Op-Ed | Made in the USA is More Hype Than Reality

A resurgence of apparel manufacturing in the United States is highly unlikely due to simple economic realities, argues Edward Hertzman.

Inside a sewing factory | Source: Shutterstock

NEW YORK, United States — At every conference or trade show I attend, there is one question that’s always asked: is apparel manufacturing returning to America?

In recent years, there has been a considerable amount of media attention focused on companies said to be “re-shoring” production back to the US. Walmart, the world’s largest retailer (and one known for its vast global sourcing chain), made a major media splash when it pledged to sell more US-made goods in order to boost domestic manufacturers, while Everlane, a small venture-backed e-tailer known for its “radical transparency”, has attracted attention for its practice of highlighting each of its factory partners on its website, many of them based in America.

While I find these examples interesting, a resurgence of manufacturing in America seems highly unlikely. Don’t get me wrong; American apparel manufacturing does exist. In fact, I am wearing an American-made pair of twill pants from Adriano Goldschmied right now. And Adriano Goldschmied is not alone in manufacturing in the US. American Apparel, J Brand, Save Khaki, Karen Kane, New Balance and many others all have domestic supply chains in place. But to assess the real potential of a return to domestic production, we have to be honest about the facts.

In the past two decades, apparel imports to the US have surged 160 percent from $35 billion to $91 billion and now comprise an estimated 95 to 97 percent of all apparel sold at retail. In 2013, apparel imports grew 4 percent, measured by dollar value, over 2012, faster than the overall apparel market. What’s more, companies have been consistently shifting production away from China, where labour costs continue to rise, to even cheaper countries like Vietnam and Bangladesh. In 2013, apparel imports from Vietnam, for example, grew by 14 percent (compared to 2.5 percent for China).

This doesn’t mean niche premium brands cannot create healthy, profitable businesses producing domestically and selling to socially-conscious, patriotic or otherwise discerning consumers. But, realistically, only a small fraction of American consumers are willing to pay premium prices for US-made apparel. The majority of consumers think of fast fashion, discount retailers, dollar stores and coupons when it comes to purchasing clothing. Country of origin is simply not top of mind.

I have been in many meetings at apparel retailers where the topic of discussion has been lowering the cost of their goods. The solution, more often than not, is exploring alternative sourcing from countries in Asia. In the context of cutting cost, no company of any size has ever asked me how to bring production back to the US.

My stance on American apparel manufacturing is very simple: it won’t work at scale because of simple economics. US cut-and-sew wages have increased by more than 13 percent in the past seven years (inflation adjusted) to an average of $14.79 an hour. Let’s assume an average workday is eight hours. That comes to $118.32 per day, a figure that stands in considerable contrast to wage rates in low-cost countries like Bangladesh and Vietnam.

In the past year, Bangladesh’s government has finally agreed upon a new salary structure for its workers, which took effect 1 December 2013, bringing the nation’s new minimum wage to 5,300 taka ($68), a 77 percent increase from the previous minimum wage of 3,000 taka ($39), yet still the lowest worldwide wage rate in the apparel industry. Meanwhile, workers in Vietnam saw a monthly minimum wage increase to between VND 1.9 million and VND 2.7 million ($90 to $128) depending on the region, a raise of 15 to 17 percent over the previous year. In India, depending on the region, monthly wages range from $130 to $150.

This means that, despite the increases, in one day an American worker will earn what a Bangladeshi worker earns in two months, or an Indian worker earns in roughly one month. And while working conditions in low-wage nations have been under scrutiny since the terrible Rana Plaza building collapse in Bangladesh last year — and things are improving — the reality is that no matter how much costs increase to accommodate better working conditions, labour costs in America will always be higher.

Of course, US employers have to follow building codes and pay social security taxes, workers’ compensation, health insurance and overtime. What’s more, underperforming workers often have to be documented by human resources departments and given multiple warnings before they can be replaced. And if a factory in America fails to follow the rules, there are serious legal consequences, not to mention the likelihood of negative national media coverage. By contrast, let’s just say, if a factory in Cambodia needs its workers to push out extra units to make a delivery and save the factory from forking out dollars to send their goods by air, the factory owner won’t need to do much to get these workers to stay and work those extra hours. For apparel companies weighing their sourcing options, all this makes doing business domestically cost prohibitive and complex.

