State of the U.S. Textile and Apparel Industry and Companies’ Sourcing Strategy—Discussion Questions from FASH455

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#1 How is international trade associated with the prosperity of the U.S. textile and apparel industry today?

#2 Can trade policy bring textile and apparel manufacturing back to the United States? If so, how?

#3 The Trump Administration has decided to impose additional import tariffs to protect U.S. steel and aluminum production in the name of “national security.” Should U.S. textile mills and apparel manufacturers ask for similar trade protection too? Why or why not?

#4 The U.S. textile industry seems to be doing quite well— since 2009 its total value of output has risen 11%. However, why do you think the apparel factories in Los Angeles are struggling?

#5 Most U.S. apparel companies have already shifted their businesses to non-manufacturing activities such as design, branding, sourcing and retailing. Is it still meaningful to give so much attention to apparel manufacturing in the U.S.?

#6 According to the readings, the increasing minimum wage is a critical factor behind the closure of many garment factories in LA. Does it imply that we have to choose between paying garment workers poorly and keeping the factory open?

#7 Assume you are a sourcing manager for a major US fashion brand, how would you rank the following regarding importance when determining a sourcing destination: Speed to Market, Sourcing Cost, Risk of Compliance?  Why would you rank them as such?

#8 Why do you think U.S. fashion brands and apparel retailers are sticking with sourcing from China, when there are less expensive products in other countries, such as Bangladesh and Vietnam?

#9 According to the study, some apparel retailers source from more than 10 or even 20 different countries or regions. What are the benefits of adopting such a diversified sourcing base? Is it necessary?

(Welcome to our online discussion. Please mention the question # in your reply)

Author: Sheng Lu

Professor @ University of Delaware

31 thoughts on “State of the U.S. Textile and Apparel Industry and Companies’ Sourcing Strategy—Discussion Questions from FASH455”

  1. #1 International trade is fundamental for both. Mills are selling their fabrics to factories abroad and the apparel “industry” is heavily depandant on Imports.
    #2 No, who wants to sew garments for the low wages being paid ? Skills and Know-how has gone – and it will be hard to bring this back.
    #3 Duties for apparel are already very high (up tp about 30% – higher than the “Penalty” duties on steel and alu). Who shall be protected by higher duties ?
    #4 see #2
    #5 No, time for US production is over.
    #6 YES !!!
    #7 You Need to find a Balance between all of them
    #8 Because China is not only (relatively) cheap but also good in quality, liability ….
    #9 Yes, essential for bigger companies. Reasons are different product-specific Know-how, Splitting risk

    1. Thank you so much for the insights and always enjoy reading your comments! I will encourage our students to share their thoughts!

  2. #5) It is very evident that with the increasing minimum wage, increased investment in non-apparel textile product manufacturing, it’s hard to keep U.S. textile and apparel factories afloat. Considering all of this, I believe it is best to remove textile and apparel production factories from the U.S. and start doing something different, instead of trying to save an industry that has been moving outside the U.S. for quite some time now?

    #6) In “Los Angeles Denim factories are struggling to stay alive”, it states that by this coming summer, the minimum wage in CA will rise from $12 an hour to $13.50 an hour, and will even reach as high as $15 an hour by 2021. Is increasing the minimum wage in CA doing more harm than good for the people in the U.S.? Because of these high wages, the LA factories cannot afford to compete with factories outside the U.S. and in turn of closing their doors for good, taking away jobs from many Americans.

  3. #5 I believe the U.S. should focus their attention on textile manufacturing rather than apparel. The U.S. are a large player in the textile industry and export to many countries around the world and can produce at a lower price than even China because of its lower cost of raw materials. The U.S. also has the resources and capital to use new technology and machinery to improve the speed and efficiency of manufacturing textiles.

  4. Q9.
    It is beneficial to large companies to source from multiple countries to pull from those that specialize in the resource. They are also able to spread their risk more evenly. For example, if the US did not produce as much cotton as expected, they would have another country to fill in this depletion of resources. This also benefits the supplying countries because they are growing their economies which benefits the workers and its development as a country.

