Sourcing decisions made by brands and retailers have considerable influence over global patterns of production, and apparel manufacturing currently occurs in over 150 countries. The FIBER Journal asked two experts to discuss trends in global manufacturing of apparel, along with consideration of labor standards and working conditions, and contemplate whether there is any chance that a notable volume of production will move back to the United States. See what Gregg Nebel and Michael Londrigan conclude.
When considering the apparel manufacturing industry during the last 200 years, there are consistent linkages between garment production, raw material supplies, and the cost of labor. Proximity and availability have driven competitiveness. The historic migration of the garment industry has been driven by the need to move closer to fabric and raw material supplies, illustrated in the best cases by the growth of vertically integrated operations that strategically and commercially ally textile manufacturing and garment cutting, sewing, embellishment, and packaging.
In the heydey of American apparel manufacturing, this meant that cotton from plantations in the southern states was shipped to and processed by textile mills in the southeast and Mid-Atlantic states, and the fabric was cut and sewn by garment factories in states close to the Mason Dixon line. Another competitive advantage in the garment manufacturing industry, labor costs, was maintained by the availability of workers in the less industrialized, more rural states. The relatively low skill sets required in apparel manufacturing, plus the comparatively higher wages than those offered in the agricultural sector, made garment manufacturing jobs desireable and steady. This set of circumstances later drove the migration of U.S. garment production centers from the more industrialized northern states with their more educated and expensive workforces to the southern states.
The migration of apparel manufacturing away from the U.S. started in the 1980s with the implementation of the North American Free Trade Agreement (NAFTA). While the General Agreement on Tariffs and Trade (GATT) established protective trade barriers for garment imports, NAFTA offered an opportunity to satisfy an increasingly price-sensitive consumer demanding high-quality products. With the cost of raw materials strategically competitive by allowing NAFTA-sourced materials to move duty-free between those countries, the obvious opportunity for savings was in the labor component. The workforce in Mexico cost less to employ than their counterparts in U.S. or Canadian factories. But this labor cost advantage was temporary. Globalization offered increased access to offshore markets that had increasingly competitive labor costs and strategic alliances between fabric suppliers and garment producers. Yet another migration of apparel manufacturing was started, moving manufacturing programs to Asian producers in newly emerging economies.
The patterns of migration in the garment manufacturing industry have proven time and again to be transitory, and once they have gone, factories have not returned to countries of “origin.” Examples include the industry’s migration from Europe to the U.S., the U.S. to Asia, and more recently, within Asia. This Asian dissemination has seen garment factories move from Taiwan and Japan to China and Thailand, China to Vietnam and Cambodia, and most recently to Bangladesh and India. The cost component for labor, labor that requires relatively low levels of skill and expertise, has made the garment manufacturing industry a critical driver for emerging economies by fueling new employment opportunities. The available labor pool in most cases is workers transitioning from agricultural and less industrialized work or underemployment.
The garment manufacturing countries left behind have evolved into technical competency centers for the industry, sources for textile manufacturing, design, and development. In some of these countries, the apparel manufacturing industry has survived in small pockets of specialization, sometimes supported by tariffs and trade protections. But the critical mass of the garment manufacturing component has moved on and does not return.
An argument can be made that competitiveness in the U.S. garment manfuacturing industry is these days driven by automation, production efficiencies, and speed to market. U.S.- produced apparel that can be competitive in today’s market is likely to be technical products produced in small volumes at highly automated factories. It is likely to be specialized 'high needle' products that can be run through computerized manufacturing and handling systems. It is products that are produced in factories that are expensive to set up and require major capital investment. In other words, it is not commodity apparel items, it is not labor-intensive apparel items, it is not a notable part of apparel’s global supply and demand. It is not apparel which can be produced in factories that are relatively inexpensive to set up and staffed with inexpensive workforces.
The answer to whether the garment manufacturing industry will return to the U.S. at its previous levels is no, at least not in the foreseable future. Opportunities for producing specialized and niche apparel products exist, but the commodity apparel products that have left U.S. factories for factories in Asia and Africa have an undisputable competitive advantage.
Would production return to the U.S. because U.S. factories treat workers better and pollute the environment less? That would be a broad generalization because, in fact, there are responsible manufacturers in many countries. A critical development of mature economies is the development of a national legal system and the regulatory mechanisms to enforce those laws. The effective regulation of employment, health, safety, and environmental practices has a cost, a cost that is reflected in the price a consumer pays for products. Factories operating in societies where governments regulate and enforce fair, healthy, and safe work conditions have mitigated some of the costs of employment and environmental law compliance with production efficiency initiatives and technology, but it is not enough to offset competitiveness gained through the manipulation of less vigorous governmental regulation. The existence of laws defining wages, working hours, freedom of association, occupational safety, and stewardship of the environment does not guarantee those rights in and of itself; there need to be rules of law monitoring and enforcing the compliance of that society’s commercial actors. The interaction of good corporate citizens, an engaged civil society, credible multinational organizations like the International Labor Organization, and local governmental institutions is indispensible in supporting the rule of law. Multistakeholder initiatives like the Fair Labor Association bring transparency to the programmatic efforts of FLA-participating companies and the systemic noncompliant behaviors those programs are confronting. But it is difficult for such collaborative efforts to keep pace with the growth of globalization, and all too often, the lack of regulatory mechanisms results in unsavory competitive advantages, advantages most often borne by workers and the environment.
As long as this unequal playing field results in a competitive cost advantage, the manufacturing of commodity apparel products will not return to the U.S. or Europe.
About the Author
Gregg Nebel has served as the Adidas Group’s Head of Social and Environmental Affairs — Region Americas since January 1998. He directs regional field operations and compliance activities with the group’s footwear, apparel, and accessories supply chains. He is the Social and Environmental Affairs corporate point person for the Adidas Group’s Americas-based brands (Adidas North America, Reebok International, TaylorMade, Rockport, CCM), subsidiaries, and licensees. His global management responsibilities include strategic planning, monitoring systems development, stakeholder verification processes, and public reporting. He has represented the Adidas Group as a director of the Fair Labor Association Board since 2003.
Nebel has been with Adidas since 1993 and served five years as head of apparel sourcing for Adidas Americas. He has spent 30 years working for fashion and athletic brands and their apparel and footwear supply chains in the Americas, Europe, and Asia. He has a bachelor's degree in political science from Providence College and completed the European Studies Program at the Oest Politik Institute, l’Universite de Fribourg, Switzerland. He speaks French, Spanish, and Portuguese and makes his home in Poulsbo, Washington.