I am certainly not praising the often subpar labour conditions that exist in the Third World, but this is the reality. And if retailers are currently responding to rising costs in China by taking their business to Bangladesh, how is it even conceivable that they will produce in the US?

But let’s put aside wages for the moment. Since its inception, clothing manufacturing has always attracted unskilled workers. From New York’s garment district to Japan, Korea, China, India and, now, Bangladesh, production has always migrated from one low-cost country to the next based who could offer the most competitive price.

Why would America want to “re-shore” an industry that is having a hard time paying its workers $100 a month in the Third World? Should we not be training and developing the future American workforce for higher skilled manufacturing where the better education and training many workers receive in the US could offer us a competitive advantage?

Over the past decade, US textile and apparel employment has plunged by nearly 50 percent to a record low of 363,000 jobs. According to the US Bureau of Labor Statistics, there are only 110,000 cut-and-sew apparel workers in the country, a number that has been consistently declining each month, so apparel factories that have remained here in the US are facing a labour shortage, which is more than a bit ironic as one of the major reasons many give for supporting domestic apparel manufacturing is job creation.

This article may turn heads. I may seem pessimistic or unpatriotic, but I am trying to be honest and realistic about the prospect of bringing apparel manufacturing back to the US. I look at the world not through a domestic lens, but a global one. And if America is indeed to see a surge in domestic apparel manufacturing, it will be because its engineers and scientists develop new machinery and new software that can automate, speed up and lower the costs of production, thereby enabling the country to compete with the likes of low-cost Bangladesh. There is opportunity here. But are we allocating our energies and resources to the right battle?

Edward Hertzman is the founder and publisher of Sourcing Journal, a trade journal covering the apparel and textiles supply chain.

The views expressed in Op-Ed pieces are those of the author and do not necessarily reflect the views of The Business of Fashion.

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17 comments

  1. I agree with Mr. Hertzman, the economicwsimply do not portend a resurgence in American manufacturing–apparel manufacturing and mills was one of few manufacturing industries that did not recover since the Great Recession. However American needs to take a page from the playbook of the Italians and become the foremost place of manufacture for luxury and specialty clothing.

    That said, the future of manufacturing oversees in Asian counties is also unstable and unsustainable economically. As prices continue to rise in China driving brands leap frog to less expensive counties of manufacture, there will come a time when there are no places left to manufacture and consumers are going to have to either 1.) consume less 2.) deal with increasing prices. After the big brands hollow out Vietnam, Bangladesh, Laos, etc. where are they going to go? Africa?

    Moreover, as customization and speed to market increases due to consumer preference and the evolving fast fashion craze, brands requiring 5,000 per SKU minimums in China and Vietnam will decrease making orders of 500 units more desirable and profitable and at such low numbers, doing it closer to home makes more sense.

    The industries long standing model is destructive from a labor, environmental and consumer perspective and is in dire need of systemic change and needs to innovation.

    Automation and technology is one solution as we continue to see new innovations like Nike’s Flyknit and Direct On Loom Pattern (DOLP) develop and some 3D printing emerge, but clothing still requires a tremendous amount of physical labor, an unprecedented amount of virgin natural resources and a globalize value chain. As the systems do change and consumer preferences and behaviors shift, I think American manufacturing (different then it is in today’s) will have a place in future.

    We must all work together to solve this problem. It is not an American problem, it is a global problem. Let’s get to work.

    Crispin Argento from Pasadena, CA, United States
  2. Ed

    Good article. All VERY true, however, niche brands will continue to thrive or perhaps reasonably survive in the USA. To say that the low cost countries are eating our lunch, is true, but you could also say no upscale restaurants should exist because McDonald’s and Burger King are so good at feeding millions of people daily, why would anyone in the food sector TRY and compete. People like quality, people like choice. As long as we can differentiate our brand to the global economy we will continue to produce in the USA.

