As supply-chain woes continue to reverberate through the global economy, plans for American clothing brands to move production back home seem more attractive than ever. Perhaps, this also means the future clothing industry pattern will be rewritten.
Apparel manufacturing moved outward in the 1990s, with many U.S. brands shifting production lines to China and other Asian countries to benefit from lower labor wages, raw material costs and operating expenses.
Thirty years later, with technological advances in manufacturing, industry shifts spurred by the pandemic, and international environmental and social awareness movements, U.S. apparel brands now need to overhaul and reform their supply chains.
Surprisingly, it is the smaller independent brands that will respond positively to the changing needs of the industry. While U.S. apparel companies of all sizes have benefited from supply-chain innovation and reshoring, smaller independent brands are better suited to move production back to the U.S.
? Inefficient U.S. manufacturing
ThomasNet reported in July 2021 that 24 percent of U.S. manufacturing companies plan to repatriate operations by 2025. But that's optimistic. The brutal truth is that for most manufacturing companies today, the industry as a whole remains too inefficient to roll back production lines quickly.
Logistics disruption is undoubtedly a major threat to the flexibility and speed of supply chains. Thus, by logical extrapolation, bringing garment manufacturing back to the US in the future would minimize supply chain risk. But finished garments cannot be made without raw materials such as fabric, zippers and buttons, which can be obtained more cost-effectively from outside the US.
Higher labor costs and overhead also make it difficult for large U.S. factories to price their goods competitively and maintain profitability.
? Production halts
The outbreak has severely damaged the clothing supply chain, leaving big companies scrambling for solutions. Reliance on overseas production lines, and the real costs, are beginning to surface as factories and textile mills have had to shut down to meet quarantine requirements, transportation disruptions and consumer buying patterns change overnight.
Large companies typically produce millions of products at a time and cannot quickly adjust their production strategies due to long collection and delivery cycles. Conversely, clothing companies in the U.S. that produce smaller volumes are less affected.
Less volume production is a strategy adopted by smaller clothing brands to avoid overstocking and be more flexible. As federal interest rates continue to rise, investing in mass production models will become less attractive for smaller brands trying to compete.
? How to achieve innovation in the moving production line?
When the backmigration sentiment is so strong, practitioners are also well aware that it will not happen without innovation. Despite worries about efficiency, American factories are still better suited to innovative concepts, such as manufacturing to order or limited editions.
At the same time, the digitization of fashion design and 3D design makes product development faster and more efficient. Leading manufacturing technology companies such as Lectra, Shima, Seiki and Twine can now offer viable solutions for automating production to order. This type of innovative production will help small companies grow, maintain profitability and differentiate products while reinventing traditional sales strategies.
Technological innovation in the US apparel industry has created a wave of opportunities for smaller brands to incorporate pre-sale or limited-edition collections into their sales and inventory management strategies, despite the higher cost of producing in small volumes. Many DTC brand sales have to delay the delivery due to the uncertainty of delivery time, so that the brand has more time to establish emotional connection with customers, and gradually began to convey the market value of "slow fashion". After all, the consumers of pre-sale orders themselves do not expect to receive the ordered products overnight. Small brands are also taking the lead in using small American factories to uphold their brand's environmental and social values.
For big clothing brands to prepare for the return of production lines or regain some "control" of the supply chain, they must innovate themselves and rely on US factories to support their transition to the "new modernity". At the same time, having smaller US factories do prototyping, custom planning, limited edition production and upcycling, or turn to digital experiments such as NFT and Web3, will prepare the apparel manufacturing industry for massive reshoring in the future.
In terms of the first step of supply chain transformation, small clothing brands have started to embrace the new adaptive manufacturing model, changing lanes and overtaking the car, while large clothing brands may be unable to turn around, or even slightly lag behind.