Reshoring: US, UK apparel brands rethink strategy
"Apparel was the third-highest industry for reshoring in the US in 2014 says A T Kearney’s Reshoring Index, accounting for 12 per cent of cases of reshoring. According to the US Bureau of Economic Analysis, from 2013 to 2014 (the latest year for which data is available), the US apparel industry’s output went up by 4 per cent, making it the country’s second-fastest growing manufacturing sector."
When apparel manufacturing jobs were flying off-shore in the 1990s, many brands divested in its clothing factory. However, over the last five years many of them expanded their workers at domestic facility they owned, before moving the operation into a larger facility to meet demand. In 1990, the US apparel sector employed 939,000 people. In the UK during 1970s and 1980s, whole towns in Lancashire and Yorkshire were fuelled by textile mills, providing up to 10,000 jobs per factory, and the industry employed between 750,000 and one million people in manufacturing.
The last three decades have brought these industries to their knees. Jobs flew overseas and factories closed, while clothing labels began to read ‘Made in China’ and, later, ‘Bangladesh’ or ‘Vietnam.’ Today, over 90 per cent of US apparel is imported and US apparel manufacturing employs about 135,000 people, according to the Alliance for American Manufacturing. In the UK, the Fashion & Textiles Association (UKFT) puts the figure at about 100,000 people.
However, some brands are bucking this trend. Last month, Burberry announced plans to invest over £50 million to expand its production in the North of England. Last year, Nike promised to create up to 10,000 new jobs in manufacturing and engineering in the US if the Trans-Pacific Partnership, a trade agreement, is enacted. And new apparel labels like Zady, Reformation and Nasty Gal are making some - or all - of their products in the US
Is reshoring, that too when jobs that were offshored, or sourced from overseas, are brought back to the US and UK a reality? The data paints a complicated picture.
Apparel was the third-highest industry for reshoring in the US in 2014 says A T Kearney’s Reshoring Index, accounting for 12 per cent of cases of reshoring. According to the US Bureau of Economic Analysis, from 2013 to 2014 (the latest year for which data is available), the US apparel industry’s output went up by 4 per cent, making it the country’s second-fastest growing manufacturing sector.
In 2014, there were only about 300 reshoring cases in US manufacturing industry, says AT Kearney. In 2015, that plummeted to fewer than 60. What’s more, the Index also shows that every year from 2011 to 2015, reshoring of US manufacturing failed to keep up with offshoring.
Sourcing Vs manufacturing
Currently, proponents of reshoring argue companies’ sourcing decisions are more nuanced. They say that factors like rising labour costs in China and fashion companies’ increasing need for speed to market - as well as issues with overseas suppliers like industrial unrest and problems with product quality - are making US and UK manufacturing more attractive.
On the other hand, some argue cost is still king. Countries like Mexico, Haiti or Peru can match US manufacturing on speed to market, for a fraction of the cost. The consensus seems to be that the US and UK won’t see apparel manufacturing growing to anywhere near the levels they enjoyed three decades ago.
Building agile supply chain
Keeping manufacturing close to stores also allows a fashion business to build an agile supply chain. Brooks Brothers, which calls itself America’s ‘oldest clothing retailer,’ has three US factories, which make 45 to 50 per cent of the company’s clothing, 10 per cent of its shirts, and 100 per cent of its ties. When apparel manufacturing jobs were flying offshore in the 1990s, Brooks Brothers, like many brands, divested in its clothing factory. However, over the last five years, it expanded its US staff, before moving the operation into a larger facility to meet demand.
Recently, Burberry waved the Union Jack with an announcement that it would invest over £50 million to develop a new manufacturing and weaving facility in Leeds. The facility will employ over 1,000 people, absorbing the whole staff from its existing two facilities in Yorkshire. However, Burberry declined to comment on what percentage of its manufacturing is done in the UK.
Incidentally, a 2013 Gallup poll found 45 per cent of Americans said they had made a special effort to buy US-made products - though this sentiment does not necessarily extend to all sectors of the market. While high-street brands like Asos source some products in the UK, due to the low efficiency of factories and the small volumes they work with, the current situation in British apparel manufacturing as it’s not for everyone.
