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Impact of Sequester On Textile Sector May Not Be Too Bad

When it’s deliver-or-die, supply chains become the lifeblood of a company. To that end, the fashion industry has embraced technology to navigate today’s hyper-complicated supply chain, with myriad solutions shaping the first, middle and last mile. Call it Sourcing 2.0.

The budget cuts that became law on March 1 — the so-called sequester, or the Budget Control Act — could delay imports including textiles arriving at U.S. ports when the number of customs workers is cut as anticipated.

Some textile industry trade groups fear the cuts will also compromise the continuing negotiations of an Asia-Pacific trade pact, and similarly affect the beginning of a long-awaited U.S.-E.U. trade arrangement.

But most industry organizations have not yet panicked as they await real world results of the budget cuts, rather than speculating on events that may or may not occur.

While the budget of some government agencies will be cut, and thus curtail (but not eliminate) their services, not every agency will be effected.  Many government employees will take mandatory furloughs or have their work hours or days cut back.

A total of 5.3 percent of domestic discretionary spending will be cut, including the budget for agencies that negotiate and enforce trade agreements, inspect imports worth billions of dollars for product safety, detect counterfeit goods, and provide security.

These Immigration and Customs department services will continue to be provided, although perhaps not as quickly as previously, according to Department of Homeland Security Secretary Janet Napolitano.

“At our seaports, delays in container examinations would increase to up to five days, resulting in increased cost to the trade community and reduced availability of consumer goods and raw material,” said Napolitano.

Trade with Canada and Mexico, the first and third biggest U.S. trading partners, will also be delayed as trucks are delayed at the borders, said Napolitano.

As a result of these forecasts of delays, textile industry concern is understandable.

“There is a lot of uncertainty around this and a lot of anxiety,” said Stephen Lamar, executive vice president of the American Apparel & Footwear Association.  But it’s premature, he said, to speculate on the impact on the industry as the cuts take effect.

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