Andrew Gerber learned the textile business in his family's Rhode Island mill. But its outdated processes, which had barely changed since the turn of the century, couldn't keep up with foreign competition. So Gerber, 27, built his own ultramodern spinning mill to prove that textiles can still be made profitably in America.

His new company, American Spinning Industries Inc., of Central Falls, R.I., uses robots and other labor-saving machines to produce 30,000 pounds of yarn a week with only 38 employees; it would take old-style mills about 150 workers to do the same job. Even with wages of $7 to $8.50 an hour, labor isn't the biggest expense, according to Gerber, who is selling all the yarn he can make.

To accommodate his equipment, Gerber had to construct a custom-designed building with 26-foot-high ceilings, pits under the machines, and wide-open space. "You need to start from scratch," he says. European equipment makers, eager to penetrate the U.S. market, financed a large percentage of his purchases. After being laughed out of several banks, Gerver got a $762,000 loan, as well as a $600,000 Urban Development Action Grant. His family also invested.