US, UK brands take to reshoring manufacturing, though not entirely yet

In the past three decades, a substantial portion of fashion apparel for US and UK brands was being manufactured in other countries, like China, Bangladesh and also Vietnam. Most branded clothes would read “Made in China”, “Made in Bangladesh” or even “Made in Vietnam”. According to the Alliance for American Manufacturing, around 90 per cent of its apparel is imported from these countries.

Lately, however, there has been a shift in their strategy. Several of these big brands are now looking to cut down on off-shoring their apparel manufacturing and setting up manufacturing units in their own countries instead.

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In February this year, Burberry announced its decision to expand its production in the north of England. Last year, Nike also made a similar announcement, to create around 10,000 new jobs in manufacturing and engineering in the US, if the Trans-Pacific Partnership (TPP) is enacted. New brands like Zady, Reformation and Nasty Gal are also making some, or all, of their products in America.

Experts believe that US and UK brands’ new strategy to re-shore its manufacturing units is growing steadily.

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According to A T Kearney’s Reshoring Index, apparel was the third-highest industry for reshoring in the US in 2014, accounting for 12 per cent of the reshoring cases. Then, the US Bureau of Economic Analysis also stated in its reports that the US apparel industry’s output went up by 4 per cent, during the period between 2013 and 2014, making it the country’s second-fastest growing manufacturing sector.

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However, there is really no cause for concern for countries like Bangladesh, Vietnam and China, where these clothes are made, in the light of this new trend. The reshoring index during the period from 2011 to 2015 shows that reshoring of US manufacturing failed to keep up with offshoring.

In fact, no matter what social concerns the brands may have, production cost is still predominant in any business strategy.

“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 argued that countries like Mexico, Haiti or Peru can not only match the US manufacturing sector on speed to market, but also offer apparel at only a fraction of the cost.

“There isn’t the manpower here, and there isn’t the workforce nor the factory capacity to have a largescale resurgence,” Hertzman added.