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Does Reshoring Fashion Manufacturing Make Sense?

Reshoring — bringing manufacturing back to Europe and the US — can help fashion businesses build their brands and improve agility. But is it worth it?
A craftsman cuts signature Burberry check fabric for a trench coat | Source: Courtesy
  • Kate Abnett

LONDON, United Kingdom — In the US and UK, fashion manufacturing is no longer the industry it once was. In 1990, the US apparel sector employed 939,000 people. In the UK in the 1970s and 1980s, whole towns in Lancashire and Yorkshire were fuelled by textile mills, providing up to 10,000 jobs per factory, and the industry employed between 750,000 and one million people in manufacturing.

The last three decades have brought these industries to their knees. Jobs flew overseas and factories closed, while clothing labels began to read “Made in China” and, later, “Bangladesh” or “Vietnam.” Today, over 90 percent of US apparel is imported and US apparel manufacturing employs about 135,000 people, according to the Alliance for American Manufacturing. In the UK, the Fashion & Textiles Association (UKFT) puts the figure at about 100,000 people.

However, some brands are bucking this trend. Last month, Burberry announced plans to invest over £50 million to expand its production in the North of England. Last year, Nike promised to create up to 10,000 new jobs in manufacturing and engineering in the US if the Trans-Pacific Partnership, a trade agreement, is enacted. And new apparel labels like Zady, Reformation and Nasty Gal are making some — or all — of their products in the US.

But is reshoring — when jobs that were offshored, or sourced from overseas, are brought back to the US and UK — a reality, or a PR stunt? The available data paints a complicated picture.

According to consulting firm A.T. Kearney’s Reshoring Index, apparel was the third-highest industry for reshoring in the US in 2014, accounting for 12 percent of cases of reshoring. According to the US Bureau of Economic Analysis, from 2013 to 2014 (the latest year for which data is available), the US apparel industry’s output went up by 4 percent, making it the country’s second-fastest growing manufacturing sector. “That’s really the first time we’ve seen in an increase in apparel for at least a decade,” says Dr Robert D. Atkinson, president of the Information Technology and Innovation Foundation, a US think tank, and co-author of its 2015 report, ‘The Myth of America’s Manufacturing Renaissance.’

But it’s not as rosy as it sounds. In 2014, there were only about 300 reshoring cases in the whole of the US manufacturing industry, from cars to telephone cables, according to A.T. Kearney. In 2015, that plummeted to fewer than 60. What’s more, the Index also shows that every year from 2011 to 2015, reshoring of US manufacturing failed to keep up with offshoring. (The Reshoring Initiative, an industry-led organisation that works to bring manufacturing jobs back to the US, takes a more optimistic view, reporting that in 2014, the US gained more manufacturing jobs through reshoring and foreign direct investment than it lost to offshoring.)

Offshoring vs Reshoring

“US executives drank the Kool Aid and were overzealous in their offshoring,” says Dr Atkinson. “There was a herd mentality in the US — if you were the last person to get to China you were going to get fired.”

Today, proponents of reshoring argue companies’ sourcing decisions are more nuanced. They say that factors like rising labour costs in China and fashion companies’ increasing need for speed to market — as well as issues with overseas suppliers like industrial unrest and problems with product quality — are making US and UK manufacturing more attractive.

But others argue cost is still king. “The entire industry is asking for cheaper prices. Brands will publicly state that that’s not the case, but, off the record, if you ask any factory it’s biggest issue right now, I don’t care what country they’re in, they’re going to say, ‘Intense pressure from their clients to lower prices,’” says Edward Hertzman, founder of Sourcing Journal Online, a trade publication covering the apparel and textiles supply chain. He points out that countries like Mexico, Haiti or Peru can match US manufacturing on speed to market, for a fraction of the cost.

The consensus seems to be that the US and UK won’t see apparel manufacturing growing to anywhere near the levels they enjoyed three decades ago. “There isn’t the manpower here, and there isn’t the workforce nor the factory capacity to have a large-scale resurgence,” says Hertzman. But while reshoring fashion manufacturing might never be a large-scale reality, there are instances where local manufacturing makes sense.

Added Agility

Keeping manufacturing close to stores also allows a fashion business to to build an agile supply chain. Brooks Brothers, which calls itself America’s “oldest clothing retailer,” has three US factories, which make 45 to 50 percent of the company’s clothing, 10 percent of its shirts, and 100 percent of its ties. (The rest of its products are made in Asia and Europe.)

