Quaker Fabric expected to close

Quaker Fabric Corp. at first prospered under free trade agreements, expanding into foreign markets such as Mexico and increasing operations in its hometown. But as trade barriers continued to fall, the Fall River textile maker buckled under the flood of cheap imports, particularly from China.

Quaker said yesterday it is likely to shut down, throwing some 900 employees out of work. The company, which has been losing millions of dollars and slashing jobs over the past few years, said it expects to soon begin liquidating its assets.

Quaker executives did not return phone calls yesterday, but last summer chief executive Larry A. Liebenow cited "fierce competition from imported Chinese fabrics" as a key reason for the company's struggles and the layoff at that time of more than 200 workers.

Quaker appears the latest victim of China, which has battered textile makers in both developed nations like the United States and developing nations like Mexico. The combination of low labor costs, massive production, and an undervalued currency has given China huge advantages, said Mark Zandi, chief economist at Moody's Economy.com, a forecasting firm in West Chester, Pa.

As recently as four years ago, Quaker, which makes fabric for furniture upholstery, employed more than 2,500 in Fall River and planned to expand, city officials said. The North American Free Trade Agreement had benefited the company, opening new markets in Mexico. Liebenow, a free trade supporter, once estimated that Mexico's business supported about 200 local jobs.

But barriers to textile imports fell in 2005 under global trading agreements and cheap imports poured in. Quaker's profit of nearly $8 million in 2003 turned to losses of $25 million in 2005 and nearly $38 million in 2006, according to financial filings.

"Chinese competition is withering," Zandi said. "It has completely undermined the textile industry here in the US and almost everywhere in the world."

For Fall River, the shutdown is a blow to the local economy, which, after years of struggling, had begun to find its footing.

Fall River's 7.2 percent jobless rate in May is above the state's 4.9 percent. But in recent years the city has attracted new employers bringing hundreds of jobs to the Southeastern Massachusetts community. Among them: Medical Information Technology Inc., a software firm expected to complete a new faculty within the next several months and create as many as 600 jobs.

"It makes a blow like this a little easier," said Fall River Mayor Edward Lambert, "but losing 900 jobs is not small potatoes. It certainly ranks among my worst days."

State, local, and federal officials mobilized quickly to help the workers, many of whom unknowingly departed for vacations after the plant shut down for annual maintenance this week, city officials said. The maintenance shutdown usually lasts two weeks; Quaker said there is "significant uncertainty" that it will reopen.

Linnea Walsh, spokeswoman for the Executive Office of Labor and Workforce Development, said a state rapid response team was in Fall River yesterday to help direct workers to unemployment, training, and other benefits. State and local officials said they will also seek federal assistance under a program that helps workers dislocated by international trade.

The program provides up to two years of unemployment benefits while workers train for new jobs.

US Representative Barney Frank, Democrat of Newton, who represents part of Fall River, said the likely demise of Quaker Fabric is another example of the unfairness of current economic and trade policies.

"These working-class people are bearing the brunt of a policy of globalization that benefits the few and damages the many," Frank said.

Although free trade causes short-term dislocations, most economists say it helps the economy over the long term, increasing efficiency, lowering costs, and raising standards of living. The textile industry, of course, has been in decline in Massachusetts for decades as firms sought cheaper labor for the lower skilled jobs, first in the South and then overseas.

"The underlying issue is costs," said Larissa Duzhansky, a regional economist at Global Insight, a Waltham forecasting firm. "China and Singapore have lower costs than the US. We are a high-cost state compared to the rest of the US. So, it's a double whammy."

Robert Gavin can be reached at rgavin@globe.com.