Industry Voice: Keys to a cut-and-sew comeback

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In response to CompanyWeek Publisher Bart Taylor’s Feb. 21 column on reshoring, I think it important to consider a couple of points when thinking about sewing in the USA.

  1. American sewing operations will not look like Chinese shops. The Americans will either sew in smaller teams with more cross training and flexibility, i.e., more of a small batch/workshop mentality. Or they will automate larger commodity based sewing operations. The industry is on the edge of a revolution in automation and the robots will be happy to slug it out with Asian factories 24/7.

  2. For brands that sell direct, American manufacturing is currently more than competitive with street retail pricing. The 50-plus percent margin that street retailers demand doubles the wholesale price to their customers. Without that markup, brands that sell directly to their community have room in their cost of goods for American manufacturing.

  3. American fabric mills are some of the best in the world with the most arcane business practices imaginable. Until the American textile industry figures out their relationship with jobbers and drops their insistence on selling full dye lots, small- and medium-sized sewn goods makers will struggle. In order to prosper, the American sewn goods makers need access to a wide variety of textiles in modern colors.

  4. Apparel pattern-making software and digital cutting has to catch up to the times. I can buy an AutoCAD clone for $99 but it is $10,000 to touch digital pattern-making software, and that is without the hardware and yearly license fee. Open-source software and low-cost digital cutting are critical to all aspects of a healthy sewn goods industry. Factory efficiency, communication, and innovation all depend on us being able to communicate with each other in a 21st century manner.

The sewn goods industry in the United States must be reimagined with these four points in mind. Without a modern production vision, flexible supply chain, and high-tech tools, it will stay much as it is.

Kurt Gray is a consultant in the apparel industry. Contact him at simplygraydesign@gmail.com.

The new American manufacturing policy should be clear: No job left behind

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Any discussion of reshoring manufacturing jobs from China to the U.S. runs headlong into two realities.

First, American OEMs and brands outsource manufacturing for a reason: the combination of skilled labor, infrastructure, and materials in China is often unavailable onshore. As good as it sounds to reshore production — and the benefits of domestic manufacturing are compounding — companies must first ask the question, “Exactly what am I reshoring to?”

An inadequate supply chain in the U.S. provides an easy answer for many companies. Or, as Phunkshun Wear president Jay Badgley told me, “Reshoring was a term I heard frequently when the tariffs were announced, but I haven’t heard any manufacturer use it in months. I don’t know of any apparel brand that’s reshoring.”

Badgley’s outdoor industry apparel brand manufactures in Denver. He’s an outlier in an industry that found qualified, cheap labor in Asia decades ago, and that hasn’t looked back. Today the factories in China — and Vietnam and Bangladesh and other Asian outposts — that make shoes, apparel, accessories, and components used in the assembly of any of a thousand products, are world-class, funded by brands in America and around the world.

This, then, is the other barrier: As much as they’re demonized here, China’s a rational actor — and a manufacturing superpower. Meaning, they won’t give up manufacturing jobs easily. The Chinese have used U.S. investments in people and factories to build a highly advanced manufacturing ecosystem. As Badgley says, “Look at a jacket from The North Face. It’s a thing of beauty. The stitching, the technology, the quality. That coat couldn’t be made here, for a reasonable price.”

China is also incentivized to maintain superpower status by its staggering demographic conundrum. Sarah Rathke, a partner at Squire Patton Boggs and speaker last week at CompanyWeek’s Supply Chain Reality Check webcast, turned me on to James Kynge’s China Shakes The World.

Kynge says this about what he calls China’s “population paradox”: “Even when the economy grows at 9 or 10 percent, it fails by a margin of several million to create the 24 million new jobs required each year. So while China appears to the rest of the world to be enjoying an amazing growth bonanza, the officials working behind the high walls of their leadership compound in Beijing feel trapped in an endless employment crisis.”

Rathke says these are primarily manufacturing jobs, noting, “The 24 million annual figure covers both new entrants into the job market, and a certain amount of transition by rural citizens, each year, to urban manufacturing work.”

Facing the daunting prospect of creating 20+ million jobs every year, it’s a certainty China will redouble efforts to keep every single American brand happy, and every job in China.

What, then, can we do to reshore a mere 5 million manufacturing jobs, a number that according to the Reshoring Initiative‘s Harry Moser, would balance American trade deficit and set the U.S. back on a path to providing companies here more domestic options.

Reduce costs, for one. Moser estimates that through a combination of workforce training, more deliberate management of the value of the dollar, and a cohesive pro-manufacturing industrial policy, the U.S. must lower its across-the-board manufacturing costs by 20 percent to be competitive with China. (Hear Moser outline the numbers in the CompanyWeek webcast.)

Moreover, it’s clear we can’t displace China as the global manufacturing leader. We can’t make everything. China moves millions of citizens into manufacturing work every year. Manufacturing, and manufacturing alone, is the engine that moves millions of Chinese into the middle class.

If we can’t make everything, what should we make?

It’s here that a new U.S. industrial policy must be more nuanced than the current dialogue. We know products and components purchased with federal dollars will be a priority, especially in biotechnology, defense, and other national security-related industries. We know a new generation of consumer-led manufacturing in consumer categories — like food and beverage, as well as transportation — is already powering a U.S. manufacturing comeback.

