Made in USA loses its shine as brands opt to source abroad
Nearly 97 % of the world’s clothing manufacturing happens outside America. The country’s shopping habits have changed dramatically. In 1965, 95 per cent of the clothing Americans purchased was made in the US. Today, it’s just 2 per cent. In order to keep up the sustainability tag, some of American brands are proudly displaying ‘Made in USA’ tag, which is far from reality
Nearly 97 % of the world’s clothing manufacturing happens outside America. The country’s shopping habits have changed dramatically. In 1965, 95 per cent of the clothing Americans purchased was made in the US. Today, it’s just 2 %. In order to keep up the sustainability tag, some of American brands are proudly displaying ‘Made in USA’ tag, which is far from reality.
Companies that used to manufacture everything in the US, such as Red Wings and New Balance, have shifted production of most products overseas. Some companies who are still producing in the USA showcase limited quantities of a product. For instance, Tanner Goods, a leather accessories brand; New England Shirt Co, a men’s shirts brand; and Oak Street Bootmakers, a footwear company.
Costs drive brands to source outside
Companies highlight that it’s easier to manufacture overseas, if you want to go for mass manufacturing. Resource availability is one of the biggest reason for American brands to look overseas for manufacturing. Additionally, fabric sourcing is one of the biggest concerns facing domestic companies in the US.
Some companies like American Giant have been able to sustain the ‘Made in USA’ tag simply because they are dealing in knitwear like sweatshirts, T-shirts, and leggings, which are made from North Carolina cotton. The moment they look for expansion, they must shift production base or source materials from other countries. The company explains sourcing merino wool from New Zealand would be an easy thing to explain to customers. Cost efficiency is also something that comes into play while sourcing fibres and fabrics.
Brands wanting to position themselves as American-made must factor in transparency and an uncertain future as the industry changes. Similar modern brands like Zady, Everlane and The Reformation use a transparent business model as the emotional hook for customers, rather than ‘Made in America’. The key lies in branding your product well while staying true to your ethical manufacturing practices.
Sourcing seems to be the need of the hour
Retailers need to maintain a discipline and focus on a greater mission in order to avoid cutting costs in manufacturing overseas. Overseas factories compete on more than just cheaper cost. For brands looking to create designs using advanced skill sets, like block printing or embroidery, they should look beyond American factories. Moving beyond your area of expertise is when you require outsourcing. Of late, investment in manufacturing technology and quality in the US has declined substantially as the industry has shifted to other parts of the globe. At the same time, small domestic brands with very limited production capacities might still be a viable option for some American brands who truly want to stay localised.
Neither re-shoring nor back-shoring can bring back many jobs
Neither re-shoring nor back-shoring will bring back many jobs that were lost via off-shoring with apparel production being still dominated by globalization, opines International Apparel Federation (IAF) president Han Bekke. He was speaking at the Sewn Products Equipment & Suppliers of the America (SPESA) Executive Conference in San Antonio (Texas-USA) recently where many apparel machinery suppliers had converged. Pressure for cheaper prices still persists in abundance, Bekke added. He pointed at the dominance of big players in the fashion market who have made globalisation more accessible via better IT systems and processes in their supply chain. Most of the apparel production takes place in Asia, Middle and South America and Turkey, he maintained.
Nevertheless Bekke forsees a future for local manufacturing given the in numerous challenges the fashion sector is facing. The race to the bottom in terms of prices will not help companies to improve their profitability on a long term. Consumer behaviour is changing in a climate of disruptive economical activities. Sustainability (social compliance and environmental compliance) is leading to a growing demand if not pressure for transparency, traceability and accountability.
The fashion system has to reinvent itself, Bekke observed. Speed to market and mass customization form a growing business case for manufacturing closer to the market, he added. New technologies like 3D manufacturing and printing, robotisation and digitalisation could create new high-skilled jobs but less than the jobs that were lost via off-shoring.
Donald Trumps strategy
Donald Trump may present an opportunity, and difficulties, for the American textile and apparel industry. What the industry is looking forward to is getting rid of the yarn-forward rule, something that may happen. The Trans-Pacific Partnership won’t happen with a Trump administration. His campaign centred on a pledge to ‘Make America Great Again’ by renegotiating trade agreements, imposing tariffs as high as 35 % on imports from countries like China and preventing companies from manufacturing overseas.
The Transatlantic Trade and Investment Partnership, a proposed trade agreement between the US and the European Union that’s already on rocky ground, likely won’t happen either. If Trump wants to raise tariffs on China, the US will have to withdraw from the World Trade Organization (WTO). The effects of leaving the WTO would be that the US would enjoy the same economic status as Syria, North Korea and Iran. The US would lose binding dispute resolution process, lose protection against non-tariff barriers, protection of its intellectual property and it might engender mutually retaliatory trade wars.
In this election, trade became the proxy, the scapegoat for everything people felt was wrong with America. Trade isn’t the main force destroying jobs, but it serves as a good target.
Textile-Future’s short comment: The new US President Donald Trump stated in his campaign to bring back jobs to the USA, and TextileFuture wonders with what means (incentives) he would engage textile companies to repatriate some of the production to the States, however we doubt that he will cater his policy also to textiles, he is more interested in infrastructure and coal. We will keep you posted on the developments. Already President Obama took various initiatives to bring manufacturing back to the USA, and he gathered important industry leaders to accomplish this task, among Walmart.