When apparel manufacturing jobs were flying off-shore in the 1990s, Brooks Brothers, like many brands, divested in its clothing factory, according to John Martynec, senior vice president of manufacturing at the company. However, over the last five years, it expanded its staff based at the US facility it owned, before moving the operation into a larger facility to meet demand.

“We’re starting to feel resonance in producing in the US again,” says Martynec. “The whole idea is quicker turnaround times, smaller volume orders.” Making products in small, frequent batches — Brooks Brothers’ products take five to 14 days to turn around — means the company can respond to what consumers are actually buying, reducing excess inventory. “It’s rapid replenishment,” says Martynec. “In a season, we could in theory make two or three deliveries on a product that we find is selling very well.”

Brand Building

"Brands are only brands because they are names that stand for something," explains Patrick Grant, the designer behind British menswear brand E Tautz. Grant has encountered the problems in UK manufacturing first-hand. Last year, he bought Cookson & Clegg, a factory that supplies his label that was running at a loss, and he is currently Kickstarting a project called Community Clothing, which aims to make affordable menswear using British factories during times of the year when demand is low. "If your brand stands for Britishness, you ought to think very carefully about what that really means. I think you ought to have more of a concern about where your product comes from."

Earlier this month, Burberry waved the Union Jack with an announcement that it would invest over £50 million to develop a new manufacturing and weaving facility in Leeds. The facility will employ over 1,000 people, absorbing the whole staff from its existing two facilities in Yorkshire.

Burberry declined to comment on what percentage of its manufacturing is done in the UK (according to the company’s latest annual report, it has 10,851 staff, meaning the new factory could make up just over 9 percent of its workforce). What is clear is that, for a company whose brand image is so closely tied “Britishness” — from its preference to British brand ambassadors, to its runway shows, which have featured Royal Guard costumes and English performers like Alison Moyet — UK manufacturing plays a part in its brand currency.

For Shinola, an American luxury lifestyle brand founded in 2011, local manufacturing is also key to the brand’s appeal. “It’s a differentiator in the marketplace. We’re participating in a luxury product category and we’re the only one who is actually manufacturing those [products] here in the United States,” says Heath Carr, chief operating officer of Bedrock Brands, the Texas investment group that owns Shinola.

In the case of Shinola, which was founded as a “job creation vehicle,” says Carr, brand story trumped the cost savings of producing abroad. To date, the company employs 231 people in manufacturing in Detriot, where it makes its watches and leather goods. “We knew it would be more [expensive]. But it was about creating meaningful jobs,” says Carr.

Indeed, a 2013 Gallup poll found 45 percent of Americans said they had made a special effort to buy US-made products — though this sentiment does not necessarily extend to all sectors of the market. While high-street brands like Asos source some products in the UK, due to the low efficiency of factories and the small volumes they work with, Patrick Grant says of the current situation in British apparel manufacturing, “It’s not for everyone… We’re talking premium clothes that will always come out at some sort of premium price point.”

Mass Customisation

In the last few years, brands like Nike and Burberry have rolled out ‘mass customisation’ services, which allow customers to participate in the design of their products, which are then built to order in large-scale factories.

Burberry’s monogramming service, where consumers can choose to emblazon their products with initials in a thread colour of their choice, is all manufactured at the brand’s factory in Castleford, England.

“The technology in system and manufacturing is enabling more of what people call mass customisation, smaller production runs, and at a more competitive price,” explains Dr Atkinson, who says that this manufacturing trend is an asset for countries like the US and UK, which struggle to compete on low-cost, large-volume apparel production, but have the resources to invest in manufacturing technologies.

Mass customised manufacturing’s smaller production runs and fast turnaround means that factories close to the brand’s customers can be advantageous. Burberry declined to comment on whether most orders for monogrammed products are made in the UK or overseas.

Product Development

Tanya Menendez is the co-founder and chief marketing officer of Maker’s Row, an online database that context designers and businesses with over 10,000 US fashion and furniture manufacturers. “The main advantages for businesses are the quick turnaround times, the ability to collaborate with their factories, and then also the control,” she says.

Thirty percent of Maker’s Row users are first-time designers; another 40 percent are small businesses — many of whom use local suppliers to develop their first products and gauge consumer feedback on iterations of a product before placing larger orders. Most of the factories on Maker’s Row don’t have a minimum order quantity and can turn around a garment in one or two weeks.

“It’s less risky to be able to test your product here,” says Mendenez. “The thing with overseas is that you don’t know what’s going to happen with your money; it very difficult to pursue legal action, there’s no accountability.”

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