A news headline today from the Associated Press reported that the company that owns the iconic American tailored clothing brands of Hickey Freeman and Hart Schaffner Marx (HMX Acquisiton Corp) is is filing for Chapter 11 bankruptcy protection. As reported by the AP:
The labels Hickey Freeman and Hart Schaffner Marx got their start in 1887 in Chicago and have been worn by presidents including Barack Obama, who wore its suits for his inaugural and election nights. Their original parent company, Hartmarx, filed for bankruptcy in 2009 and was acquired by British company Emerisque Brands and the North American branch of Indian clothing company SKNL.
The tailored clothing industry in America employs slightly more people than the extinct typewriter and buggy whip industries. Jobs in the manufacture of men’s and boy’s clothing have been either outsourced or replaced by mechanization. Employment in men’s and boy’s clothing has declined from 459,000 in 1965 to 234,000 in 1990 to 29,000 today. The US lost 93.7% of the jobs in the manufacture of men’s clothing at a time when total employment in the economy increased by 120%.
The US doesn’t produce (or consume) the same goods as it did a generation ago. The US economy must continually transform itself, because of competition in a global economy and the mechanization of production, to generate enough economic growth to create jobs. The changes required to keep up with foreign competitors will be the result of innovation, risk-taking, and investment in human capital.
President Obama was probably correct when he admitted in this week’s debate that some manufacturing jobs are gone from the US for good. Outsourcing of these jobs makes economic sense if foreign competitors are more efficient and pass on their lower costs to US customers. However, outsourcing of jobs is harmful for the US economy if it occurs because of stifling taxes and regulatory burdens.