Month: October 2024

FASH455 Discussion: How likely will US fashion companies increase apparel sourcing from Guatemala in 2025 compared to 2024?

Note: The video was taken during a Guatemala garment factory visit in May 2024. Credit: Sheng Lu

Discussion instructions:

The following two scenarios are generated by ChatGPT using input from FASH455 students’ proposed discussion questions*. Based on what we learned in class and additional information you collected online (not from ChatGPT or any AI tools), please critique the scenarios presented, including the strengths and weaknesses of the argument, any viewpoints you agree or disagree with, and any additional factors that could be considered. In your response, please share the link to any further resources you consulted.

Scenario 1: US apparel import from Guatemala would increase in 2025

In 2025, U.S. apparel imports from Guatemala are projected to experience a significant increase, driven by a confluence of favorable economic conditions, strategic supply chain shifts, and improvements in local manufacturing capabilities. The U.S. economy is expected to grow at a rate of 2.2%, which, coupled with rising consumer confidence, is likely to sustain robust demand for apparel. Guatemala’s geographic proximity to the U.S. presents a logistical advantage, allowing for shorter shipping times and reduced transportation costs compared to Asian suppliers. Moreover, U.S. apparel imports from Guatemala, which have historically averaged around $1.5 billion, could see a notable increase around 2-5%. This increase is further supported by Guatemala’s investments in modernizing its textile industry, including advancements in sustainable practices and technology adoption that align with growing consumer preferences for ethically sourced and environmentally friendly products.

Additionally, the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) has enabled duty-free access for certain apparel products, encouraging more U.S. brands to explore sourcing options in Guatemala. With a utilization rate of around 70% under CAFTA-DR, brands are beginning to leverage the agreement more effectively, which could lead to a higher volume of apparel imports as they seek to optimize their supply chains. In this context, the increasing trend toward sustainable fashion could further elevate Guatemala’s status as a preferred sourcing location, particularly for companies looking to enhance their corporate social responsibility profiles. As a result, the combination of economic growth, logistical advantages, and strategic shifts in sourcing could lead to a substantial increase in U.S. apparel imports from Guatemala in 2025.

Scenario 2: US apparel import from Guatemala would remain stagnant in 2025

U.S. apparel imports from Guatemala are poised to remain stagnant in 2025, continuing a troubling trend that has characterized the market for over a decade. Despite a projected U.S. GDP growth of 2.2%, the apparel market faces significant challenges that hinder any potential growth in trade volume. Historical data illustrates that U.S. imports from Guatemala have stagnated around $1.5 billion, primarily due to intense competition from Asian manufacturers who can offer lower prices and greater production capacity. With the global supply chain still recovering from disruptions and high inflation pressure, U.S. companies may prioritize sourcing from countries that can provide more cost-effective solutions, further sidelining Guatemala.

Moreover, Guatemala’s textile sector grapples with persistent capacity constraints and labor shortages, limiting its ability to scale operations effectively in response to market demands. The country’s utilization of CAFTA-DR benefits remains suboptimal, hovering around 70%, and many brands have yet to fully exploit the agreement to its potential. This underutilization could be a significant barrier to increasing trade volume, as companies may prefer sourcing from countries that can more efficiently navigate trade agreements and provide better pricing structures. Additionally, the growing trend toward fast fashion and quick turnaround times poses a challenge for Guatemalan manufacturers, who may struggle to compete with the rapid production cycles of Asian suppliers. Given these persistent issues, U.S. apparel imports from Guatemala are likely to remain stagnant at approximately $1.5 billion in 2025, as the country continues to face formidable obstacles in enhancing its role in the global apparel supply chain.

*Questions FASH455 students proposed to generate initial information. Read the ChatGPT responses here.

  • Compare the most likely scenario of Trump or Harris becoming the next U.S. president and its impact on US apparel sourcing from Guatemala.
  • Here is the latest US GDP growth and forecast: 2.9% in 2023, 2.8% in 2024 and 2.2% in 2025. Analyze the historical data you have access to and predict US apparel imports from Guatemala in 2025. Ideally, please provide numerical results
  • US apparel imports from Guatemala have stagnated over the past decade. What are the critical reasons for the lack of growth? Will any factors likely change in 2025, or will they remain mostly the same?
  • Does Guatemala have the capacity to handle increased US apparel sourcing demand in 2025 from 2024? Say 5% increase or 10% increase? Please use data to justify your viewpoint.
  • What factors would impact US fashion companies sourcing with Guatemala in the future? Will any factors change in 2025, and why?
  • What is the relationship between CAFTA-DR’s utilization and the value of US apparel imports from Guatemala? Based on historical data, will the utilization rate significantly affect the trade volume?
  • Will offering more flexibility in CAFTA-DR’s apparel rules of origin encourage more apparel imports from Guatemala, and why?
  • Will recycled textiles significantly boost US apparel sourcing in 2025 vs 2024? or instead, this is a niche product and won’t affect the sourcing volume much
  • Is Guatemala a preferred sourcing base among fashion companies for fast fashion items? Can Guantema compete with Asian countries for such orders in 2025?

