FUNDAMENTAL CAUSES OF BACKWARDNESS IN TH E LATIN-AMERICA N TEXTILE

 



FUNDAMENTAL CAUSES OF BACKWARDNESS IN TH E
LATIN-AMERICA N TEXTIL E INDUSTRY
77. The considerations contained in the preceding sections might be summarized by saying that, on the whole,
the Latin-American textile industry is not only affected
by the stagnation of technical progress as regards equipment, but also by the lack of progress in management.
That these two deficiencies do not occur with uniform
intensity in all the countries, allied to the fact that in the
course of this inquiry examples have been found of old
and modern mills without administrative deficiencies,
and also of modern mills with practically no deficiencies
at all,44 indicates that the improvement of productivity in
the field of textiles, specifically, is not hampered by
insuperable obstacles. This, nevertheless, does not exclude the presence of problems which hinder the achieving of such improvements, which at the same time,


 would
bring about an increase of general productivity in these
countries.
78. At the outset, the Latin-American textile industry
was marked by an intense period of development, almost
parallel in modernity and technique with that of the more
highly industrialized countries; this was followed by
fifty or sixty years of stagnation—or even of regression
—except for increases in capacity. This phenomenon can
be explained by a complex of factors, establishing fundamental differences between the climate for industrial
development in Latin America and that in the more
advanced world centres. Some of these factors are described in the following pages.
A. Lack of extension of technical progress
in matters of equipment
79. It might be said that Latin America's backwardness in the textile industry, in so far as equipment is
concerned, can be mainly ascribed to the fact that since
the period of outstanding development, early in the
century, until the present day, manufacturers have had
little incentive to modernize their machinery. This en41 See chapters referring to each of the countries.
45 Even if the cost of equipment were deflated in order to
allow for the general rise in prices between the two periods, the
small increase of production would not in itself justify any
change of machinery.
During the past few years, a great deal more scientific research has been taking place in the textile machinery factories,
and it may therefore be expected that radical improvements will
shortly be made therein. It is curious to note that in one of the
Brazilian mills, one of the weaving sheds has shuttleless looms
couragement might have been offered by four different
sources: (1) a substantial increase of production per
unit of equipment (spindle or loom) or in a general way,
per unit of capital invested; (2) considerable savings in
labour, per unit of finished goods; (3) a marked increase
of quality in the textile goods per unit of capital invested; 


and (4) the compelling need to replace machinery, because physical deterioration rendered its continued use impracticable.
80. The increase of production per unit of capital
invested has acted as a negative stimulus because, since
the beginning of the century until the present day, machine manufacturers have only increased production per
spindle by 6 per cent and output per loom by 26 per cent,
as is shown in table 1, though the prices of equipment per
unit are now eight times higher than previously.45 If
textile machinery had progressed during the past fifty
years, from the point of view of unitary production, in a
measure corresponding to that in other industries, such
as the manufacture of glass or the casting of metals,46
it is quite likely that the Latin-American textile mills
would now be equipped with more modern machinery.
This would probably have occurred despite the limitations of the capacity to save, since the incentive offered
by increased production per unit of machinery is very
strong in Latin America, where profits can be more
easily augmented by increasing the volume of production
than by reducing costs. 


81. The stimulus to modernize machinery offered by
the reduction in the amount of labour required per unit
of equipment might have been stronger, since improved
working methods, and automatic mechanisms added to
machinery during the past fifty years, have reduced
the amount of labour required in spinning mills by 20
per cent and the amount of labour in the weaving mills
by 53 per cent.47 However, this stimulus has also been
extremely weak in Latin America, principally owing
to the relative unimportance of the average wage level in
industry, as compared with the average price of textile goods. In fact, if the price of a popular fabric in
each country is assumed to be 100, expressed in local
currency, the cost per man-hour would be 60 in Brazil,
82 in Chile, 36 in Ecuador, 83 in Mexico, and 57 in Peru,
whereas in the United States, where the price of labour
is of the highest importance, the cost per man-hour
would be 355.
82. The improvement in the past fifty years, in so far
as the quality of the textile goods is concerned, is of considerable importance, especially in the spinning mills.
However, this advantage would hardly encourage manufacturers to modernize machinery, since the high customs tariffs in the majority of the Latin-American countries do not contribute to free competition with the imported goods in so far as quality is concerned. It is
certain that when dealing with ordinary fabrics, the
manufacturers have always forced the market to accept
whatever type or quality of products they have either
wished to, or been able to, manufacture, and the factor
manufactured in the same mill, whereas in machine-manufacturing countries this type of loom is still in the experimental stage.
In another Brazilian factory, there are European spinning
frames, which are fed directly with the card sliver, whereas in
the United States this process has not yet been adopted on a
commercial scale.
" The weighted average for spinning and weaving is 44 per
cent. The reciprocals of these percentages are shown in table 1,
in the box "Difference in the number of workers required".


 12 Productivity of the Cotton Textile Industry in Latin America
of consumer preference has had hardly any influence on
production policies.
83. Lastly, physical deterioration in itself has had
.little influence in hastening the process of modernization
because the maintenance service of the mills hais undertaken repairs, or the changing or fixing of broken and
worn-out parts to such an extent that very little of the
original equipment remains in the machinery now stand-
. ing. It cannot be denied, however, that there has been a
functional depreciation which has caused an increase in
the number of man-hours required in order to complete
the process of production with the machinery available,
and to service that machinery. This factor, because of
• the low price of labour, does not provide sufficient incentive to render the postponing of the replacement of
equipment impossible.
84. Together with the lack of incentive, the modernization of equipment has been affected by the decreasing
capacity of many mills to create adequate reserves for
the replacement of their machinery. This has been be-
,cause of: (1) a financial policy unsuited for the proper
establishment of such reserves; (2) the extraordinary
increase in the cost of machinery, due to higher prices
and variations in the exchange rates; and (3) the fact
that in periods of high profits in industry, that is, during
the war, it was impossible to obtain equipment and the
savings that could have been used for that purpose had
either been employed mainly in other types of investments or, when an opportunity to purchase equipment
occurred, these savings had already been set aside in
order to expand working capital, which was necessary
because of inflation.

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