Debate on Sourcing and Manufacturing in the U.S. Apparel Industry–Discussion Questions from FASH455

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(Figure source: USITC 2016 Shifts in US Merchandise Trade)

The value and future of apparel “Made in the USA”

#1 What are the primary obstacles in bringing apparel manufacturing back to the United States? Why or why not the labor cost is a detrimental factor?

#2 Shall policymakers encourage “jobless recovery” in the U.S. apparel manufacturing sector—meaning using more machines to make apparel but with empty factory floors?

#3 If apparel manufacturing generates the lowest added value to the final product, why not just let it go? Isn’t most U.S. apparel brands and retailers which moved production overseas and invested in design, product development, branding and retailing are doing very well financially?

2017 US Fashion Industry Benchmarking Study and Apparel Sourcing

#4 Why do you think respondents say that social compliance and sustainability issues are more important today than five years ago? Is this because of the many issues that have occurred in the recent years? What has changed?

#5 If the majority of respondents answered that they have increased their concerns and decisions on ethical sourcing and sustainability, why are there still manufacturing incidents overseas related to American-based brands?  All the respondents even audit their suppliers.  Should there be a standardized code for the process and requirements for auditors especially with overseas suppliers to ensure the ethical supply chain brands promise?

#6 According to the study some US fashion companies source from places with duty-free programs but don’t claim the benefits. They claim it is because of strict, complicated rules of origin and heavy documentation requirements by NAFTA and CAFTA-DR. How can these rules and regulations be changed? What are the obstacles?

#7 Through this article we understand that larger companies generally have a more diversified sourcing base than smaller companies. How could these extended operations correlate to our previous discussions of supply chain management and how it affects humanistic aspects of production such as workers’ rights and various labor laws?

#8 The benchmarking study finds that hiring plans of businesses within the fashion industry are beginning to shift.  Companies plan to increase their talent to include more diverse educational backgrounds such as engineering and business analytics. What are the implications for conventional fashion educational programs like FASH? How should FASH keep up with the changing nature of the apparel industry and improve the competitiveness and employability of our students?

(Please feel free to join our online discussion. In your comment, please mention the question #.)

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New USCBC Study Suggests Overall Positive Impacts of China on the US economy

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Although the trade relationship with China is often blamed for causing job losses in the United States, a new study prepared for the U.S.-China Business Council (USCBC) by Oxford Economics suggests overall positive impacts of China on the US economy. According to the study:

  • China has grown to become the third-largest destination for American goods and services, only after Mexico and Canada. China purchased $165 billion in goods and services from the United States in 2015, representing 7.3 percent of all US exports and about 1 percent of total US economic output. By 2030, US exports to China are projected to rise to more than $520 billion annually.
  • The US-China trade relationship supports roughly 2.6 million jobs in the United States. Specifically, US exports to China directly and indirectly supported 8 million new jobs in 2015.
  • The reported gross US trade deficit with China is overstated and somehow misleading. As China has become an integral part of the global manufacturing supply chain, much of its exports are comprised of foreign-produced components delivered for final assembly in China. If the value of these imported components is subtracted from China’s exports, the US trade deficit with China is reduced by half, to about 1 percent of GDP—about the same as the US trade deficit with the European Union.
  • Additionally, “Made in China” lowered prices in the United States for consumer goods. As estimated, US consumer prices are 1 percent – 1.5 percent lower because of Chinese imports–trade with China saved each American household up to $850 in 2015. Given the fact that hourly labor costs in the textile industry were $2.65 in China in 2014 compared with $17.71 in the United States, the report argues that replacing Chinese imports of textiles and clothing with US manufactured products would significantly raise US consumer prices.

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In terms of the textile and apparel (T&A) sector, the report suggests that:

  • The rising U.S. import from China mostly represents China’s displacement of imports from other countries and regions: China has been squeezing out traditional apparel manufacturers such as Mexico, Hong Kong, and Taiwan.
  • Meanwhile, textile and apparel manufacturing is one of the very few sectors that observe a paralleled pattern of rising imports from China and declining gross value added in the United States since 2000. In comparison, over the same period other sectors that experienced the most rapid growth in Chinese imports are also the sectors where US businesses have seen the strongest growth.

The report can be downloaded from HERE.

