Production and Export Strategies of U.S. Textile and Apparel Manufacturers

Presenter: Kendall Keough (MS 2020, Fashion and Apparel Studies)

Textiles and apparel “Made in the USA” are gaining growing attention in recent years amid the escalating U.S.-China trade war, the rising cost of imports, and consumers’ increasing demand for “speed to market.” Statistics show that the value of U.S. textile and apparel (T&A) production totaled $US28.1bn in 2018, which was a record high since 2010. Meanwhile, different from the old days, more and more T&A “Made in the USA” are sold overseas today. According to the Office of Textiles and Apparel (OTEXA) under the U.S. Department of Commerce, the value of U.S. T&A exports reached US$22.9bn in 2019, up nearly 20% from ten years ago.

Despite the strong performance in production and export, however, U.S. T&A manufacturers do not seem to be “visible” enough. Given the information gap, we recently analyzed the 122 U.S. T&A manufacturers included in the OTEXA “Made in the USA” database. Information in the database is self-reported by companies and then verified by OTEXA. Our analysis intends to gain more insights into the state of U.S. T&A mills, including their demographics, production and supply chain strategies, as well as their export behaviors.

Key findings:

First, U.S. T&A manufacturers display a relatively high concentration of geographic locations. Notably, as much as 61% of self-reported yarn manufacturers are from North Carolina (NC), followed by South Carolina (SC), which accounts for another 11%. The concentration of yarn manufacturing in the south, in particular, can be attributed to the abundant cotton supply in that region. Meanwhile, California (CA) has one of the most complete T&A supply chains in the country, with the presence of manufacturers across all T&A sub-sectors.

Second, large-size textile mills are gradually emerging in the United States, whereas U.S. apparel manufacturers are predominantly small and medium-sized. U.S. textile mills, in general, have a high concentration of factories with over 100 employees, particularly those engaged in producing yarns (53%), fabrics (37%), and technical textiles (38%). In the past decade, many relatively small-sized U.S. textile mills had merged into larger ones to take advantage of the economies of scale and reduce production cost. In comparison, over half of the apparel mills in the OTEXA database reported having less than 50 employees. Notably, because of the significant disadvantage in labor cost, U.S. apparel mills are not trying to replace imports, but instead focusing on their “niche market.” For example, designer-based micro-factories are popular these days in U.S. fashion centers such as New York City and California. These factories typically provide customized services, ranging from proto-typing to sample production.

Third, “fabric + apparel” and “fabric + technical textiles” are the two most popular types of vertical integration among U.S. T&A mills. A relatively small proportion of T&A mills included in the OTEXA database had adopted the vertical integration business strategy. Notably, fabric mills seem to be most actively engaged in the vertical integration strategy–around one-third of them reported also making apparel, technical textiles, or home textiles. Additionally, 20% of technical textile manufacturers in the OTEXA database have incorporated an apparel component to their product portfolio. This is a significant trend to watch as more and more sportswear brands are developing technology-driven functional apparel. However, we find few U.S. T&A mills have created a vertical integration model that covers three or more different nature of products.

Fourth, U.S. T&A mills have shifted from only making products to also offering various value-added services. Notably, the majority of companies included in the OTEXA “Made in the USA” database reported having the in-house design capability, including apparel mills (86%), fabric mills (80%), yarn manufacturers (61%), home textiles manufacturers (71%) as well as those making technical textiles (91%). U.S. T&A mills also commonly describe themselves as “innovators” and “solutions providers” on their websites to highlight that the nature of their core business is to serve customers’ needs rather than just “making” physical products.

Fifth, exporting has become an important economic activity of U.S. T&A manufacturers today. Notably, of all the 122 U.S. T&A manufacturers in the OTEXA “Made in the USA” database, as many as 70.5% reported engaged in export, a trend which echoes the rising value of U.S. textile and apparel exports in recent years. Regarding the particular export behaviors of U.S. T&A mills, several patterns are interesting to note:

  • U.S. textile mills (76%) are more actively engaged in export than those that make apparel products only (37%).
  • Larger U.S. T&A mills overall had a higher percentage engaged in export than those manufacturers smaller in size.
  • The Western Hemisphere is the dominant export market for U.S. yarn, fabric, and home textile mills, whereas the export markets for U.S. apparel mills and technical textile producers are relatively more diverse.
  • Except for apparel producers, the export diversification strategy is commonly adopted by U.S. T&A mills. As many as 77% of yarn manufacturers included in the OTEXA database reported exporting to three or more different markets in the world. Likewise, around 40% of the fabric, home textiles, and technical textiles mills did the same.
  • Free trade agreements support U.S. T&A exports. A high percentage of U.S. T&A mills that reported exporting to the Western Hemisphere said they took advantage of NAFTA and CAFTA-DR, two primary U.S. free trade agreements with the region. The utilization of NAFTA and CAFTA-DR is particularly high among U.S. yarn producers (83.3%).

Additional reading: Kendall Keough and Sheng Lu. (2020). ‘Made in the USA’ textiles and apparel – Key production and export trends. Just-Style.

Author: Sheng Lu

Professor @ University of Delaware

12 thoughts on “Production and Export Strategies of U.S. Textile and Apparel Manufacturers”

  1. Do you think that due to COVID-19 and/or the increased desire for more sustainable fashion, more designer-based micro factories will begin to emerge? This could also be caused by the decrease of trade with china due to the trade-war. I would be interested in your thoughts.