    Stephen Liquori from Wellesley Hills, MA, United States
  3. Thank you for the bleak recap of the current status of domestic and global manufacturing. No manufacturing will never completely return to the USA however there is a strong movement of small independent designers making and growing there business in the US. There is much more out there than American Apparell. Nothing will ever really change though until the American consumer quits it addiction to cheap disposal clothing. Other countries like France have a fashion and manufacturing industry because they understand and live the concept of buying less and buying better.

    Hilary Arthur from Downingtown, PA, United States
  4. Nicely written article – now let’s get to some ideas on solutions and not call it a day for the US apparel manufacturing market. I’d like to see Mr. Hertzman focus further research into how/what is required to bring back a level of sustainability in the apparel manufacturing market to the US, i.e., at what production points does it make sense to automate, what would be the effectiveness of this in America’s apparel manufacturing market. As others have written, there are designers creating and producing here in the US and having success (my favorite story is Natalie Chanin’s Alabama Chanin label). I and my partner are in the process of creating a label for Made to Measure/Bespoke and limited edition collections. We want to use new technology in the design cycle (including grading, etc.) and the marketing presentation. It would be very interesting and helpful to get some insight into what the “academics” and armchair consultants are thinking or have experienced along those lines.

    Alesia Booth from Roswell, GA, United States
  5. And Gap has just announced they’re taking some of their manufacturing to Myanmar. We need to offer training for sewers. All the fashion design programs have sewing machines that are hardly used because few ‘designers’ ever plan to sew. Why not offer factory sewing training classes on these industrial machines. Of course, you have to find someone who knows industrial sewing techniques to teach. But any program would be better than none – and “workforce” training programs should fill this void.

    marilynn barber from Houston, TX, United States
  6. Mr. Hertzman makes very good points… However (as the owner of an USA sewing factory) I take objection with the assumption that I would want to subject my employees to working with the likes of Walmart or any other company that is in the business of commodities…

    The industry is coming back as SOMETHING COMPLETELY DIFFERENT and this new model requires brands that are capable of retailing themselves online (eliminating wholesale) and factories that can turn orders in 2-4 weeks at 100% AQL
    In 2008 (when I first opened our US branch) 20% of our accounts were online retailers and 80% were wholesale or “brick and mortar” retailers… Today 80% of our accounts are online retailers exclusively while only 20% have a “brick and mortar” store and we are NOT dealing with wholesale accounts at all
    We have just completed our 4th move (due to expansion) and have no shortage of dedicated (skilled) workers because we invest in them, offer a working environment that provides EVERYONE with work life balance (we have ALWAYS operated on a 4 day work week) and this is only possible because I will NEVER put my team in a position where they will have to (unfairly) compete with workers in a developing country
    We can afford to say NO to the likes of Walmart or any other company that expects us to break the law just so that we can meet their price points and they can jump on the “Made in USA” bandwagon (at our expense)

    The employment levels in our sector may be dropping, but we have found that (at least in our case) providing our operators access to technology has increased our productivity exponentially and allowed us to attract more technologically inclined candidates due to our “higher than average” incentives

    Rocio Evenett from Rosemead, CA, United States
  7. A major obstacle to re-shoring apparel manufacture in not just the wage related economics, but also a severe shortfall of skilled worker. As an entrepreneur in the first phase of setting up an apparel manufacturing business, and willing to pay $15 and hour or more for the right experience, I have found it extremely difficult (nearly impossible) to find skilled workers. And where we do find one, more often that not they want us to take the business to them instead of working in our manufacturing facility. Fact is, fabulous ambition though it might be to bring back manufacturing to America, it is not going to happen on a large enough scale, until we can invest in growing our skilled trades and changing the work culture to find people who will not look down upon being a ‘skilled tradesman/woman’

    Ritu Handa Pandulla from United States
  8. Mr. Hertzman states flatly “Country of origin is not top of mind,” and I suspect he hopes it never is. When a customer is faced with choosing a $19 pair of jeans or a $75 pair that is made in America, it seems ridiculous to expect the “country of origin” to make up that much ground. This is what the global fashion industry is banking on. That people will continue to buy cheap clothing because “cheap is better.”

