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Op-Ed: Onshoring Creates New Textile Jobs, but What About Apparel?

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Jobs in America’s apparel making industry fell year-on-year by nearly 5,000, or 3.4%, in March 2015. That was a slightly faster rate of decline than in March 1995, but pretty typical of the remorseless annual decline we’ve seen every month since the early 1990s.

True, in February, the White House paraded the fact that employment data that month had shown “the American textile industry is adding jobs for the first time in two decades.” America’s Department of Labor Statistics had just announced 2,300 more jobs in textile mills — together with a category of businesses it calls “textile product mills” — than a year earlier.

But as in March, there’d also been fewer jobs in apparel making, so the total number of jobs in textiles and apparel actually fell year-on-year. Indeed, by March, that total fall had grown slightly, to 3,800 — even though by then, there were nearly 3.5 million more jobs in the U.S. economy overall.

Flanagan_Onshoring_New_Jobs

I don’t believe that’s a fluke. On both sides of the Atlantic there’s disconcerting evidence that, in affluent countries, more jobs nationally might cause fewer apparel-industry jobs.

I suspect there’s a serious flaw in much of the “onshoring” rhetoric popular right now in many developed countries’ discussions about apparel manufacture.

Job problems in the U.S.

In the U.S., production and employment  in both apparel and textiles fell sharply between 1995 and 2010 — and have more or less leveled out since. In apparel, both jobs and production have fallen faster than in textiles — but in both apparel and textiles, jobs have fallen faster than production.

There are three main reasons the declines haven’t been as fast in textiles as in apparel:

  • The U.S. textile lobby has been very effective in ensuring that most duty-free programs for offshore apparel manufacture apply only to garments made from U.S.-spun yarn.
  • Many textile processes are not particularly labour-intensive, so moving spinning, weaving or knitting to low-wage countries hasn’t always been cost-effective.
  • Fracking makes it likely that U.S. energy costs will fall faster than elsewhere — while land for development is easier (and sometimes even cheaper) to acquire than in many densely-populated Asian countries. So the U.S. looks attractive for building spinning mills: capital-intensive businesses, where the cost of energy matters far more than the cost of the very few jobs they bring with them.

In the past couple of years, as apparel and textile production has been more or less stable, we’ve heard a lot about the difficulties U.S.-based manufacturers have found in finding and keeping staff — even though unemployment was exceptionally high.

Those difficulties have been greater in apparel than in textiles. Inexperienced sewing-machine operators are surprisingly expensive in developed countries.

  • They can take months to become productive
  • Supervising and training them can take time from experienced staff
  • While being trained, they can do considerable damage to costly fabric
  • Even on minimum wage, that adds up — and it can take years before they’re productive enough to earn performance-related bonuses.
  • So during their first few years, many staff leave to find easier ways of earning more — creating even more pressure on the employer.

Those problems will almost inevitably get worse as the economy picks up.

Hence the all-too-common story: the raids on sweatshops – usually around New York or California- the criminal charges, the dozens of (almost always immigrant) workers found earning less than the legal minimum. It’s not true of every garment factory employing immigrants — but few months go by without another group of factory owners found unable to keep going without cutting corners.

It’s much the same in Europe

Similar stories emerge about as often around Paris. In Italy, they’re commonplace in the city of Prato which has around 40,000 Chinese garment workers — and Prato’s  scandals aren’t limited to low pay. This January, three factory managers were jailed for the deaths of seven Chinese colleagues after a December 2013 fire in one of Prato’s garment factories.

Are these scandals just in a few rogue factories? An academic study published in February of the UK’s Leicester, a key hub for much of recent mass-market onshoring growth, found that at least 70 percent of its garment workers were paid less than half the minimum wage of £6.50 ($9.75) an hour.

There may be something odd about the U.K., or Leicester, or the study: but it’s the only study I’m aware of that has investigated with academic rigor how much wage abuse exists in developed-country garment industries. If it’s at all typical, it shows a problem the onshoring debate has ignored so far.

Since the Leicester study came out, discussion — as with the Prato factory fire — has been concerned with stopping  such abuses. But what if they’re as widespread throughout Europe and North America as the study indicates they are in Leicester?

All the rich-world garment industry wage abuses I’ve quoted — Paris, Prato, Leicester, New York, Southern California — are among immigrant workforces, with poor skills in the local language. The Leicester study seems to indicate that mass-market garment factories simply can’t compete on price with Asian production centers without exploiting vulnerable migrants.

For the past five years, onshore advocates have been claiming that Asian wages are growing so fast they’ll soon converge with American rates. “We expect net labor costs for manufacturing in China and the U.S. to converge by around 2015” Harold Sirkin, a senior partner at the Boston Consulting Group, said in 2011.

In fact, between 2011 and 2014, wholesale prices of U.S. apparel grew 4 percent, according to America’s Bureau of Labor Statistics. The price per square meter of apparel imported from China fell 11 percent over the same period. Far from “converging,” the price gap between U.S.-made garments and China-made garments actually widened.

I don’t believe this affects all the niche garments for which onshore manufacturing presents a good commercial case. But in the mass market, even while rich-country labor was at its cheapest, onshore apparel making seemed viable only when carried out by the most easily exploited.

Does anyone really believe it’s likely to be more viable as the labor market tightens and wages start drifting up?

 

Mike Flanagan, CEO Clothesource. Clothesource offers consultancy on the world garment industry using the wide resources of The Clothesource Knowledge Base – the most comprehensive collection of information anywhere about sourcing for the apparel industry. He can be contacted at Flanagan@clothesource.net.

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