Executive Briefings

Recession and Rising Transportation, Labor Costs in Asia Benefit Small Apparel Makers in U.S.

A number of small U.S. clothing manufacturers that bucked the offshoring trend are catching a tailwind as rising costs for labor and transportation make Asia more expensive. In the U.S. apparel market, domestic production fell from 41 percent in the late 1990s to just 3 percent in 2008, according to the most recent government data. Still, hundreds of small companies, most with just a few dozen employees, manufacture in the U.S. Many are benefiting from their decision to keep production stateside, says Nate Herman, vice president for international trade at the American Apparel & Footwear Assn. "There haven't been any new manufacturers popping up, but the ones that are around are pretty much at maximum production," Herman says.

The recession winnowed out many factories in Asia, so those that survived-primarily large operations-have started turning down or postponing smaller jobs, says Jeremy Lott, a vice president at SanMar in Preston, Wash., one of the biggest wholesale apparel suppliers in the U.S. Overseas factories "can really pick and choose the orders they want to take and what they're producing because there's a shortage," Lott says. "If you don't have the buying clout at the factory level, your orders are taking significantly longer than they used to."

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A number of small U.S. clothing manufacturers that bucked the offshoring trend are catching a tailwind as rising costs for labor and transportation make Asia more expensive. In the U.S. apparel market, domestic production fell from 41 percent in the late 1990s to just 3 percent in 2008, according to the most recent government data. Still, hundreds of small companies, most with just a few dozen employees, manufacture in the U.S. Many are benefiting from their decision to keep production stateside, says Nate Herman, vice president for international trade at the American Apparel & Footwear Assn. "There haven't been any new manufacturers popping up, but the ones that are around are pretty much at maximum production," Herman says.

The recession winnowed out many factories in Asia, so those that survived-primarily large operations-have started turning down or postponing smaller jobs, says Jeremy Lott, a vice president at SanMar in Preston, Wash., one of the biggest wholesale apparel suppliers in the U.S. Overseas factories "can really pick and choose the orders they want to take and what they're producing because there's a shortage," Lott says. "If you don't have the buying clout at the factory level, your orders are taking significantly longer than they used to."

Read Full Article