    What Mr. Hertzman does not appear to be calculating is the possibility of a large scale cultural shift when it comes to buying clothes. If I buy a $19 pair of jeans and they fall apart in one year and the $75 jean lasts 4 times as long, the math is pretty simple. But who is keeping track of how long their clothes last? That’s the other side of the coin the global fashion industry is banking on – that consumers continue to be blind to quality. But still, its ridiculous to think that quality alone can make up those kinds of gaps.

    Ms. Arthur pointed out in her comment that French culture includes a certain amount of “buy less, buy better” attitude. Is it possible that Americans have the capacity to adopt a similar cultural attitude?

    Mr. Argento’s point is a great one – that for now, the most practical and realistic path for a resurgence in garment manufacturing here stems from luxury and specialty markets. We have a great deal of experience cutting and sewing for boutique brands and collaborations. That being said, large brands like Calvin Klein and Coach have come through our doors in the last two years. They have not committed to large scale production, but they found our team of master sewers and our location to be huge advantages when developing products.

    There is more than a “hipster revolution” happening in America, where only the most snooty and particular customers pay attention to labels. Just go read the backlash on Carhartt’s or Levi’s Facebook page. As far as we can tell, Charle’s Bergh’s brand strategy to be “sustainable” by asking his customers not to wash their jeans is just one of a multi-pronged approach to stick a finger in the dam of consumer expectations.

    Patriotism is one thing. Quality is another. Access to a brand is yet another. Comprehending the actual economic impact of your American dollar is another. Authentic relationships with brands instead of being branwashed all the time is another. All of this adds up to *potentially* something more than niche, ultra-hipster, ultra-patriotic, consumers spending their money carefully.

    Who knows, maybe there is something happening that’s more than a trend – but Mr. Hertzman and other stakeholders in the globalized fashion world have relied on costs alone for so long, the entire concept of “buying better” is foreign to them. All that matters is profits and production – the values behind the products, the truth about brands, let that go by the wayside. The masses are just too dumb and too easily manipulated to ever change the way clothing is bought.

    They hope.

    LC King from Bristol, TN, United States
  9. So many good comments already, I won’t re-hash what was already elegantly said. I will add this… the reason people in their 20′s and 30′s (the boomer’s kids) connect with made in USA clothing more than their parent’s generation is very simple – the jobs that Mr. Hertzman thinks we should doing instead don’t exist. Higher-end manufacturing – what does that mean? Could you elaborate? “Should we not be training and developing the future American workforce for higher skilled manufacturing where the better education and training many workers receive in the US could offer us a competitive advantage?” What jobs should those be? Could you be more specific? How about making computers, that’s always popular. Designed by Apple of California, made in China. The high-end component of manufacturing is design and engineering, but you still need to make the stuff, and there is place for workers to just “make” instead of design. You also can’t create new technology when you no longer have an industry. We used to make knitting machines because we had a knitting industry. Now we have neither.

    So what kind of manufacturing should we be engaged in? Why not just say instead, “I have no real answer for import/export crisis in America, but my job is heavily invested in current way of doing things, so I would prefer to kick the can down the road.”

    Jacob Hurwitz from Ardmore, PA, United States
  10. I thought we stopped using “Third World” in, like, 2000?

    Nouran Soliman from Richmond Hill, ON, Canada
  11. “Should we not be training and developing the future American workforce for higher skilled manufacturing where the better education and training many workers receive in the US could offer us a competitive advantage” – and f*cking the rest of world and the asian workers and childs that sew our clothes in horrible conditions? That’s so lame, you should have kept it to yourself.

    marina colerato from Brazil
  12. Great op-ed article, Mr. Hertzman!

    Lindsay Mayer from Paris, Île-de-France, France
  13. Not everyone can become an engineer even if research and education efforts provide resources for some people to participate in technical aspects of fashion engineering. I work as a vocational school teacher in Austria, where companies like Wolford and Lenzing not only provide jobs for researchers and engineers, but also help educate young textile technicians who operate machinery. There needs to be opportunities all the way down the production line in order to insure a future for even mechanized textile factories. Well-trained non-scientist technicians can ensure that new production techniques succeed, and they in turn provide a healthy middle class economy.