  5. #7 Assume you are a sourcing manager for a major US fashion brand, how would you rank the following regarding importance when determining a sourcing destination: Speed to Market, Sourcing Cost, Risk of Compliance? Why would you rank them as such? If I were a sourcing manager for a major US fashion brand, I would rank Risk of Compliance first, then Sourcing Cost, then Speed to Market. I would rank them in such an order because Risk of Compliance is the basic establishment of trust between you and the factory. This is fundamental when you are sourcing and must precede both speed and cost. I would rank cost second because this is what will determine our profit per item sold, if we can produce at a lower cost then we can make the apparel cheaper but still earn the same amount. Lastly, while speed to market is important, I think that it is not of the utmost importance as long as it is within a certain window.
    #8 Why do you think U.S. fashion brands and apparel retailers are sticking with sourcing from China, when there are less expensive products in other countries, such as Bangladesh and Vietnam? I think that U.S. fashion brands are sticking to sourcing from China because of the infrastructure and efficiency that already exists there. They have working relationships with the factories and to move them elsewhere would mean severing that relationship and changing the basic process which is a hassle and has extremely high initial costs.

    -Katherine Kornienko

  6. great thoughts! Actually, you can link your answer to the question #7 with #8: Compared with most sourcing base, China enjoys the competitiveness as a relatively balanced supplier in terms of cost, speed to market and compliance. And like we discussed yesterday, China also benefits from having a relatively complete textile and apparel supply chain whereas China’s competitors such as Vietnam and Bangladesh have to import textiles from China.

  7. #8: US fashion brands and apparel retailers have continued to source from China because of their manufacturing capacity and efficiency. As respondents to the survey explained, speed to market and investment in new technology has also kept them competitive. While sourcing from Bangladesh would be less expensive, China is sometimes a more attractive option for manufacturing because companies are cautious about compliance risks when sourcing from Bangladesh. The growth of trade with Vietnam seems to be cautious because of the unknown future of the TPP. US fashion brands will likely continue to source a large amount from China until the future of the trade relationship with Vietnam becomes clearer. China has also remained attractive to brands because of its reliability in terms of quality.

    1. Look forward to hearing your thoughts today in class regarding whether the US should or should not rejoin the TPP. You can also think about how the current patterns of trade and sourcing could be affected, should TPP (including US) is implemented.

  8. #4 The U.S. textile industry seems to be doing quite well— since 2009 its total value of output has risen 11%. However, why do you think the apparel factories in Los Angeles are struggling?

    Apparel factories could be struggling because even though there is a perception that consumers want “made in America”, American consumers don’t really want to pay the price for “made in America”. The US minimum wage is higher than most other countries that are manufacturing and producing apparel. Labor with the additional cost of (hopefully) good quality material and trims would create a higher cost for US brands that have to pay the factory a minimum order. So by the time the “made in the USA” garment gets to the consumer, it’s doubled in price because of all the higher costs associated with it. So if the mass consumer won’t pay, the market demand isn’t there, which leads brands to move their apparel production elsewhere. Small, up and coming brands seem to not have the finances to use factories with minimum orders to be made in America, unless it’s such small brand they use their own equipment and sewers. While well established brands will most likely always choose outsourcing and manufacture overseas to cut costs and make more money.

  9. #8
    I think that retailers are sticking with China for sourcing for a number of different reasons. First, they are highly efficient and have superior technology. Retailers know that they are getting high quality products in a timely manner which is very important to them. Additionally, China has much stricter laws surrounding employees rights and their pay. While some other countries like Bangladesh offer cheaper prices, there are much higher liabilities when it come to employees. For example, the Rana Plaza building collapse was a horrible event that also caused backlash for the retailers that were found to be using that factory. Retailers face backlash from society if it is found that they are sourcing products unethically. For these reasons, I think retailers are sticking with China for sourcing.

  10. #7
    I think it is a balancing act. No one thing; speed to market, sourcing cost, or risk of compliance, is more important than the other. It is vital to acknowledge the significance of each one separately, and then find a balance when determining a sourcing destination. The current trend in the industry is people want things right now, as soon as possible. Speed to market is so important in the current climate, so it would be easy to assume it is the most important consideration. However, costing for the fashion brand is just as significant. It is crucial that both the brand and the customer get the lowest price so that the brand makes a profit and the consumer wants to buy, making sourcing cost just as imperative as speed to market. Risk of compliance is just as important as speed to market and sourcing cost because this is a company that is creating a product for consumers, which also provides jobs for other people. If regulations are not followed it could lead to things like social and environmental issues that turn into legal problems that are not good for the company or the customer.

  11. In response to question 7, I would rank them as Sourcing Cost, Speed to Market and Risk of Compliance because ultimately customers want lower prices the most. Speed to market is important because of how fast trends change and the demands of retailers for new products to keep customers interested. Risk of Compliance came last because while it very important, what I’ve personally seen is that many companies make a mistake (like workers in foreign countries getting hurt) and then getting away with a simple apology. It’s a sad truth but I see it many times in the retail industry.