  2. I find it super interesting that U.S. based T&A manufacturers seem to be doing well, as I had limited previous knowledge on the topic. As it is well known, labor cost in the U.S. is higher than other countries, it seems that each manufacturer thrives when manufacturing within their niche market. I would like to see if there are certain niche markets that do better than others. For example, does proto-typing do better than sample production? Overall I really liked this article as I thought it was a great introduction to the vertical integration within U.S. manufacturing in the T&A sector.

  3. Theres no doubt that “Made in the USA” is going to prosper in years to come. The United States is so advanced in comparison to other countries, that the growth of T&A manufacturers will rise. I wasn’t surprised to hear that the US T&A exports totaled $22.9 billion in 2019 which has risen 20% from 10 years ago. We are always evolving and innovating that the increase in exports seemed expected. It was interesting to read about the vertical integration that the US T&A mills has adopted. I think this article was really interesting to know more about our country’s textile manufacturing.

  4. As the article states, “Made in USA” T&A products are gaining growing attention. The U.S.-China trade war, the rising cost of imports, and consumers’ increasing demand for “speed to market” are to blame. But, it does not mention how COVID-19 is going to effect the U.S. T&A industry (including consumer demand). I think that COVID-19 will provide more benefits to the U.S. T&A industry than it will have consequences. With the already increasing demand for speed to market, COVID-19 is likely going to further this demand. Global trade relies on trust and China broke this trust by lying about the outbreak that originated there. There are more risks when out-sourcing, so more people are going to want products that are either “Made in USA” or made in a neighboring country in NAFTA or CAFTA-DR. With the rising costs of imports, an increase in near-sourcing will decrease the import costs (no tariffs). Lastly, I think that the pandemic will give the U.S. an opportunity to grow the apparel industry— specifically increasing sustainable brands and rethinking manufacturing to make it faster (automation). The U.S. is not labor intensive, but, by changing previously labor intensive jobs to be automated with new technology— the U.S. has a chance to increase exportation of apparel goods.

  5. Based on what we have learned throughout this course regarding the differing natures of the textile and apparel industries, it is easy to see how large scale textile mills are thriving in the U.S., as apparel factories continue to operate at a smaller scale. The United States has an advanced economy that has access to large amounts and capital and technology, which allows the U.S. to efficiently manufacture textiles. On the other hand, the U.S. is too advanced to produce apparel, which is a labor intensive process that can be performed by much less developed nations. Therefore, in order to maximize production and efficiency, the U.S. allocates their scarce resources to purchasing machinery for textile production, and only produces domestic apparel for smaller niche markets.

  6. There has always been a large portion of the American public that prefers to buy products that are made in America and, the lure of profits tied to selling products made in America is becoming very strong with American and foreign companies. From this class it is know that the United States has a lot more resources than other countries and can prosper in having factories produce here. When American companies started to outsource their manufacturing needs to countries such as China and India, the wages in those countries were extremely low. As the American companies apply more money into those growing economies, wages are going up and the increased costs involved with shipping and tariffs are combining to make it much cheaper to make products in the United States. This way of making money could help the United States flourish.

  7. I’m not shocked to learn that over the years, “Made in the USA” items in the T&A industry have become more common and that the US has potential to really become one of the key players in trade for this industry. As we are constantly evolving and growing with the introduction of new ideas and inventions, it makes sense to me that we would have stronger production practices, and therefore a stronger trading practice. I do think it’s interesting to learn about how American made products are now being popularized among other countries, and the driving factors that go along with this growth.

  8. It is not surprising to me to find out that 72% of self-reported yarn manufactures are from the Carolinas because of their access to the abundant supply of cotton, but it does surprise me that California has one of the most complete supply chains in the country. The “Made in the US” does seem particularly hard to comply with because there are such large textile mills but smaller apparel manufactures making it harder to complete large amounts of orders when there are only small apparel manufactures. It is surprising how US textile and apparel mills talk about how they want to serve customers’ needs instead of just making products, leading to them making apparel, fabric, yarn, home textiles, and/or technical textiles. This is helpful, yet it does not seem to have a large impact on the root of the “Made in the US” strategy because these mills aren’t solely focused on making apparel products.

  9. Something that caught my eye would be how the article mentioned that ‘more and more T&A “Made in the USA” are sold overseas today. Trump has been very adamant about wanting retailers to source locally within the U.S. and NAFTA & CAFTA-DR have helped the U.S to be the only supplier for the Western Hemisphere, but how does the idea of having “Made in the USA” sold overseas impact the overall market? Wouldn’t the US T&A mills want to supply to the local industry rather than overseas?

  10. I found it interesting that you mentioned U.S. apparel mills are focusing on finding niche markets to continue to grow instead of attempting to replace imports. However, is focusing on these niche markets a sustainable practice for growth, or could they be considered a “fad” only suitable for short-term growth?

  11. I thought it was very interesting the textile & apparel that is “Made in the USA” is mostly exported with as much as 70.5% engaged in export. I always thought there was a large market for people in the US to want to buy products that are made here, but I did not realize there is a bigger market in other countries. It was also interesting for me to read about how a high percentage of U.S. T&A mill that reported exporting to the Western Hemisphere said they took advantage of NAFTA and CAFTA-DR. After learning how the US benefits from the trade agreements it is nice to learn how other countries are also benefiting.

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