Apparel Supply Chains and Reasons for Reshoring
A big shift is looming, and why it matters for those in the apparel space
Above image courtesy of Unionwear
The effects of COVID-19 and supply chain issues paired with tariffs and the Forced Labor Prevention Act have pushed the topic of reshoring apparel manufacturing to the forefront. Key players in the space share their thoughts on the current happenings, their approaches to reshoring or nearshoring, and why this conversation matters for apparel decorators.
Rethinking Manufacturing
For Kathy Cheng and her family, founders of Redwood Classics Apparel in Ontario, manufacturing apparel in Canada is more than just a strategic business decision, it’s personal.
“We've had a whole new life as a result of the factory and so even when everyone was going offshore — we obviously had opportunities; we had ties — but we chose not to because we believe in giving back into the community in which we live and serve,” Cheng says.
Her parents emigrated from Hong Kong, bringing with them textile milling and manufacturing experience. “They came to Canada for a brand new life,” Cheng notes. “Very, very, humble beginnings.” When the time came for the family business to restructure in 2009, Cheng officially became her father’s business partner. One thing remained: The brand’s focus on quality, speed to market, and the made-in-Canada label.
In Newark, New Jersey, Unionwear makes custom hats and bags for the U.S. military and corporate brands. The company’s founder Mitch Cahn explains that everything from cutting, sewing, and embroidery is done in-house. The company works with 500 different domestic suppliers for materials, but not all its materials are domestic.
“So anything for the military is going to be 100% domestic," he states. "For corporations, it really depends on what they're looking for. There's definitely been a major surge in onshoring, or we call it reshoring. Nearshoring, not so much. There's a lot of talk of nearshoring, but there's not a lot of action in nearshoring.”
Cahn started his business back in 1992 and says history is repeating itself. The North American Free Trade Agreement was set in place, conversations about opening factories in Mexico were happening, “and then two years later, they were all in China, and they kind of bypassed Mexico,” he explains.
Unsure of the disconnect, Cahn wonders why it’s so difficult to set up apparel manufacturing facilities in Mexico or the Caribbean Basin. What he does predict is more companies reshoring or finding alternatives overseas that are less expensive than China.
This is something Lane Seven Apparel has found success in — manufacturing its blanks in Pakistan and holding wholesale stock at its Los Angeles, California facility.
Lane Seven’s Strategic Accounts Executive Milissa Gibson says there are two things happening in the industry right now: “One, you're seeing a diversification in suppliers." She notes that pre-pandemic, businesses could name two or three suppliers in their network for sourcing blanks. When the pandemic hit, businesses were in a panic wondering what they were going to do, forcing them to expand their vendor networks.
The pandemic taught businesses how to pivot. Gibson thinks this trend will continue into 2023 and affect distributors just the same.
"I think as you go into trade shows, looking at 2023, you're going to see a lot of printers and distributors really look at the whole landscape and go, 'Oh I screwed up initially. How do I protect myself ... looking at a recession and diversifying my portfolio of suppliers, my product assortment, everything?'"
She argues that there needs to be a “secure link” in business supply chains. This is where reshoring or nearshoring comes into the equation.
Why Reshoring Matters
Reshoring solves a myriad of problems for the industry, apparel decorators, and distributors. It solves issues with lead times and supply disruptions, mitigates risk, and minimizes harmful environmental and unethical labor practices.
For Redwood Classics, manufacturing apparel in North America allows the company to serve customers better. Cheng explains, “So I don't consider ourselves as a manufacturer, but we are a servitized manufacturer, where there's a lot of consulting done. We're helping clients do product development that they may not necessarily have the skill set or experience for.”
She makes special mention of the company’s expertise and craftsmanship — noting over three decades of North American manufacturing experience.
“Unfortunately our industry has been so driven by price, price, price; it takes extremely courageous business leaders to be willing to have those conversations, to open up the window,” Cheng argues. “I would challenge those that say we need more retail brands in here; no, we need more retail quality.”
For decorators, that equates to how well ink lays down on a T-shirt or sweatshirt, the hand and feel of the garment, how well embroidery runs on it, and the consistency in a bulk order. That reliability makes partnerships easier and elevates a decorator’s craft, according to Cheng.
Gibson says one of the big reasons mills are shifting their manufacturing away from China is sustainability. Cotton sourcing and ethical labor practices matter to end users.
And with that also comes the topic of making meaningful, lasting pieces — fewer textiles in landfills. Talking about sustainability and capturing an experience with branded merchandise, Cheng poses, “Why wouldn't you make it a holistic experience where someone would want to wear this T-shirt for 10 years?”
Lane Seven uses cotton sourced through the Better Cotton Initiative, an organization that drives sustainable cotton farming. Farmers join the organization and have to be transparent about their farming practices and processes. This allows everyone in the chain to trace the cotton back to the field it was grown.
