WASHINGTON — The Obama administration has made strides in helping companies boost U.S. apparel and textile exports, which have posted double-digit growth in the past 12 months, but firms still face obstacles that restrict their ability to ship abroad.
This story first appeared in the February 7, 2012 issue of WWD. Subscribe Today.
With a shift in apparel production back to the Western Hemisphere from China, U.S. textile and apparel producers have seen their export business in the region grow.
U.S. apparel and textile exports to the world grew 14.4 percent to $22.2 billion in the year ended Nov. 30 compared with the same period a year earlier, according to the Commerce Department’s Office of Textiles & Apparel. Of the $22.2 billion in exports, textile exports grew 14.5 percent to $17.2 billion, while apparel exports grew 14.3 percent to $5 billion.
“Essentially 64 percent of our yarns and fabric exports go to [North American Free Trade Agreement] and [Central American Free Trade Agreement countries] for further processing,” said Kim Glas, deputy assistant secretary for textiles and apparel at the Commerce Department “I think it is a reflection of more brands and retailers sourcing more apparel in the Western Hemisphere. As result of that, U.S. exports of yarns and fabrics have grown significantly over the last year.”
While Central America, Mexico and Canada are the largest markets for U.S. apparel and textile exports, China is also growing, as evidenced by a 15 percent increase in U.S. exports during the past 12 months.
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“The U.S. government plays a big role in export promotion. Efforts by Commerce and the U.S. Trade Representative’s office, in collaboration with key industry trade groups, fall under the broader National Export Initiative launched by President Obama in 2009 to double exports in five years, which would mean total U.S. exports would need to grow to $3.14 trillion by 2015 from $1.57 trillion in 2009. Textile and apparel exports are on track to meet the goal of doubling by 2015,” Glas said, increasing 35 percent over the past two years.
OTEXA, within Commerce, has lined up a roster of six trade shows this year in which it will help promote U.S. products, including shows in Atlanta, Las Vegas, Chile, Dubai, Paris and Cape Town. Trade officials also plan to take part again in a Sourcing in Americas pavilion at the Sourcing at MAGIC Show in Las Vegas in August, hoping to build off the successful inaugural pavilion and summit last year that featured 74 U.S. and Latin American companies.
Don King, executive vice president of sales for Schott NYC Corp., a classic American-made outerwear company based in Elizabeth, N.J., said the company has participated in conjunction with Commerce in the International Fashion Fair in Japan.
“We have written a lot of business,” King said. “We started working in the Japanese marketplace in 1976 and we used to do that trade show once a year in conjunction with the Commerce Department. That has really helped us maintain a Made in the USA signature and to make the marketplace [in Japan] aware of a company such as Schott that still maintains a position in manufacturing here in the U.S.”
King said budget cutbacks have diminished some of the government support, which he called “an unfortunate sign of the times.“
Obtaining export financing is another obstacle for the textile and apparel industry. Glas said Commerce and USTR convened a meeting several weeks ago between the Overseas Private Investment Corp. and a coalition of apparel and textile trade groups to look at the possibility of loan guarantees for the industry.
“It was really an opportunity for the industry to hear firsthand what programs OPIC offers,” Glas said. “The industry [had a chance] to talk to one another to see if they can develop a project that will make the parameters that OPIC looks for.”
Kevin Burke, president and chief executive officer of the American Apparel & Footwear Association, said, “I talked to a number of companies last week who said places like El Salvador are near or above capacity in terms of producing for export. Companies are looking at the global supply chain and shortening it.”
He said the government has been supportive of the industry but challenges remain, particularly in the area of export financing.
“If they want companies to export and be good at it, they have to come up with the financing to do so,” Burke said. “Often times, the Export-Import Bank has systematically failed to support this value chain with the liquidity necessary to move this relationship to the next level.”
Cass Johnson, president of the National Council of Textile Organizations, said, “It’s still a chronic problem in that there are opportunities throughout the Western Hemisphere to do what are called full-package product financing that companies cannot do in the CAFTA region because no one will provide financing to them.”
Johnson said the organization has had discussions with Ex-Im Bank officials, but have been unsuccessful in convincing them that the region is not risky, despite long-standing relationships between textile mills and Central American producers.
“[We] do know it is a significant issue for the industry,” said Glas. “We have been talking about it for a number of years now, whether financing options exist at the Export-Import Bank.”
Some rebirth is being seen in the once-dominant southern textile industry, aided by exports to such places as Central America.
Francisco Sanchez, undersecretary of international trade at the Commerce Department, went on a three-day trip at the end of January to promote exports and textile manufacturing in North Carolina, where he toured businesses, including Parkdale Mills’ yarn spinning facilities, as well as the North Carolina State University College of Textiles’ new Nonwovens Institute Partners Lab.
“Producing American-made products and selling them in markets around the world helps businesses succeed, puts people to work and helps expand the circle of opportunity,” Sanchez said at a North Carolina leadership forum. “U.S. producers have retooled their efforts to focus on higher-value, niche products, to invest more in research and development, and to modernize their facilities and technology. This commitment to advanced manufacturing and to producing the best quality products is crucial in today’s dynamic global economy.”