    Loli Owlkins from Vienna, Bundesland Wien, Austria
  14. The article, in my experience, is on the mark, but missing one big thing: where to find the trainable and interested employees. Ultimately, if we are at all serious about this, we must start with our kids when they are very young, inculcating eye-hand skills AND the value of making “stuff”. Only then can we remotely consider becoming a little more like Italy, where doing such work is actually still honorable. But as a designer, manufacturer and college professor, I don’t see it. Not now, and hardly on the horizon. In order to find skilled sewers (forget about anything else), I must go to the Vietnamese or Cambodian immigrants — but my generation or a bit younger, not their kids, because they don’t want to do this work, either. Others are only used to slamming fabric through a machine, or if they are truly skilled, useful as help with my higher-end niche market. I very rarely run across an American kid who wants to actually learn this stuff, because they don’t have the foundational skills, it’s too demanding and takes too long to really become good. And, there is no “status” in it.

    The simple fact is, if we don’t have people who really know how things are made, they sure as heck can’t “manage” it, let alone invent or devise new things. Believe me, I’ve seen too many highly-trained “designers” whose designs can’t be made, let alone be economical or practical in other ways. And so many patternmaking books are hardly worth the paper they’re printed on, if we’re talking about learning about how to create a really good garment. And software doesn’t do it, either, if the operator isn’t knowledgeable.

    Nonetheless, my kids’ generation are very interested in good quality and a triple bottom line, and despite not having a lot of money are willing to pay for it. They also seriously want to learn, are starting small direct-to-consumer businesses, and are very interested in keeping work here. So maybe there is hope.

    Philip Sawyer from Boston, MA, United States
  15. I’ll be the lone dissenter here and disagree with Mr. Herzman’s assessment.

    First, Mr. Hertzman is making the classic manufacturing mistake of not accounting for all costs. Stating that off shore labor costs are a small fraction of domestic labor costs is a given. But what if you consider ALL the costs that go into managing the long supply chain, including transportation of products, inventory costs, inventory losses, pricing inefficiencies driven by inventory, capital costs related to inventory, and on and on.

    All of these costs are non-value activities that should be completely eliminated from the supply chain. I would hold that, all the inefficiencies and embedded non-value added costs that exist in supply chains today actually exceed the difference between off shore and domestic labor costs.

    What I would agree with is, using traditional production and supply chain methods, it would be impossible to compete with off shore production. But, if you can take an approach to elimination of non-value added activities (read Deming and Taiichi Ohno) then it could be possible to compete with domestic production at most pricing levels.

    The biggest challenge is that most executive level people don’t get it. And when they don’t get it, there is no way to transform a company to make this work. A good example of the real barrier to “re-shoring” can be seen in this story from an episode of NPR’s This American Life.

    http://www.thisamericanlife.org/radio-archives/episode/403/nummi

    Rob Honeycutt from Berkeley, CA, United States
  16. In 2011, along with my business partner, I made the decision to invest in the resources necessary to develop my brand M.Nii 100% in America. And in my opinion, it was the best decision we ever made. This editorial is simply based on economic facts, but as humans we must put equal weight on the environmental and social impact of where we produce. The future of our industry (and planet) is not solely based on margins, but rather, cultural shifts to a new way of thinking. A lower price based on lower wages throughout the chain does not equate to long term value. It equates simply to the BUSINESS of Fashion. And as global citizens we must make it our Business to bring humanity back to the supply chain and invest in sustainable resources for the future of mankind. I would politely ask Mr. Hertzman to put a value on that and punch out his formula to see if we might start discussing a new value proposition based around “True Cost”…

    While M.Nii remains proudly American Made (with all the inherent struggles), I am now globally sourcing a new brand, so I face these economic realities everyday. But I would like to think the billion dollar brands of tomorrow will be built on more than the lowest wages for the hands that manufacture them… regardless if they are in America or Vietnam.

    Juan Mas from Los Angeles, CA, United States
  17. I’ve noticed that many successful new brands who produce in the US are able to do so by relying on direct e-commerce therefore being able to set up costing structures for a competitive retail price that allows for a healthy profit rather than offering goods to third party retailers at wholesale price. Of course, the question of scale is still relevant as running a large scale e-commerce business requires a great deal of infrastructure.

    Moriah Lutz-Tveite from Nashville, TN, United States