What then, of other industries manufacturing offshore and dependent today on outsourced labor and infrastructure? The current thinking is that some just aren’t “strategic,” or that barriers are too great to justify investing in more U.S. production.

It’s the wrong approach. Public and private actors should collaborate to find ways to encourage more domestic production in even the toughest industries — like apparel. Moser’s cost formula is a foundation.

And who would argue that the outdoor industry, for example, isn’t a “strategic” economic sector? Very few in America’s West. But if we can’t cut and sew, what should we do here to help companies bring production home, even incrementally? What can be accomplished here, with American assets, ingenuity, and inspiration?

With the idea that no job that can be done here should be left offshore, this is the question that should occupy manufacturing advocates across a dozen industries.

No soldier left behind. Booyah.

Bart Taylor is publisher of CompanyWeek. Email him at btaylor@companyweek.com.

Biden can avoid repeating Trump’s failures on reshoring. Here’s his difficult path

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Reshoring is the topic of the day in manufacturing, and for good reason. Bringing back five million jobs to the U.S. — a goal of President Biden’s — would “balance the U.S. $800 billion/year goods trade deficit,” says Harry Moser, founder of the Reshoring Initiative.

Balancing the trade deficit would be just one benefit of many. We’d have also addressed financial and public-policy challenges that, according to Moser, simply make it too expensive for many companies to manufacture in the U.S. “If their cost is too high versus offshore, they will eventually fail,” he says. “Do all the things we need to do, and the work will come back because it will be profitable to make the product here.”

In a just-published analysis, “Review of Trump’s Results and Critique of Biden’s Reshoring Plans,” Moser expands on his prescription for reshoring success through the lens of policies enacted by President Trump and those proposed by President Biden. His conclusion is sobering: U.S. competitiveness starts by reducing U.S. costs by 20 percent vs. offshore competition; requires a lower U.S. dollar; and needs more students choosing a manufacturing apprenticeship or engineering degree instead of a liberal arts degree. Unless he takes action to achieve these outcomes, Moser believes, “Biden will repeat Trump’s failure.”

Moser’s review of Donald Trump’s reshoring legacy notes his fast start. “The number of reshoring and FDI [foreign direct investment] jobs announced coming to the U.S. surged from 75,000 in 2015 to 115,000 in 2016 and 193,000 in 2017,” driven largely by “reductions in corporate tax rates and regulations, and a generally business-friendly environment.”

But Trump’s confusing tariffs and narrow view of China-U.S. trade slowed progress. “Tariffing steel but not steel products put U.S. manufacturing, other than steel producers, at a competitive disadvantage,” notes Moser. “Tariffing China caused work to shift to other Southeast Asian countries.”

A growing trade deficit — from $679 billion in 2016 to $854 billion in 2019 — was “clearly not a successful result,” adds Moser. Trump’s inattention to the value of the U.S. dollar proved a “strong headwind.” Through 2019, “The Broad Dollar Index averaged 10 percent to 15 percent higher than during the Obama terms,” Moser explains.

His conclusion: “President Trump successfully alerted the nation to the dangers of a huge and growing trade deficit and China’s economic threat, but failed to attack the root cause of the problem — uncompetitive U.S. manufacturing costs — because of an overvalued dollar and inadequate skilled workforce.”

Lost in the racket surrounding President Biden’s first few weeks has been his focus on manufacturing, more perhaps, than any incoming president the past 50 years. As a result, there’s plenty to critique. Moser hones in on workforce training and wellbeing, like strengthening the Affordable Care Act, and targeted tariffs and tax incentives, including a new Made in America tax credit, as positive aspects in Biden’s new plan.

He also doesn’t lose sight of his main thesis — lowering the cost of manufacturing in the U.S. — in criticizing other Biden proposals, like a minimum wage hike, raising the corporate tax rate from 21 to 28 percent, and the push for a strong U.S. dollar, a stated goal of new U.S. Secretary of the Treasury Janet Yellen.

Moser also pushes back on a list of policy proposals that, however well intended, make the task of developing a new 21st century manufacturing workforce that much harder. Lowering the eligibility for Medicare to 60, “will cause more workers to retire early,” he asserts, even as making college free for families with annual incomes under $125,000 “will shift more smart students from skills training and engineering to liberal arts degrees,” undermining U.S. competitiveness.

Moser’s lasting contribution to the reshoring dialogue may well be his sustained focus on total cost of ownership — simply doing the math for individual companies looking to bring work home and U.S. policymakers at large. Lasting momentum requires cost equity at home.

At the same time, it seems unlikely the standalone pieces will come together, as Moser suggests, without a true national industrial policy guiding their implementation. President Biden is adding pieces to a plan that his predecessor began. Biden’s manufacturing legacy may pivot on his ability to elevate reshoring and U.S. manufacturing into a moonshot-like strategy — a national imperative.

The ROI to America’s lasting economic health would be worth the effort.

Bart Taylor is publisher of CompanyWeek. Email him at btaylor@companyweek.com.

Watch Harry Moser, with Bart Taylor, explore total cost of ownership trends and other supply chain and reshoring issues Thursday, February 18, 10 a.m. – 11 a.m. MST, at CompanyWeek’s Need to Know: Supply Chain Reality Check webinar. With supply-chain experts Sarah Rathke and John Boner.

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