Costume Buying and Sourcing: FASH455 Exclusive Interview with Kara Hamalainen, Associate Costume Buyer at Disney Live Entertainment

About Kara Hamalainen

My name is Kara Hamalainen, and I am a May 2023 graduate of the University of Delaware. I earned my Bachelor of Science double majoring in Fashion Design and Product Innovation & Fashion Merchandising and Management. While studying at UD, I was very involved with the Impact Dance Company and Synergy Fashion Group. I have a strong passion for the costume industry because I grew up as a dancer, and it is the perfect way to link my two most prominent interests of fashion and the entertainment world together.

After graduating from UD, I was accepted into the Disney Professional Internship program and began my role as a Disney Live Entertainment Costuming Buyer Intern. I had the most incredible experience as a Professional Intern for the Walt Disney Company, and luckily, my time with my dream company did not end after my internship. I was offered a full-time Associate Costume Buyer role, and I get to continue making magic for thousands of people every single day! I currently live in Orlando, Florida and have been in my full-time ACB role for about six months.

Sheng: As a costume buyer for Disney, what are your primary job responsibilities? What does a typical day or week look like for you? Which part of the job do you find most exciting? Were there any aspects of the position that surprised you after you started?

Kara: The primary responsibility of a costume buyer under Disney Live Entertainment is to have the right costumes at the right place, in the right quantity, and at the right time. Buyers are responsible for placing orders for costume pieces, garments, and accessories and ensuring that delivery dates for products ordered are closely monitored. By achieving this, we can create and enrich the experiences of our guests and cast members worldwide. Our work can be seen at the Disney theme parks, resort hotels, cruise ships, and numerous other locations around the globe, which is truly a special and unique opportunity.

I am an Associate Costume Buyer under our Character Programs & Development (CP&D) replenishment team. In this role, I mainly replenish existing products but may assist with new developments as needed. My main responsibility is facilitating the purchase of various hard and soft goods for our character costumes. I assist a few buyers on my team with their orders while managing my own orders and vendor relationships. I also facilitate conversations with domestic vendors across the U.S. to get high-quality products on time and within budget. Additionally, I issue fabric and notions requests from our warehouse to get materials stored in-house and sent to our outside vendors for production.

The most exciting part of my job is witnessing how my work behind the scenes impacts people every single day. Whenever I go to the Walt Disney World theme parks, I watch guests interact with their favorite Disney characters through meet & greets and parades. It is heartwarming to know that I get to contribute to something so special to somebody and allow them to have that memory for the rest of their life.

An aspect of my role that surprised me the most was how complex and detail-oriented every single element of a character’s costume is. It may be as small as an earring or a buckle on a belt, but each costume component is treated equally. Attention to detail is an extremely crucial element to Disney Live Entertainment Costuming to ensure the power of storytelling comes across to all guests.

Sheng: What does the buying and sourcing process look like for costumes? What factors do you typically consider in your buying and sourcing decisions? What are the unique issues or challenges involved in costume buying and sourcing?

Kara: The buying process for character costumes begins with our CP&D inventory planning team, which monitors the inventory of our costumes in terms of sizing, assortment, and quantity. The inventory planning team determines optimal inventory levels and all costume issue locations in the warehouse. They are also the team that will receive specific requests from costuming leaders and sites regarding inventory status and demand for a certain character costume. Once the inventory planning team has decided what character costume piece will need to be ordered and the ideal quantity, they will notify the buyer to place an order.

Once the buyer has been notified of the new purchase request, they will email their vendors to notify them of the new order. It is essential to inform the vendor of the item, quantity, and due date to confirm that the order can fit into their current production schedule. The buyer will also confirm pricing with the vendor. As soon as the vendor confirms that the new order will fit into their production schedule, the buyer writes the official purchase order. For all soft goods, this is the point in time where the buyer will notify our patternmaking team to send the tech pack and samples to the vendor for production. If necessary, the buyer will also ensure that fabric and notions requests are made for the order. Once the buyer takes these steps, the outside vendor will successfully produce the order.

