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Does Ghana Have What it Takes to Become Apparel’s Post-COVID Sourcing Hub?

The COVID-19 crisis has represented a retail reckoning, bringing shifting consumer attitudes, slowed spending, and broader, industry-wide questions about what the global supply chain will look like in its aftermath.

With brands continuing their slow but steady migration out of China due to trade woes, coronavirus-induced disruptions and rising labor costs, other regions are stepping up with the aim to compete.

According to Marc Hansult, co-CEO of Ghanaian apparel manufacturer DTRT, West Africa may be sourcing’s new frontier.

Hansult and partner Skip Richmond founded the company in 2013, settling in the country because of its yet-untapped potential and proximity to potential brand partners.

“Geographically, West Africa is better positioned to serve the U.S. markets and European markets,” Hansult said. “We anticipated that speed to market would become a more important factor in buyers’ decision-making.”

With DTRT (an acronym for the company’s mantra, “Do the Right Thing”), Hansult and Richmond aimed to subvert the sector’s longstanding ills, especially related to sustainability and human interests. “We had a desire to show that the apparel manufacturing industry can actually do good,” Hansult said, despite “the general reputation that the industry had for how it treated the environment and the people working in it.”

Ghana, which had very little history in apparel manufacturing at the time, offered a clean slate for a burgeoning industry, Hansult said. A positive political and social climate made it receptive to outside investment.

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Richmond and Hansult wanted to build up the apparel manufacturing sector in the region from scratch, bringing in best practices and firmly held beliefs about how it should be run. “There aren’t that many industries that can create jobs at this scale, that can bring people into employment and give them a career path,” Hansult said. “Many factories across the world aren’t what they should be, and we have a desire to show that when it is done right, it can be extremely positive.”

A long-term strategic partnership with Seattle-based SanMar, a promotional company that screenprints and embroiders gear, gave the manufacturer the backing to move into Ghana in the first place. “They’re a visionary company because they came with us,” Hansult said, enabling the operation to take root.

Human impact and sustainability

Today, DTRT employs about 2,500 people, though it started with just 50. “Everyone that has ever worked for us was brought in with next to zero previous experience—not just in terms of industry skills, but in terms of any general workplace knowledge,” Hansult said.

The training the company has provided to its blossoming workforce extends well beyond technical factory skills, he said, and benefits also encompass more than just compensation. “We pay significantly higher salaries than the minimum wage,” he said. “We offer free meals, healthcare and access for family members and transportation allowances.”

A USAID study showed that DTRT employees have been lifted from below to above the poverty line by their work with the company, Hansult said. “For us, that’s a key benchmark.”

“When you think about other parts of the world and how the industry operates—like Bangladesh or Haiti, for example—the industry tries to keep wages low to remain at a competitive level,” he added. “It traps people who work in our industry below the poverty line.”

Setting up shop in a country with a more experienced workforce and mature infrastructure for export might have made DTRT’s mission as a manufacturer easier, but Hansult said it would have made his work feel meaningless. “We want people to be able to experience economic growth through these opportunities,” he said.

It has also been rewarding to see an industrial uprising in Ghana, he said, as more companies begin to see the country as a sourcing destination. As DTRT’s workers develop their technical skills, they’ve been able to make higher quality products, driving up the value of the business, Hansult added.

DTRT still relies on textile materials from China, Vietnam, Indonesia and Taiwan for the performance and athleisure styles that make up most of its range. But Hansult said a partnership with a U.S. customer early on helped the company develop a greener development process that reduced water consumption by 80 percent, and that specific fabrication still makes up most of the material the company sources.

Ghana has some capacity to produce its own cotton, and Hansult is hopeful that textile and inputs manufacturers take root in the area in the coming years to aid in the creation of a vertical supply chain. Hansult said he’s been fielding more questions than ever before about Ghana’s potential for growth.

Fashion heavyweights like PVH Corp. and H&M have started looking at West Africa, Hansult has happily entertained their inquiries.

“It could be a three- to five-year period before we start to see vertical solutions, but we believe we can play a role,” he said.

Coronavirus consequences

Calling virus-born supply-chain disruptions “significant,” Hansult said the problems began around Chinese New Year in February.

“It started with the delays in getting materials out of Asia, and then it quickly changed to a dramatic concern related to demand,” he said. The company’s brand partners were hit hard by store closures, and the impact at retail was devastating.

DTRT navigated the rough waters with partners, acknowledging that the season would look very different than they had hoped. Hansult said the company was able to avoid many outright order cancelations, though there is still uncertainty about how some brands will fare in the coming months.

In the meantime, the manufacturer has been engaged in the production of personal protective equipment (PPE), and has worked with the Ghanaian government to fulfill face mask needs.

“Making masks has helped us produce at full scale, but there’s still tremendous uncertainty,” Hansult said. “Stores have opened and closed again, and no one has a crystal ball to see when things will recover.”

The company has also solicited outside investment to fund its workforce, taking on additional debt to keep everyone gainfully employed. “We made that our number one priority, and we have not had to let anyone go without pay,” he said. “We’ve worked with our stakeholders and financial partners to bring in the funding to keep people employed, no matter what.”

Even a temporary furlough could see the factory’s employees backslide into poverty, and it’s a risk DTRT isn’t willing to take.

“The current situation has only served to highlight the need for sustainable and responsible supply chains,” Hansult added. It also underscores the need for greater transparency across the industry, so that shoppers can grasp the impact of the products they choose to buy.

“Driving change is not only possible, but it’s a responsibility that the industry has to take on,” Hansult said. The COVID-19 crisis has only amplified the urgency for retailers, brands and suppliers to do right by the people who make up the most vital parts of the supply chain.

“It all goes back to the mission and what we want to accomplish,” Hansult added. “We’re a for-profit business and we want to deliver healthy returns for all stakeholders, but always with a clear focus on driving positive impact.”