USITC Studies the Impact of Trade on Manufacturing Jobs in the U.S. Textile and Apparel Industry

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employment in the US T&A industry

In its newly released Economic Impact of Trade Agreement Implemented under Trade Authorities Procedures, 2016 Report, the U.S. International Trade Commission (USITC) provides a quantitative assessment on the impact of trade on manufacturing jobs in the U.S. textile and apparel industry. According to the report:

  • Manufacturing jobs in the U.S. textile and apparel industry have been declining steadily over the past two decades. Between 1998 and 2014, employment in the NAICS 313 (textile mills), NAICS314 (textile product mills) and NAICS 315 (apparel manufacturing) sectors on average decreased annually by 7.6 percent, 4.3 percent and 11.2 percent, respectively.
  • Rising import is found NOT a major factor leading to the decline in employment in the U.S. textile industry (NAICS 313)–as estimated, imports only contributed 0.4 percent of the total 7.6 percent annual employment decline in the U.S. textile industry. Instead, more job losses in the sector are found caused by improved productivity as a result of capitalization & automation (around 4.6 percent annually) and the shrinkage of domestic demand for U.S. made textiles (around 3.5 percent annually) between 1998 and 2014.
  • Rising imports is the top factor contributing to job losses in apparel manufacturing (NAICS 315), however. As estimated by USITC, of the total 11.2 percent annual employment decline in apparel manufacturing, almost all of them is affected by imports (10.8 percent). On the other hand, increased domestic demand for apparel (such as from U.S. consumers) is found positively adding manufacturing jobs by 2 percent annually in the United States from 1998 to 2014.
  • To be noted, USITC did not estimate the impact of trade on employment changes in the retail aspect of the industry. According to the U.S. Bureau of Labor Statistics, approximately 80 percent of jobs in the U.S. textile and apparel industry came from retailers in 2015. These retail-related jobs are typically “non-manufacturing” in nature, such as: fashion designers, merchandisers, buyers, sourcing specialists, supply chain management specialists and marketing analysts.

Globalization and Trade: Discussion Questions from FASH455 Students (Spring 2016)

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The following discussion questions are proposed by students enrolled in FASH455 (Global Apparel & Textile Trade and Sourcing) Spring 2016 after learning the unit on textile and apparel as a global sector. Please feel free to leave your comment and engage in our online discussion.

Debate on globalization and trade

1. In the US and France, older people those ages 50 and above, are less enthusiastic about trade in general than younger people, those ages 18 to 29. Older people in the US and France are also more likely than younger people to say trade destroys jobs. Why does age affect how people view trade?

2. In 2002, 78% of Americans viewed foreign trade and business as a positive thing. Since then, it has dropped down to 68% of Americans. What has caused some Americans to view foreign trade and business as a negative thing? What can be done to prove to more Americans that foreign trade and business can actually be beneficial to America?

3. Is it worthwhile for countries to offer benefits or incentives to keep companies from moving factories abroad?

4. It is stated that “we wear more than four million American jobs”. With this being said, it is obvious that due to certain steps in globalization, American jobs are supported. Why do you think that only a little over half (54%) of the public believes that trade creates jobs? What are some reasons for the rest of the public’s opinions about trade not creating jobs?

5. The US and other nations with advanced economies are skeptical of the benefits of trade and foreign investments. Are these countries justified in their reasoning, especially with the knowledge that “imports actually create more value and jobs throughout the supply chain”? What are these justifications?

6. Globalization is a major driving force in an expanding marketplace and there are numerous benefits, such as an increase in resource. Do you think that there are important risks of globalization that some companies are not taking into consideration? Since globalization and outsourcing has such a good effect on the U.S. economy, why does it have such a negative reputation in America?

7. Why is it that so many nations are debating between whether or not trade is good or bad for their country? What are the possible differences between each nation that could develop these opposing positions?

8. How mercantilism is relevant in today’s society? How is it outdated? Is it safe to say that the assumption “exports are good and imports are bad” is wrong in today’s society?

Impact of globalization on the textile and apparel industry

9. Due to the low cost of employment, loosened restraints of employee treatment and ethics, and low prices of factories and goods abroad it has become an attractive way American businesses can grow at a more affordable price. If given the opportunity would you stand by these companies’ actions to seek the cheapest way of production or would you stand on the side of Mr. Miliken, opposed to trade with foreign companies? Explain either side.

10. It is clear that over time, Milliken & Co. has dropped their anti-trade stance and began to warm up to the idea of being global. With society constantly changing, do you think that the future will consist of all textile companies taking a global   stance on the industry? Why or why not?

11. Why is it that our soldiers’ uniforms are made in the U.S., but our Olympic athletes marched into the last summer games in London wearing uniforms containing tags saying “made in China”, does this show a weakness in the U.S?