  12. #9. I think its beneficial to source from multiple countries because it can build strong relationship and ties between multiple countries. I also think it is beneficial in the case of comparative advantage. By trading with multiple countries we have access to a wide variety of products that a countries have a comparative advantage of producing. Finally I think it is beneficial to trade with multiple countries because it can culturally diversify a country. Introducing a country to goods from many different parts of the world can create exposure to different parts of the world. It can somewhat unite countries together.

  13. #8 I believe there a few different reasons U.S. Fashion and Apparel brands are sticking with sourcing from China even though there are cheaper options out there. The first being is that they want to build long-term relationships, I remember learning from a guest speaker discussion that previously companies would always be changing their suppliers but now it is more common to stick to the same one. It makes it easier for the companies to not have to constantly switch, and they can also build trust with them. When sourcing from China although they may be paying more than other countries, they are paying for quality as well as trust. They can trust that the factories there are following ethical guidelines with labor practices, whereas in Bangladesh it may be hard to regulate that.

  14. In reference to question #9, I believe that apparel companies decisions to source from 10-20 countries/regions is both smart and necessary. It is necessary because of the ever-changing nature of trade deals and policy that could at any moment affect a company’s practices and supply chain. By establishing relationships with manufacturers all over the world, companies are able to mitigate their risks of a sudden rise in tariffs or other trade policy issues because if an issue arises in relations between the US and China, for example, a company can quickly shift their production to a factory they work with in Vietnam. Besides the benefit of being able to shift production from one place to another, companies who work with more than one supplier have the benefit of being able to find the most competitive price for a garment without searching for new supplier relationships. I would be interested to see if companies most just diversify their sourcing from different countries in Asia or if they also make sure to have relationships in Europe, Africa, or Central/South America.

  15. #4 The U.S. textile industry seems to be doing quite well— since 2009 its total value of output has risen 11%. However, why do you think the apparel factories in Los Angeles are struggling?

    I think the apparel factories in Los Angeles are struggling because automation and increased technology are taking jobs away from Americans. The total value of output from the U.S. textile industry has risen in the past few years, due to the increased efficiency and output that machines and technology provide. Since technology can produce textile products more efficiently, less workers are needed in the factories. In addition, although the U.S. textile industry is doing well, it is cheaper to produce apparel overseas, so the U.S.-made textiles are shipped to factories in developing countries, where they can be made into apparel for much cheaper labor costs than in U.S. apparel factories. Therefore, the Los Angeles apparel factories are struggling since their business is being outsourced.

  16. #4 I think that Los Angeles factories are struggling because they are being beaten out by overseas cheap labor that causes apparel makers to outsource to foreign competitors, such as China. This obviously leaves Los Angeles in a bad place since they used to do so well in the industry and now are having business taken from them. Prices and wages just aren’t matching up to their competitors and although the US is said to be doing well, producing in other parts of the world is still a cheaper option.

  17. #8

    USA has been known notable to source from china. Growing up, i remember looking at almost all my toys and clothes and seeing “Made in China.” China has been reliable with their manufacturing capabilities, and still relatively cheap for US fashion brands. Quality and liability has been kept through retail brand relationships with them built over years, that sourcing from other cheaper countries could get tricky. Theres always that unknown of how a product may be produced, just to save a few cents. Fast fashion is everything today, and Chinas ability to send products to market quickly with there up to date technology means a lot to retailers. I think it will be interesting to look at sourcing 10 years from now, and see if areas such as Vietnam and Bangladesh play a different role with the USA.

  18. #5 I think that the U.S. should spend less time promoting the apparel manufacturing and put more emphasis on the textile manufacturing in the U.S. The decline of manufacturing of the actual clothing in the U.S. is unlikely to improve. This being said, the U.S. does export a large amount of textile goods to be manufactured into apparel by other countries. As far as non-manufacturing activities, the U.S. can utilize these actions as well as the textile manufacturing to build a strong industry focused on textiles.

  19. #2 No, I do not think that trade policy could ever fully bring back textile and apparel manufacturing to the US. The US simply does not have the cheap labor nor the capacity to manufacture goods at the same pace and level as competitors. We have minimum wages in the US, therefore no one would want to work for low wages.
    #4 Despite the textile industry doing increasingly well in the US, the apparel industry in Los Angeles is most likely struggling because they are forced to make their apparel more expensive due to high labor costs and their inability to produce in mass amounts. Many factories are producing denim, which Mexico can produce using US textiles under NAFTA for much cheaper.

