Bureau of Labor Statistics: Manufacturing-related Fashion Jobs Continue to Drop in the U.S.

A recent study released by the U.S. Bureau of Labor Statistics (BLS) showed that manufacturing-related fashion jobs in the United States will continue to drop through 2020. Although the occupation of sewing machine operator is projected to face the most significant shrinkage in employment, the job decline is suggested to be an industry-wide phenomenon. According to the BLS, from 2003 to 2012, the U.S. apparel manufacturing industry (NAICS 315) had lost 57.7% of its jobs.

The question open for discussion, yet critical for textile& apparel major college graduates, is that how might the decline in manufacturing affect the destiny of other aspects of the U.S. fashion industry in the long run, such as the design and product development functions. No industry sector can survive as an island. As argued by the world’s leading scholar on the subject Michael Porter in his numerous studies addressing the industry competitiveness, the availability and strength of the local supporting industries have a key role to play in shaping the competitiveness of an industry in a nation. For example, the reason why the United States remains the world leading man-made fiber producer today is largely because the U.S. chemistry industry is able to provide needed inputs (such as raw material, technology and knowhow). By the same token, if fabrics are no longer locally made, compared with their overseas competitors such as Italy and China, the U.S. fashion designers might also be put at a big disadvantage in sourcing the needed material and developing the sample products in a timely manner, with flexible choices and at a reasonable cost.

Technology is another critical  factor contributing to job decline in the U.S. fashion industry. As the 2008 study Forecasting the US fashion industry with industry professionals—Part I material and design concluded that “design and production processes would rely heavily on computer and digital technology…the apparel package in the U.S., including creative design, will possibly migrate offshore with the exceptions of heavily technology-involved design and product development tasks.”   

In the meanwhile, the retail sector remains a robust job creator for textile & apparel major college graduates. From 2003 to 2012, total employment in the U.S. apparel retail industry (NAICS 4482) increased 5.7%. By 2012, almost 80% of the occupations in the U.S. textile and apparel industry were offered by retailers. 

by Sheng Lu

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Is clothing “made in USA” more ethical? How “ethical” should be defined?

It has become a commonly held view that apparel workers in many developing countries are unfairly treated because they are much lower paid compared with their counterparts in the developed countries.  For example, American Apparel, a company that insists all of its products made in USA, claims itself to be sweatshop-free on the basis that it pays workers an hourly wage of $12.  However, does an hourly wage of $12 in the USA necessarily mean more “ethical” than an hourly wage of several cents in a poor developing country like Bangladesh?  

An often ignored fact is that in many developing countries, jobs in the apparel sector are better paid than positions in other sectors. For example, according to a recent study conducted by the World Bank, in Bangladesh, wage level in its apparel sector is 17.7% higher than the average level of all sectors, 72.2% higher than the wage level in the agriculture sector and 4.5% higher than the wage level in the service sector. This is not surprising, because in many developing countries, “moving from agriculture and low-end services into apparel jobs is a channel for social upgrading” (Lopez-Acevedo & Robertson, 2012).

Then, what does an hourly wage of $12 mean in a developed country like the United States? Data from the Bureau of Labor Statistics show that, in 2012, average wage level in the U.S. apparel manufacturing sector (NAICS 315) is 26.2% below the average wage level of all sectors. More specifically, the average wage level for the production occupations is 47.3% below the national average level and 53.6% below the national average level for sewing machine operators, the exact type of job that the hourly wage of $12 refers to. 

The point to make here after the comparison is that it is misleading to define “ethical” or comment on “corporate social responsibility” without putting the matter in the context of the stage of development and the nature of the economy.  Wage level is not determined by good will, but by the principle of economics 101.

