EXECUTIVEPAGESnies source from ten or more countries, and a quarter source more from Vietnam than from China. But
China continues in its role as the world’s biggest exporter of textiles and apparel - including fabrics for
garment makers in places like Vietnam and Bangladesh.
Bangladesh, Cambodia, the Philippines, Indonesia, Malaysia, and Pakistan are some of the other Asian
countries high on the list of manufacturers seeking to diversify their supply chains. Workers earn as little
as $63 per month in Bangladesh.
Bangladesh is the number-six sourcing destination for U.S. companies, according to Lu’s study. But
despite price advantages, Bangladesh doesn’t offer the speed to market and production flexibility many
are looking for - and also features heightened compliance risk. The study also indicated waning enthusi-
asm for sourcing from Africa. It’s also worth noting that, as of late March, the Bangladesh government
kept apparel factories open despite the coronavirus fears - and even as it suspended safety inspections.
The coronavirus pandemic underscores the production and logistics risks associated with apparel manu-
facturing, leading to the question of whether new sourcing opportunities in the U.S. are in the cards. In
2019, the U.S. ranked as the number-ten sourcing base for the domestic apparel industry, with 43%
usage, according to Lu.
Made in the USA
Many American consumers favor Made in the USA products and are willing to pay a premium for them,
according to a survey by Consumer Reports, but apparel insiders see high prices, limitations in fabric
options, and a shortage of skilled labor as disadvantages to domestic sourcing. On the other hand, some
industry and technology developments could militate in favor of more on-shore or near-shore sourcing
options. Those include demands for speedy procurements and deliveries, the drive to reduce inventories
by producing smaller batches, and the application of hi-tech solutions to apparel manufacturing.
“Smaller batches lower inventory levels and total cost,” said Harry Moser, president of the Reshoring
Initiative. “Increased flexibility offers mass customization, easier style changes, and speed to market for
faster fashion.”
Buck Mason, a 2013 menswear startup, chose to manufacture shirts and jeans in Los Angeles, complet-
ing their first batch of t-shirts for what it would have cost to travel overseas to research offshore options.
According to Moser, the company “determined that close proximity made production easier to manage.”
New Technologies
The application of advanced technologies such as robotics and 3D printing to apparel manufacturing
could also lead some companies to source more domestically. “Automation reduces labor-intensive tasks,”
noted Moser.
A 2019 McKinsey study concluded that production is more likely to shift to the U.S. as automation
improves, and, according to that survey, the industry believes that is exactly where things are headed.
Over 80% of respondents believed that production of simple garments will be fully automated by 2025,
creating an 80% labor reduction. Seventy percent believed complex garments, such as dresses and
jackets, will be significantly automated, resulting in a 40% labor reduction.
“Within five to 10 years,” the study said, “suppliers with fully automated factories could enable full on-
shoring. More complex silhouettes will be semi-automated within a decade and to such a degree that
companies can scale up new, high-margin business models that include customization.”
In the nearer term, human labor will still be required to sew apparel, but finishing products can be auto-
mated. Under that scenario, raw materials may be cut and sewn in Asia, while the final work could be done
by machines at a fraction of the time and cost in the U.S. or Mexico.
Coronavirus and Apparel Supply Chain
The coronavirus outbreak has been tough on apparel supply chains, given the industry’s heavy reliance
on production in China. But sourcing diversification is about reducing risk, not fleeing a particular location,
whether because of disease or tariffs.
Even before the coronavirus—or the tariffs, for that matter—hit, some experts opined that as much as
25% of Chinese production capacity will shift elsewhere over a period of a few years. On the other hand,
China currently offers a degree of scale and quality that some companies won’t be able to find elsewhere.
While apparel supply chains may be shifting, it’s still safe to say that much of the world’s apparel will still
be sourced from China for years to come. (Courtesy: Peter Buxbaum, American Journal of Transportation)
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