WASHINGTON — Made in America keeps gaining momentum.
This story first appeared in the June 11, 2014 issue of WWD. Subscribe Today.
In a survey of 29 of the largest American retailers, apparel brands, textile companies and importers and wholesalers, 55 percent of the executives said they plan to increase their production somewhat in the U.S. in the next two years. The companies included fashion brands, department stores and lifestyle brands selling a range of products from apparel to footwear, accessories and home goods.
The new study, prepared by Sheng Lu, assistant professor in the department of Textiles, Fashion Merchandising and Design at the University of Rhode Island, in collaboration with the U.S. Fashion Industry Association, also found that about 77 percent of respondents said they already source products from the U.S.
The decision to source in the U.S. is related to the type of company, according to the study. For example, 82 percent of the company executives who said they plan to increase sourcing in the U.S. were retailers, while 55 percent were importers and wholesalers.
“Secondly, companies with the most diversified global sourcing bases seem more likely to commit to sourcing in the United States,” the study said.
Among those companies planning to increase sourcing in the U.S., 36 percent currently source from more than 20 different countries, while 15 percent source from 11 to 20 countries and 37 percent source from six to 11 countries.
“This suggests that companies sourcing from the United States have a more diversified sourcing base overall than the average level of respondents,” the study said.
But the study also noted that the growth in Made in USA is not contingent upon companies reducing imports, as many of the executives said they plan to increase sourcing from Asia, Central America and the Caribbean Basin in the next two years.
Fifty-four percent of those companies increasing production in the U.S. expect their volume or value in China to remain the same or increase.
China, which maintains a 41.5 percent share of the U.S. apparel import market, will remain the “dominant supplier” over that time period, but 50 percent of retailers and brands surveyed said they plan to decrease their sourcing in China somewhat. Only 19 percent said they will increase production there.
Also of note in the report, respondents said they plan to increase sourcing from several Asian countries, including Vietnam, Myanmar, Pakistan, Bangladesh and Indonesia.
The biggest winner for gaining import market share appears to be Vietnam. Sixty-three percent of respondents said they plan to increase sourcing there somewhat in the next two years, while 25 percent said they will strongly increase their production base there.
Despite two factory tragedies in Bangladesh over the past 19 months that claimed the lives of more than 1,240 workers, companies said they are committed to increasing sourcing in the country, particularly in light of two industry-led initiatives to improve fire and building safety in Bangladesh’s garment industry. Sixty percent of the firms said they plan to slightly increase their sourcing in Bangladesh, while 5 percent said they “strongly” plan to increase sourcing there. Forty-five percent of the respondents said they plan to increase their sourcing in Cambodia, another country hit hard by worker unrest.
But the latest U.S. trade data showed a downturn in imports from those two countries. Apparel imports from Bangladesh to the U.S. in April fell 5.3 percent compared with a year earlier, while apparel imports from Cambodia dropped 7.9 percent, an indication that strife in both countries impacted their imports to the U.S.
The study also found mixed results for the utilization of U.S. free-trade agreements, under which companies that meet the rules of origin can receive duty-free benefits. The North American Free Trade Agreement, the Central American Free Trade Agreement, the African Growth and Opportunity Act and the U.S.-Korea Free Trade Agreement are the top four most-used free-trade deals and preference programs, the report found. Seventy percent of the companies said they use NAFTA, 52 percent said they use CAFTA, 37 percent use AGOA and 30 percent use KORUS. Bilateral free-trade deals, such as one with Australia, Chile and Panama, and the Andean preference program, were not used at all by respondents.
The study also noted that 81 percent of respondents expect the pending Trans-Pacific Partnership agreement between the U.S. and 11 other countries, including Vietnam, to have a somewhat positive or very positive impact on their business, while 50 percent said the Transatlantic Trade and Investment Partnership with the European Union could have a positive impact.
The survey, taken in March and April, was confidential and included USFIA members and nonmembers. About 70 percent of the respondents are fashion retailers, while 67 percent are engaged in the import and wholesale business and 11 percent represent manufacturers and suppliers. About 96 percent of the respondents employ more than 100 employees.