  20. #5 I think it’s important to maintain a balance in manufacturing of apparel between national and international. In the face of expanding globalization of the T&A supply chain, it is not necessary that the US close its doors to imports and fully invest in local manufacturing, but it would be unwise to completely hand off the industry to the next rising economy. There will always be a market for internal sourcing, and there will always be benefit in outsourcing. The T&A industry cannot self sustain in a race to the bottom.

  21. #2 Can trade policy bring textile and apparel manufacturing back to the United States? If so, how?

    I do not think that trade policy will be able to bring back manufacturing back to the United States. I do not think that the only benefit/goal of trade negotiations is to bring manufacturing back to your country. The overall point of negotiations is to gain as much benefit for your country from a particular deal. This benefit could come from many aspects of the deal, direct or indirect. A common misconception is that the United States is not “successful” within the T&A industry because it is not the country that many other choose to source from. However, this is not true. The United States has stayed as one of the top players within the industry due to other advantages that we have. Trade policy alone will not bring back manufacturing because the United States simply does not have the advantage in this sector.

  22. #1: International trade is related to the prosperity of the textile and apparel industry today because most products today are considered “globally made.” Instead of every aspect of a product having the label “Made in China” it is actually a lot more complicated than that. Fibers, fabric and thread can all be sourced from different countries and assembled in different countries as well. Most countries have specialty products or services that they are known for, so companies will optimize their sourcing by purchasing the best services and materials from the vendors and suppliers with the best quality to price ratio. International trade is huge for the global supply chain of the textile and apparel industry and any trade deals, tariffs or quotas implemented by officials can really have an impact on the prosperity of the textile and apparel market worldwide.

  23. #9: I believe that its important to adopt such a diversified sourcing base to gain strong relationships with a variety of countries. Another major factor is the constant battle between changing rises in tariffs, rules and regulations and trade policies that may negatively impact a company that is just sourcing from that specific country. By sourcing from a variety of countries, a company is overall reducing the risk of such changes that could occur. Also, each country provides their own competitive advantages, so with the combination of multiple sourcing relationships, this can enable a company to weigh the pros and cons of which countries are really benefiting them and which are not. I also think that its important to have multiple sourcing relationships because of the flexibility it offers. If consumer needs change a company can simply remove themselves from one supplier and focus more intently on a country that excels in that specific product/fabric/technique etc. These short-term contracts may result in longer lead-times, but suppliers will see these short-term contracts as incentives to lower their prices if they want to stay in business with the company.

  24. #2 – I do believe that the right trade policy can bring textile manufacturing back to the US. Many people automatically assume that the reason why we cannot manufacture in the US is because our wages are too high and drive the final garment cost up too much for brands to stay competitive. I also believed that, but I learned in our class that actually, Europe has higher wages than we do and is still able to manufacture garments and textiles there. So although there is no right or wrong trade policy, I do believe that a “good” trade policy can help both US textile manufacturers and the US apparel industry.

  25. I think US fashion and apparel brands are sticking with sourcing from China mainly because it is reliable while also being relatively cheap. China sourcing has been able to maintain that strong reputation of making quality products for a relatively cheap cost. Is it the cheapest? No, and that is where can compare to countries such as Bangaldesh and Vietnam. Factories in these countries are not as well known for their quality and for their standards of workforce and employee treatment. They’re low costs result in cheap labor, which is a very high risk for fashion and apparel brands to make. Using the Rana Plaza tragedy as just one example- retailers faced a lot of backlash from the unethical sourcing. Paying just a little more, can ultimately save you a lot more, which is why Us brands are sticking with sourcing from China.

  26. #5 It is true that most of the Apparel companies in the United States have shifted more toward functions such as design, branding, sourcing, and retailing. This is due to the fact that the US has shifted to become more capital intensive, rather than labor intensive. Being capital intensive suggests the fact that the US would import most of its apparel, instead of producing it domestically. It is meaningful to give attention to apparel manufacturing in the US only where the United States has the comparative advantage. Additionally, depending on the political decisions made on trade policies, it may be prosperous at times to produce apparel in the US. Otherwise, if another country can produce the apparel in a more efficient way, the US companies should consider outsourcing as a business strategy. It is only important to give attention to apparel manufacturing domestically if there are a large amount of benefits that would result.

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