Is manufacturing moving closer to home?
There has been a lot of talk this year by apparel retailers, brands and importers on both sides of the Atlantic about increasing the amount of product they source closer to home. But is such a move realistic and is it likely to prove more than a passing trend?
A new report published by just-style asks 'Is there a future for garment near-shoring?' - and looks at the key drivers, benefits and challenges of moving apparel manufacturing closer to markets in the US and western Europe.
The research says suggestions of a revival in the apparel industries in developed countries are "exaggerated." Employment is less than half what it was in 2005, and most rich-countries' domestic garment manufacture is around a third of its 2005 level.
Data shows that domestic apparel production in the US accounts for just 0.9% of the number of garments bought by consumers, and 3% of the value. Domestic production anywhere in the EU-15 member states accounts for around 21% of all garments bought, and is falling.
Likewise, the number of US workers in apparel manufacturing fell 3.1% in 2011 compared to 2010, and 24.3% compared to 2005. In Europe, worker numbers in 2011 fell 3.6% on 2010.
The business lost by domestic producers has not all gone to China. The US and EU, the two largest garment markets in the world, sourced from a wide range of countries last year. Indeed, over 50 countries exported apparel worth US$1m or more by value to the US and EU. That said, there are also national manufacturing differences between EU countries.
The share of imports held by garments made in neighbouring countries also differs between the EU and US. The report outlines the percentage, by category, of all imports that are on-shored and near-shored.
It also suggests different groups of stakeholders have completely different demands from the supply chain. Retailers and brands, for example, want cost-effective availability of their designs - which may be best provided by garment factories within a few days' travel of the main market. But politicians, administrators in the EU, and trade unions often have other agendas.
The report describes the broad sourcing options in terms of where garments are assembled - and explains why that does not necessarily mean the same thing as where the raw materials are spun, woven or knitted. It also looks at how and why sourcing strategies have become internationalised.
Close-shoring has become an issue because of high unemployment in Western economies and rising costs in developing countries. Whether or not the developing world will continue to offer ever-cheaper prices than the West is examined, as is the likelihood of new trade protection.
A crucial question asked by the 'Is there a future for garment near-shoring?' report is whether buyer philosophies will change?
Many buyers would prefer to manufacture at home, or nearby, if they possibly could, for reasons that include net cost, potentially higher profit, potentially higher sales and lower retail costs, potentially happier customers, and corporate goodwill.
But, faced with soft garment sales, re-sourcing is a low priority for all buyers. Instead, the priority for management and retailers and brands remains improving profit through faster turnaround, lower markdown and lower operating costs.
Click here for more details on the report: 'Is there a future for garment near-shoring?'
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