12. Milliken & Co. has made the statement that “There is a new generation of CEOs… It’s part of their DNA that they operate in an international environment” This makes sense, however I wonder if companies would have gone global if labor costs the same everywhere? Would companies outsource jobs if the labor cost the same in every other country? With limited resources, they would still need to source the materials from other countries, but would they still manufacture them in the states or wherever they sourced them from?

 [Note: for the purpose of convenience, please mention the question # in your reply/comment].

The Future of “Made in China”: Robots are taking over China’s Factory Floors


The video echoes one recent Wall Street Journal article about Levi Strauss using automation technologies to revamp their apparel production in China:

“In an apparel factory in Zhongshan, a gritty city of three million stuffed with industrial parks across the Pearl River from Hong Kong, lasers are replacing dozens of workers who scrub Levi’s blue jeans with sandpaper to give them the worn look that American consumers find stylish. Automated sewing machines have cut the number of seamstresses needed to stitch arc designs into back pockets. Digital printers make intricate patterns on jeans that workers used to do with a mesh screen.”

One important factor that gives a push to adopting robots in China’s factory floor is the end of very cheap labor in China. China’s wage level has been rising in double-digit percentages for the past decades. And as a consequence of its “one-child policy”, by 2050, the working-age population in China could decline by 212 million according to estimation from the United Nations.

But Levi executives say they have largely abandoned a strategy of relocating production to one impoverished country after another, known as “chasing the needle,” in favor of other forms of cost-cutting.” “Labor is getting more expensive and technology is getting cheaper,” says Andrew Lo, chief executive of Crystal Group, one of Levi’s major suppliers in China.

“Levi is adapting its laser technology so it can etch different patterns to make one type of denim look like another, reducing costs by buying less fabric. For a new line of women’s wear, Levi said it needed only 12 fabrics, rather than 18. In the past three years, Levi said, it cut the number of its suppliers by 40% and the number of fabrics by 50%.”

“The changes also give Levi greater flexibility, said Ms. O’Neill, the 44-year-old executive who helps oversee the company’s supply chain. If a pair of jeans using a particular fabric is selling well, she says, Levi can use lasers to produce more of the desired look, and pare back designs that are losers. “The idea is to delay decision-making for as long as possible,” said Ms. O’Neill.”

And this is only the beginning! Some technologists think that inventions such as 3-D printing—essentially printers that replicate solid objects like copiers reproduce printed pages—will have a big impact by 2050. In such a world, printers could spew out clothing, food, electronics and other goods ordered online from a nearly limitless selection, with far fewer workers involved in production.

“In 2050, you could potentially have a 3-D printer at home that could produce all the fabrics you want,” said Roger Lee, the chief executive of Hong Kong’s TAL Group, which makes 1 of every 6 dress shirts sold in the U.S. for brands from Banana Republic to Brooks Brothers. “That would make us obsolete.”

Ironically but not surprisingly, automation also keeps wages down. Levi said it expects China production to rise only “modestly” next year; new orders are up for grabs. Apparel InternationaI’s president, Oscar Gonzalez, says the company now boasts an advantage over China—a large pool of apparel workers who were laid off in past downsizings. Excess labor has helped him keep wage increases to 2% or 3% a year he says. “Every Monday when we recruit,” he adds, “there are long lines of applicants.”

Welcome for any comments and discussion questions.

Employment in the US Textile and Apparel Industry (Update: August 2014)

[Please read the updated version: U.S. Continues to Lose Apparel Manufacturing Jobs in 2016]

Employment in the textile sector has remained stable since 2011. From the end of 2013 to July 2014, employment in textile mills (NAICS 313) even slightly increased 0.1 percent, mostly contributed by fiber & yarn mills (NAICS 3131) and fabric mills (NAICS 3132). The data supports the argument that textile manufacturing is gradually returning back to the United States.

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Employment in the apparel manufacturing sector (NAICS 315) continued to shrink. By July 2014, total employment in apparel manufacturing had declined by 15.6 percent since 2010 and went down 7.3 percent just from the end of 2013 to July 2014. Still it is getting harder and harder for US consumers to find “made in USA” apparel in the retail stores.

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Retailers remains the leading job providers in the U.S. textile and apparel industry. By July 2014, within the total 1.76 million employment in the US textile and apparel industry (NAICS 313, 314, 315 and 448), almost 80 percent came from the retail sector (NAICS 448).

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From 2010 to July 2014, employment in the US manufacturing sector as a whole enjoyed a 5.5 percent growth, much higher than the case in the textile and apparel sectors. This trend reminds us that the principal of “comparative advantage” is still working in the 21st century.

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Last but not least, geographically, manufacturing jobs in the US textile and apparel industry were gradually moving from the North to the South from 2007 to 2011.

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by Sheng Lu