When production is completed, and the order is delivered to our warehouse, a detailed quality check process will be performed. Every item goes through inspection, is counted for quantity accuracy, and is measured to ensure that sizing is to spec based on the tech pack. If there are any discrepancies, there are multiple ways in which the issue can be resolved so the items can ultimately pass the quality inspection. Most importantly, the buyer will be notified and communicate the issue to the vendor so it can be prevented for future orders. If there are no noted issues with the order, then the order will be received in the system and marked for completion.

A challenge frequently arises involves orders with a “hard due date,” meaning the costume piece is needed for a specific project, show, or cruise ship. These hard due date orders do not have flexibility with their due dates as a regular replenishment order would, so it is crucial to make the vendor aware of shifting order priority if necessary. Sometimes, these hard-due-date order requests come in with very little notice, so the buyer will confirm with the vendor that they can turn in the items quickly and successfully meet the due date. If a hard due date order becomes impossible to meet, the buyer will communicate with the inventory planning team, which will work on finding a viable solution.

Sheng: As a costume buyer, how do you collaborate with other departments and teams at Disney, such as designers, product development, and sourcing? How about external stakeholders, such as your vendors?

Kara: For the CP&D Procurement Buying team, one of our main focuses is our communication and relationships with outside vendors. It is extremely vital that we build and maintain strong relationships with our outside vendors so our business can continue to run successfully. The buyers are in constant contact with their assigned vendors, communicating daily via email and phone about both current and new costume orders. It is also important that we get our work onto their production schedule in a timely manner to avoid scheduling conflicts with other customers they may have.

Regarding other teams at Disney, my buying team often collaborates with the project development buying team. This team is responsible for buying and sourcing materials for new character costumes that the designers are currently developing. Once the development process has been completed, we hold transition meetings where the development team goes over everything the replenishment buying team will need to know about the new character costume for future orders. This includes elements such as raw materials, fiber content, vendor information, and price per costume piece.

Sheng: Do you see any innovations changing the future of costume buying or production, particularly due to factors like technology, AI, and sustainability?

Kara: The Walt Disney Company commits to environmental sustainability, implementing several goals to achieve by 2030 related to emissions, water, waste, materials, and sustainable design. Specifically for Disney Live Entertainment Costuming, we focus on sustainable materials, manufacturing, and zero waste management. Fabrics and raw materials will be resourced to contain at least 25% certified sustainable content or lower-impact alternatives. Plastics will also need to contain at least 30% recycled content or a lower-impact alternative material. Manufacturers of raw materials and garments must provide one or more approved sustainable certifications and confirm participation in the Higg Index.

As a buyer, it will be our responsibility to work with our outside vendors and ensure they are closely following our company’s sustainability efforts. As some vendors source their own materials rather than use Disney-supplied materials, they must shift toward using recycled, sustainably sourced, or lower-impact alternative textiles and raw materials. Additionally, any vendors specializing in plastics and other hard goods will have to figure out ways to make their materials more sustainable without affecting the quality of the costume piece. Our current outside vendors must also maintain a sustainable manufacturing certification and provide proof of their sustainability practices. Suppose this is not possible for some of our current vendors. In that case, I imagine we would have to identify new vendors who can maintain production on a sustainable level that is ideal for our business model.

Sheng: What advice would you give to students interested in pursuing a career in costume buying and sourcing? What skill sets are most valued in this role? Are there any specific experiences or opportunities at UD and in the FASH program that you would highly recommend for our students exploring their career paths?

Kara: I would highly recommend taking advantage of internship opportunities during your time at UD. Internships are a great way to gain hands-on experience in the day-to-day responsibilities of a particular role while allowing you to strengthen your understanding of the textile and apparel industry from a real-world perspective. It is also an extremely effective way to network and make valuable connections in the industry. Don’t be afraid to start conversations with your FASH professors about your goals and interests, as they are always willing to help and will likely have strong connections to the industry as well.

Additionally, having an open mind is extremely important going into the industry. Your first job out of college may not be your dream role, but know that you are gaining valuable industry skills that can be applied to a number of different positions. For example, I know that I eventually want to work my way into a more creative and design-driven role. While my current position as a costume buyer may not be focused on design and creativity, the communication and organization skills I am gaining can still translate to various positions in the industry.

Lastly, follow your dreams! It might sound cliché, but you never know what will happen if you put yourself out there and give something a shot. I faced multiple rejections from Disney before getting accepted into the internship program. If I had not decided to persevere and keep trying, I would not be where I am today. I also owe so much of my successes to the UD FASH program, as I am so grateful for the opportunities it provided. Good luck to all of you!

