In October, Chinese apparel maker Suzhou Tianyuan Garments Co. announced it would invest $20 million in an old, Arkansas metals fabrication plant and convert the facility into a state-of-the-art garments factory. Tianyuan said it would begin to make clothes in the plant in late 2017, marking the first time a Chinese garments manufacturer would be producing its wares in the US.
The announcement was met with great fanfare, especially as Tianyuan, which produces primarily for Adidas, said it would be hiring 400 textile workers. However, don’t expect this to signal an onslaught of foreign producers to American shores.
“Some textile manufacturers have moved back to the US. There’s some resurgence there,” said Vinod Rangarajan, with the fashion and apparel consultancy 703 Advisors. But [labor rates] are still “not that competitive.”
Reshoring, or on-shoring, is a hot button issue these days, with the Trump election and pressure the president-elect has put on individual manufacturers such as Carrier to keep workers in the US.
The textiles and garments industry itself has managed to hold its own and even expand production modestly since the Great Recession. However, the labor force remains a fraction of what it was in years past, a combination of both outsourcing and increased automation. According to the National Council of Textile Organizations, which represents the industry, American-made textile products totaled some $76 billion in 2015, a 14% increase over 2009. Yet, the number of workers last year stood at 390,000. That’s barely half the number of textile workers employed a decade before and just 16% the total textile-related American workforce in 1973.
How much of the recent gains can be attributed to reshoring? The answer: Not much at all.
Consultancy A.T. Kearney investigates the reshoring of manufacturing in general and publishes an annual reshoring index. Its latest study, based on 2015 data, makes two points: The first is that for every one dollar of American manufacturing that left American shores last year, just 12 cents worth of offshore production came back. That’s by far the biggest gap since 2004, the year the consultancy began to tally results.
The second takeaway is that apparel reshoring in particular amounts to just 12% of all published cases of manufacturing-related reshoring over a five-year period. From 2011 to 2015, that equals just 77 cases. To make matters worse, 2015 represented a huge drop in the total number of manufacturing-related on-shoring compared to 2013 and 2014, according to A.T. Kearney.
A private organization called Reshoring Initiative published a different set of figures. It puts the total number of apparel-related reshoring at 102 companies totaling 6,700 jobs during the period 2007 to 2015, although 30 of these cases came in 2015 alone.
Quality control, time and proximity to market are the most obvious reasons for American domestic production. But almost by definition, that lends itself to higher-quality, higher-margin items, which in turn translate into smaller production runs. So, for example, the designer Todd Shelton relocated his production from China to New Jersey, opening a small factory in East Rutherford in 2015. It was a move that garnered extensive publicity. But the company employs just nine individuals and charges at least $200 for pair of jeans and at least $180 for a shirt, not exactly mass market.
Of greater promise is Under Armour, which inaugurated a new Baltimore manufacturing and design facility in June. The sports apparel maker trumpeted the center as state-of-the-art, with 3D printers, full-body scanners and robotics. But while the company promises the facility will help “reinvent” the apparel manufacturing process, no one anticipates Under Armour will move production wholesale to the US.
Two management professors who have studied the issue – Morris Cohen at Wharton and Hau Lee at Stanford – came to this conclusion: Reshoring is not a myth, they said, but it’s not a phenomenon, either.