Distance is no longer desirable for fashion brands seeking stability or a fresh start – and that’s why private label manufacturer Arzee International is shoring up and keeping business coastal.
Arzee International is a premium full package manufacturer based in Los Angeles, that works with a wide variety of clients ranging from emerging designers to national brands. Arzee’s services include development, raw materials sourcing, sampling, and bulk production, through its manufacturing facilities that interestingly – and advantageously – recently expanded to Mexico.
The firm’s expansion to Mexico was wholly strategic, and the proof is in the numbers: For the first six months of 2019, the U.S. and Mexico exchanged $309 billion worth of goods, representative of 15 percent of all U.S. trade, according to a report by Tempest Capital. And Mexico boasts an 80 percent reduction in shipping time to the U.S. compared with China, as Mexico City can ship to New York in a mere three days, while shipping from Hong Kong to the same destination can take up to 40 days.
All this and a 75 percent reduction in shipping costs to the U.S. – specifically when compared to China – creates a recipe for reinvigorated international trade.
But the noted shift to Mexico is not all that recent and perhaps only partly related to the unprecedented and swift worldwide changes brought on by the coronavirus pandemic. Alex Turbay, head of operations at Arzee International, told WWD, “Long before COVID-19 further disrupted manufacturing out of Asia, the United States and China were already in a dramatic trade war that increased costs, disrupted supply chains and placed many apparel companies that heavily concentrated most of their manufacturing in Asia exposed to a weakened Asian manufacturing network.”
Turbay continued, “The Chinese supply chain uncertainly coupled with long lead times, high minimums and increased costs has made on-shoring apparel production a pressing matter to compete and survive.”
“With the newly signed U.S. Mexico Canada agreement, Mexico is best positioned to take advantage of the geopolitical and economic shift and capture the wave of production that is exiting China. Mexico is a low-cost bordering country with large developed manufacturing hubs, a highly skilled workforce and a modern logistics infrastructure that connects to us and allows free flow of commerce through a network of modern roads and railways.”
Further, described as a “world engineering powerhouse,” Mexico ranks eighth place in countries that graduate the most engineers globally, with 113,944 engineers in 2019, according to the same report. Prized talent alongside lower labor costs doesn’t hurt for an industry reliant on machinal-oriented infrastructure and expertise in technical skills.
According to researchers at Gartner, the tariffs imposed by the U.S. and Chinese governments during the last few years have increased supply chain costs by at least 10 percent, and significantly more, depending on the category.
Turbay added, “In addition, the traditional system of having to plan into and commit to large inventory purchases months in advance of sales because of production and transportation lead times are over,” he explained. “In our ‘new normal,’ brands with supply chain partners that offer speed, quality, and the agility to produce replenishments or in-season reactivations on demand will come out thriving.
And naturally, the need for nimble also translates to a need for nearby. “On demand manufacturing is done most efficiently when production is made close to the end customer. With the dramatic shift to online shopping, this will enable brands to turn designs faster, improve sell through by doing a better job of matching supply with demand, and improve working capital through holding less inventory. All of this is not possible with the traditional Asian model.”
Turbay explained, “Brands that are finally moving production closer to their customers are now gaining the advantage of reducing labor costs, faster shipping, lower inventory, not to mention ease of business travel to large flourishing city and tourist destination.”
The Greening of Fashion
As far as enduring changes stemming from the coronavirus pandemic, Ryan Zimmerman, head of Business Development at Arzee International, told WWD that the shift to online spending has strengthened relationships between shoppers and brands. “The pandemic has driven a strong shift towards online sales. The resulting direct dialogue between brands and consumers should translate to better relationships and understanding of consumer trends and desires.”
Arzee said that some of the “direct changes” they’ve witnessed during the coronavirus pandemic include consumers dressing far more comfortably on a daily basis. “Tailored essentials and elevated basics in Jersey, Terry, and Fleece are big winners in the work-from-home world. When people head back to the office, we will see ‘productive comfort,’ ‘tailored essentials’ and ‘professional athleisure’ being the new modern workwear. The silhouettes are familiar such as a T-shirt, a Henley, or a sweat pant, but defined by quality, fabrication, subtle details and more tailored patterns.”
And another lasting trend that has generated critical change worldwide is the greening of fashion. “Consumers care about sustainability,” Zimmerman said. “According to 2019 Global Wellness Trends, fashion was the second worst offender of water pollution responsible for roughly 10 percent of all carbon emissions. More visibility into supply chain practices and prioritizing sustainability is a large part of our North American operation.”
Regarding its own sustainability efforts, Arzee is pushing the pile forward from several fronts. “We view sustainability as a commitment to continuous improvement and innovation. By onshoring production and better matching supply and demand, we believe this will eliminate overproduction, lower carbon footprint through faster delivery times and complete visibility into each step of the entire supply chain.”
Zimmerman continued, “We have partnered with fabric mills and washhouses committed to reducing water waste through the purchase of high-efficiency wash machines and precision irrigation techniques as opposed to flood irrigation. For us, that includes an expanded offering of sustainable fabrics for our clients, inclusive of U.S. grown Pima and GOTS-certified organic cotton and a “re-fibered” poly-blend material.” Zimmerman explained that one of its fabric mill partners “pays disenfranchised members of the community to collect and bring plastic bottles off the streets. The bottles are disinfected, broken down through a trituration process, and re-fibered to a polyblend where we make eco-friendly tees and sweatshirts.”
But embracing sustainability and evolving with a rapidly modernizing industry doesn’t happen overnight. “We want to be at the forefront of this industry. To help offset our carbon emissions, we partnered with the non-profit organization Cool Effect and are excited to contribute to their carbon reduction projects moving forward,” Zimmerman said. And in the near future, Arzee plans to sell directly online, as well as open an incubator program for emerging brands. “There is nothing more important right now than our environment – and our consumer.”