–The End–

Event Recording: Regulating and Reforming De Minimis (October 2024)

The event was hosted by the Washington International Trade Association on October 9, 2024

Panelists

  • Ralph Carter, Staff Vice President, Regulatory Affairs, FedEx
  • Kim Glas, President & CEO, National Council of Textile Organizations; Commissioner, U.S.-China Economic and Security Review Commission
  • Melissa Irmen, Director of Advocacy, NAFTZ-National Association of Foreign-Trade Zones
  • John Pickel, Senior Director, International Supply Chain Policy, National Foreign Trade Council
  • Felicia Pullam, Executive Director, Office of Trade Relations, U.S. Customs and Border Protection
  • Ana Swanson, Trade and International Economics Reporter, The New York Times (Moderator)

Event summary: Competing views about de minims and its reform

Arguments supporting De Minimis: Proponents like Ralph from FedEx argue that de minimis reduces trade friction, drives international supply chain efficiency, and allows U.S. companies to offer competitive pricing through free returns and streamlined customs processes. Meanwhile, they argue that the de minimis supports low-income U.S. consumers and enables small U.S. businesses to remain competitive.

Criticism of De Minimis: Critics, including Kim Glas from the National Council of Textile Organizations (NCTO), argue that it undercuts U.S. manufacturers, especially in industries like textiles, by allowing cheap imports from countries like China, often bypassing tariffs and safety regulations. They also say that de minimis was unfair to U.S. retailers that pay millions of dollars of tariff duties. Additionally, there are significant concerns about the safety risks posed by counterfeit goods and dangerous products (e.g., fentanyl) entering under de minimis exemptions.

Challenges of dealing with de Minimis: Felicia from the U.S. Customs and Border Protection (CBP) emphasizes the strain on the agency’s resources due to the sheer volume of de minimis shipments—it surged from about 2.8 million shipments per day in fiscal year 2023 to close to 4 million shipments per day in fiscal year 2024. She highlighted challenges such as the often unreliable information the de minimis imports submitted and the outdated authorities that hinder CBP’s enforcement.

Equal treatment for U.S. Foreign Trade Zones: U.S. Foreign Trade Zones (FTZs) are designated areas within the United States that are considered outside U.S. customs territory for import duties. They allow businesses to import, store, assemble, manufacture, or process goods with deferred or reduced customs duties, which are only paid when goods leave the FTZ and enter U.S. commerce. Currently, U.S. FTZs do not benefit from the de minimis exemption, meaning goods imported directly into the U.S. from overseas warehouses can qualify for de minimis, but goods entering through U.S. FTZs do not.

Melissa Irmen from NAFTZ-National Association of Foreign-Trade Zones advocates for U.S. foreign trade zones to be given the same de minimis privileges as foreign warehouses, arguing that this would ensure better oversight and security while maintaining trade efficiency. Critics, however, say that expanding de minimis in this way would exacerbate the problem rather than fix it.

Reforming the De minimis: There is a push for comprehensive reform of the De minimis system, with proposals ranging from raising duties on certain products to eliminating the exemption altogether for specific categories of goods (e.g., textiles, products subject to Section 301 tariffs).

Particularly, in a face sheet released in September 2024, the Biden Administration announced it would address “the significant increased abuse of the de minimis exemption, in particular China-founded e-commerce platforms.” The announcement said the Biden Administration would issue a Notice of Proposed Rulemaking that would exclude from the de minimis exemption all shipments containing products covered by tariffs imposed under Sections 201 or 301 of the Trade Act of 1974, or Section 232 of the Trade Expansion Act of 1962. The announcement also called for Congress to pass new legislation to reform the de minimis rule comprehensively. 

Related readings:

Current Event Discussion: How Shipping Containers Control Global Trade

FASH455 Learning activity: After watching the two video above, please explore the following topics with the assistance of ChatGPT or other generative AI tools:

  1. The significance and complexity of container shipping for U.S. fashion brands and retailers
  2. Current issues related to container shipping for U.S. fashion brands and retailers

In your response, please include the following elements:

  • Questions: list at least three questions you asked ChatGPT or other AI tools that helped generate the most information and insights.
  • Summary and reflections: summarize the key points from the answers you received from the AI tool and share your reflections (e.g., were there any surprising insights? the outlook for the issues discussed)
  • Further Reading: Suggest 1-2 additional articles from national or international press that offer deeper insights into the topics. The readings need to be published after 2024. Please share the article link and briefly explain why you recommend them.