar; Gereffi, Humphrey, and Sturgeon, “Governance of Global Value Chains”; Bair, “Global Commodity Chains” and “The Corporation.”

87 da Silva Lopes, Teresa, “The Growth and Survival of Multinationals in the Global Alcoholic Beverages Industry,” Entreprise & Society 4, no. 4 (2003): 592–598CrossRefGoogle Scholar. See also Sabel, Charles F. and Zeitlin, Jonathan, “Stories, Strategies, Structures: Rethinking Historical Alternatives to Mass Production,” in Worlds of Possibilities: Flexibility and Mass Production in Western Industrialisation, ed. Sabel, Charles F. and Zeitlin, Jonathan (Cambridge, UK, 1997), 1–33CrossRefGoogle Scholar.