Over the last few years, and certainly throughout this election cycle, much has been made of the burgeoning interest in American manufacturing. The reasons for this interest are myriad: a more informed consumer population concerned about where their products come from, increasing labor costs overseas, increasingly long lead times and quality control issues. Now we can add political risk and uncertainty concerning global trade policy to that list .
Over the next decade the National Association of Manufacturers estimates that 3.5 million manufacturing jobs will be needed and that 2 million of those jobs are likely to go unfilled due to a skills gap. This is especially relevant to the sewing industry. The American garment and textile industry has shed over a million jobs since the mid-1990's. That is a tremendous amount of institutional knowledge to vanish over two decades. Not only does it mean that the workforce of skilled garment workers working in the United States is aging, it also means that the development of modern, lean production systems has stalled in many of the remaining domestic factories.
Barring rapid developments in automation, it is unlikely that large scale manufacturing of commodity apparel will return to the United States in the short term, however the benefits of smaller scale domestic production are many, including:
- Shortening lead times from many months to as short as a few weeks. Having a dedicated production line running at a factory can allow for production to align more closely with consumer demand. A flexible factory applying lean principles can turn around orders extremely quickly and almost certainly with lower MOQs than overseas factories.
- Managing quality is easier. Language barriers and time zone differences are negligible. With the factory a short drive or easy domestic flight away there's no need to rely on an agent or have employees make costly and time consuming travel to an overseas locations to deal with quality issues.
- With a shift in focus to direct to consumer sales, and the margins associated with those sales, the increased labor costs makes US manufacturing significantly more viable. The Bangladesh garment worker's minimum wage of $68 USD a month pays for a few hours of an American worker's time. Obviously FOB price isn't the only factor. The opportunity cost of long product development lead times, long production lead times, tariffs, shipping costs and shipping time all need to be taken into consideration.
- Consumer demand for made in the USA products is undoubtedly increasing. Millennials, and consumers in general, are increasingly concerned about where the goods they purchase come from. Expect that trend to continue, not only from locavore hipster types, but also from those who have seen the negative effects of globalization in their communities.
- Political risk in the form of unpredictable policy making from Washington needs to be taken into consideration. Though unlikely to come to fruition, it would certainly throw a wrench into many operations to wake up one day to a 40% border tax.
Most brands should be interested in at least exploring domestic production opportunities. Those that act quickly and find a quality factory partner will be ahead of the curve. A shortage in qualified labor in most aspects of apparel manufacturing all but guarantees that there won't be capacity to match the increasing demand in years to come.
Bill Amos is the founder of climbing apparel brand NW Alpine, and the founder and President of Kichatna Apparel Manufacturing, an Oregon based contract sewing firm specializing in athletic and outdoor apparel. He can be reached at firstname.lastname@example.org.
CEO at NW Alpine
Thanks a ton for such a great article Bill, looking forward to passing in the trails one day brother!