By now, I’m sure you’ve heard of the massive project Nike has launched with investment firm Apollo Global Management to radically increase production in the Americas.
In a joint statement Nike and Apollo said the partnership will increase regional manufacturing capabilities, enable faster delivery of more customized product and drive investment in sustainability.
This announcement came in ideal timing for the upcoming Sourcing Summit 2016 in New York on Sept. 20. Why? Because a panel on “Near Sourcing: How to Enter the Western Hemisphere” will dive deeply into what’s going on in the Americas.
China and not-China
In the apparel producing world outside of China, the Americas exist—North, Central, South and the Caribbean. We all know how the industry migrated from New England through Pennsylvania, the Carolinas, the deep south, Maquilas and then, suddenly, Asia. But despite the mass exodus of manufacturing, the Americas remains the source of some 18 percent of U.S. apparel production.
The Americas Apparel Producers’ Network (AAPN) has been active in the Americas since 2001, especially Central America. In those early days, we found factories who were just sewing shirts, receiving piece goods and supplying labor. Today, those same producers are selling sophisticated services.
Big brands know the value of the Americas
Nike is not alone in knowing the Americas. VF, Academy Sports & Outdoors, Hanes and Under Armour are already there, not to mention as many as 100 other brands. The list of those who “get” the value of the Americas is long, they are elite in their profession and their stories of success are many.
But therein lies the problem. We share case studies where the Americas is providing the highest value at virtually Zara-like cycle times. Unfortunately, there are two truths about these stories—one, you’ll never hear them in public or see them in writing, and two, they almost always result when both the customer and the producers are all privately owned with minimal turnover and high trust.
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You’ll never get speed until you build trust.
In these market-speed success stories, you find the region isn’t fast just because it is close. It is fast because as a network, stakeholders, have shared success stories and openly detailed which investments, which technologies, which skills and which processes have proven to make the region faster.
All companies compete as supply chains
Apparel supply chains can have 20 to 30 links in them. Isolating just one of these, like the texturizing of synthetic yarns, or the massive inventory of hundreds of components needed just to make elastic waistbands for men’s underwear, is incredibly complex.
Just as complex are the dozens of departments filled with hundreds of people worldwide that often use different systems for each brand and retailer.
Very often factories’ effectiveness, ease of doing business, market speeds, product development and so much more, stem directly from the experience of its major clients.
The Near Sourcing panel at the Summit couldn’t be better timed. To develop an executable sourcing strategy for the Americas, it’s vital to first learn the strategies working now in the region for the brands and retailers that are already there.
It’s not just Nike convincing Apollo to invest. The pace, precise targeting and volume of investment in the region that you don’t know about is just as serious. At AAPN’s May Conference, Jesus Canahuati of Elcatex in Honduras gave a talk about investing in textiles. It became clear to all of us that this man had a 20/20 vision of where he would be in the year 2020.
He’s not alone. Nike has its sights on growth and the Americas will be as key to that as it is to a long list of other brands firmly established in the Americas.
Perhaps in the past, the time to source from this hemisphere wasn’t right, but it is right now.
By Mike Todaro, managing director of the Americas Apparel Producers’ Network.