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Denim Mills Weave Their Way Through Trade Tensions and Buying Shifts

Like water always seeking its own level, denim and jeans manufacturers are finding their way through the sourcing complexities created by the U.S.-China trade war and tariffs–real and threatened–and the ongoing desire to diversifying production to limit risk.

But that’s not to say it’s been easy. Executives at the Kingpins New York trade show this week said they continue to shift their sourcing strategies in reaction to the trade climate, sometimes on the fly. But production development has never been more at the forefront to meet new consumer challenges and sustainability requirements.

In addition, sometimes-volatile cotton prices that soared above $1 a pound earlier this year only to come back to earth at around 73 cents a pound this week, have added to the ongoing movement toward fiber blending in denim that’s also driven by improved fabric and garment performance.

Bo Dean, senior vice president of sales and marketing at Twin Dragon Denim Mills, said while the company’s theme in its collections is “No Stress” regarding its eco-friendly fabrics and processes, the trade tensions are causing anxiety in the sector.

“Tell me what the benefits of a trade war are?” Dean posed. “At least let us know exactly what to expect so we know the rules we need to operate under. Maybe doesn’t cut it for running a business.”

Dean agreed with the analysis of several executives at the show that what’s happened as a result of the trade war and actual and threatened tariffs is that China has lost jeans market share mostly to other Asian nations. However, a lot of Chinese fabrics are now being exported to countries like Vietnam and Cambodia to make apparel, since they don’t have a textile base.

In the first nine months of the year, U.S. imports of denim apparel from China grew just 1.36 percent in value to $683.08 million. In comparison, jeans imports from Bangladesh increased 14.2 percent in the period to $419.21 million, while shipments from Vietnam jumped 41.95 percent to $205.43 million. Jeans imports from Pakistan grew 9.75 percent to $178.98 million in the period and Cambodia’s were up 30.85 percent to $88.34 million.

But Dean contended that “the tariffs really aren’t hurting the Chinese companies. They’re hurting the U.S. companies that have to shift their production and likely pay more to import the goods.”

Twin Dragon’s uses what it sees as “eco-friendly” fabrics such as Lenzing’s Tencel, Modal and Refibra, as well Repreve and other recycled polyester so its customers have “No Stress” in choosing fabrics. The mill also employs laser techniques in many cases to lower water usage, and its Liquid Indigo is also a more sustainable dye. No Stress also involves advanced materials for engineered stretch and comfort, along with durability and longevity.

Tricia Carey, director of global business development for denim at Lenzing, said much of the product development at the company involves meeting the U.N.’s Sustainable Development Goals for manufacturing and material usage. Lenzing has created a comprehensive flyer it uses to explain the ecological benefits of Tencel Lyocell and Tencel x Refibra fibers.

“It’s a constant education around sustainability,” Carey said. “We educate the mills and they are then our ambassadors to the brands and retailers.”

Carey also noted that improved production methods have allowed Tencel to be blended more with other fibers for improved product performance. Lenzing works with mills around the world such as Atlantic Mills, Isko, Bossa, Artistic Milliners and Orta for product development and diversified manufacturing.

Lenzing recently mothballed an expansion of its Tencel plant in Mobile, Ala., in part due to the tariff threats from the Trump administration and the uncertain trade environment.

“There’s definitely a shift in sourcing, with companies looking outside of China to places like Bangladesh, Vietnam and Mexico for denim,” Carey said. “There are also more companies adapting strategies that use Mexico for quick response and make regular goods out of China.”

Ebru Ozaydin, director of sales and marketing at Karachi-based Artistic Milliners, said, “Pakistan has benefitted as a supplier to denim because of the U.S. trade war with China. But companies for a long time have been shifting their denim sourcing out of China and into countries like Pakistan, Bangladesh, Vietnam and Cambodia.”

Many denim companies are “creating an exit plant to limit their exposure in China because of the trade wars and China’s commitment to supply its own domestic market.”

Ozaydin said, “The industry always finds a way.” She said there are smart executives among the major Hong Kong sourcing firms and at the big companies that will always find the right places to produce.

Ozaydin noted though, that Artistic Milliners’ strengths as a vertical jeans manufacturer that is constantly investing in technology and machinery, is what “defines us and makes us grow.”

Changes are also taking place in the market thanks to smaller companies being able to make an impact with the growth of direct-to-consumer channels. These brands are working directly with fabric mills to develop materials to meet their customers’ needs, Ozaydin noted.

These and many other brands have a sustainability strategy now that is built into their raw material buying plan, Ozaydin said. Instead of buying toward trend, they want a certain percentage of sustainable cotton, like cotton from Better Cotton suppliers, they want a percentage of recycled polyester and they want reused materials such as Tencel x Refibra.

“It’s been called detox buying,” Ozaydin added. “They want an aesthetic, but it has to include a sustainable or ecological element to meet their company goals and to be able to tell a brand story.”

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