Along with sustainability being at the “forefront of any mill,” Gibson says transparency is a big piece of that puzzle. “I think [end users] are going to want to know all the way down to how things are manufactured and made.” She adds that driving prices down will also be important.
Because of the pandemic, Gibson says we "saw sustainability be a lot less of the focus for the last two and a half years,” but as things begin to level out more, millennials, Gen Z, and Gen Alpha continue to take up more of the buying market and demand environmentally and ethically conscious products.
Whether it's lessening lead times or bolstering people, planet, and profit, the topic of reshoring comes down to one thing: risk management.
Cheng says in developed countries like North America there’s less risk. Granted, it is at a higher price point, but for those buying products domestically, there’s more control. More control in scheduling inventory and lead time and more control in pricing.
With supply chain disruptions still a pain point for many apparel decorators, risk mitigation is huge. For them, that might mean working with a domestic supplier who guarantees product in two weeks rather than months.
However, Cheng doesn’t think everything should be made domestically, but says “there’s a need to level it out a bit, so we can, as an economy, minimize the risk of this type of supply chain disruption because I've never seen supply chain disruption at the level we're facing right now.”
One solution for mitigating risk, according to the experts, is diversification. For many apparel decorators, this was key to success throughout the pandemic, especially now as businesses recover.
With the cost of importing up due to tariffs, freight fees, and inflation, diversification looks more and more appealing. Cahn argues it’s “good for domestic” because the cost difference between import and domestic is currently only $1-$2 . He says it gives companies more reason to consider buying USA-made products. It allows people to support the U.S. economy and allows those that want to be more conscious to consider domestic products.
Above image courtesy of Unionwear
Challenges and the Future
Speed to market is everything, and bringing an apparel manufacturing workforce domestically is important, but sources say the knowledge base and equipment aren’t quite there.
“There’s not a lot of hard skills [in North America],” Cheng expresses. “And often people don't seem to realize textile manufacturing, yes, there's machines, but you still need the individual to guide it, right?”
She equates it to NASCAR drivers and their cars. Simply having a fast car doesn’t guarantee a win. The driver matters. The same is true for apparel manufacturing.
“You can't just throw someone in there,” Cheng explains. “It's not the machines. I got plenty of machines here. I need the people. I need the craft. I need the skilled craftspeople to run the machine. Experience matters.”
Cahn agrees the infrastructure in North America isn’t quite up to par. “There’s not a machinery industry that’s domestic,” he says. “There’s not a lot of places that are inventorying raw materials, so when we want materials to be domestic, we have to buy and commit to large quantities of them or wait a long time.”
In cases where a customer wants an odd color, Unionwear might have to go with an imported fabric because of the lack of availability domestically.
Although the end cost is not that different from importing, Cahn says buyers don’t know that. “A lot of buyers on the retail side, they're really trained to look at unit costs,” he explains. “They're not trained to look at audit costs, travel costs, insurance costs, tariffs, freight, all that other stuff.”
Most people get surprised, he says, after seeing the costs associated with importing, dividing it by the number of units, and then comparing it to domestically made goods. “It’s really not that far off,” Cahn adds.
Cheng stresses the importance of acknowledging the makers behind the textile and apparel manufacturing industry. Quality garments made in North America come at a price, and that price helps pay living wages to makers.
“You know, we respect our craft, we respect what we make, and we respect what we do here, and our operational cost is extremely different,” Cheng says, adding that a big challenge is “competing cents to a dollar.”
So how does the industry make moves when price has been No. 1?
“I think overall there's an overarching desire for it,” Cheng notes, but people have to be willing to “invest in quality and doing the right thing.” She emphasizes that apparel decorators have to be willing to have these conversations with their customers, and in the case of the distributor, ask the end user and putting the options in front of the buyer.
She suggests a good/better/best approach, showcasing various products. Quality, reliability, and speed to market should be top priorities, and then price can enter the conversation.
It comes down to asking, “Hey, have you thought of this?” says Cheng.
Gibson says Lane Seven is having more free-flowing conversations with customers about their needs and expectations and just overall more transparency. She argues that although there will still be holes and outages in the supply chains, there’s hope that by mid-2023, pre-pandemic stock levels will return.
While all signs point to reshoring, if there is a lot of competition in the manufacturing space, Cahn says there’s a possibility that prices will be driven down and “distributors and decorators will start to feel pinched again and feel like they need to save that extra dollar or two” and make a shift back to import goods.
On the flip side, he says younger generations have the desire to do better — for the environment, labor justice, trade justice, and “all sorts of things that you get with the made-in-USA label that you don't get with really any other label where the vast majority of goods are made in Asia.”
Shorter lead time, smaller carbon footprint, and ethical manufacturing practices are all part of the reshoring conversation and holding stock domestically (United States, Canada, Mexico, and Central America).
Experts agree reshoring is a great way to differentiate themselves and with people concerned about supply chain disruptions, apparel decorators need to bolster relationships with suppliers to manage business going forward.