By Sheng Lu

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TPP updates: Hong Kong and South Korean textile firms increase FDI in Vietnam

The American Chamber of Commerce in Vietnam recently updates the textile & apparel sectoral negotiation under the TPP. At this point, different stake holders in the negotiation still hold divided views on a number of key issues, such as the rules of origin and short supply list. It is not a country line, but a line between different business types. What is also interesting to watch is that textile firms from Hong Kong and South Korea have taken actions to seize the “strategic opportunity” of investing in Vietnam. In the long run, it is not positive news for the U.S. textile mills to see Vietnam become more self-dependent on textile supply. However, few people believe TPP would conclude by the end of this year…

Full text of the article:

In Vietnam in preparation for the Trans-Pacific Partnership duty-free exports of apparel from Vietnam to the USA in accordance with the Textiles and Apparel Chapter rules of origin.

Senator Richard Burr (R-NC) asked USTR Michael Froman at the Jun 6, 2013 Senate Finance Committee hearing on the nomination, ” … a poorly negotiated TPP agreement could result in the loss of hundreds of thousands of U.S. jobs in the textile sector … If confirmed as the U.S. Trade Representative, will you support the yarn-forward rule of origin?”

Ambassador Froman replied, “The short answer is yes. We have made clear that we need clear rules of origin with yarn-forward at the center, we need rules against trans-shipments … the yarn-forward fule is a central part of our approach to textiles.” Click this link to see a C-SPAN video of the Senate Finance Committee hearing (0:27:41).

The “yarn forward” rule of origin means that all products in a garment from the yarn stage forward must be made in one of the countries that is party to the TPP agreement. In simple terms, the “yarn forward” rule means that the benefits of the agreement accrue to producers in TPP member countries rather than producers in non-TPP countries.

Perhaps in response, Mr. Nguyen Vu Tung, Deputy Chief of Mission at Vietnam’s Embassy to the USA in Washington, said at a conference on Jun 19, 2013, that the latest U.S. offer “is really, really difficult for us to accept.” Unless the two sides can reach a breakthrough, “I’m really concerned about the prospect of Vietnam to conclude the successful negotiation of TPP,” he said. According to the report, ”U.S. textile producers sell billions of dollars of yarn and fabric each year to U.S. free trade partners in Latin America, where it is turned into clothing and sent back to the United States. They fear without the yarn forward rule, Vietnam will be able to shut down that trade by importing yarn and fabric from China to make clothing to ship duty-free to the United States.”

Deputy Chief of Mission Nguyen Vu Tung made the comment at a conference organized by the Woodrow Wilson Center in Washington on The Trans-Pacific Partnership: New Rules for a New Era, Jun 19, 2013 (3 hours), with opening remarks by Robert Zoellick, former U.S. Trade Representative, former U.S. Deputy Secretary of State, and former World Bank President. Click the link to see a video of the webinar.

While political leaders and diplomats discuss the Trans-Pacific Partnership rules of origin, Hong Kong, South Korean, and Australian firms are developing and planning major textiles FDI in Vietnam to produce yarn and fabric, the supporting textiles industry for apparel production.

Korea’s Kyungbang inaugurates new $40 million yarn facility in Binh Duong; plan to develop the largest yarn-spinning in Asia. When the plant is extended in its second and third phase (with registered investment of $160 million), it will be the largest mill in Asia.

Hong Kong’s Texhong to invest $300 million, Pacific Textiles $180 million in new textile facilities in Vietnam, in preparation for TPP

Texhong has has already invested $200 million in a plant in Dong Nai Province, and committed in Jul 2012 $300 million to a factory in Quang Ninh, which should be operational in the 2nd half of 2013.

Last year [2012] Texhong said it would invest $300 million to build a new yarn factory in Quang Ninh.. When the second-phase investment is completed next year [2014] its annual capacity will more than double to 110,000 tonnes of yarn.

Australia’s Woolmark® helps develop yarn-forward wool products in Vietnam. Today there are close to 50 companies in Vietnam using Australian wool. “When we started the project, none of the manufacturing partners knew anything about wool, and some of them had never even felt it,” said AWI project manager Jimmy Jackson. Initially we ran training courses to explain wool’s properties, benefits and features for manufacturing and producing garments. The next step was to introduce the manufacturers to suppliers of Australian wool yarns. We also had to explain the Woolmark standards and requirement in terms of both wear and laundering performance. Now that the Vietnamese manufacturers are confident in producing quality wool garments, AWI will introduce them to global retail and brand buyers.