Skip to main content

Global Fashion Trade Groups Seek Government Aid to ‘Keep Supply Chains Solvent’

As the apparel and footwear industry struggles to stay afloat in markets across the globe, trade groups are calling for action.

In a memo released Wednesday, the American Apparel and Footwear Association (AAFA), the Footwear Distributors and Retailers of America, the Accessories Council, the Council of Fashion Designers of America, and the U.S. Fashion Industry Association joined more than 60 international trade organizations representing the fashion sector in demanding aid from governments, supply chain partners and stakeholders.

“Companies are desperate for cash to pay their workers and suppliers, while at the same time access to revenue is down due to closed stores,” said AAFA president and CEO Steve Lamar. “This is why we need governments—both the U.S. and globally—to work together with international financial institutions to make sure financial resources are available to keep supply chains solvent and workers employed.”

Members of the fashion community have played an important role, the groups said, in the creation of personal protective equipment (PPE), repurposing their supply chains and factories for the task. Still, many businesses have had to suspend or limit operations to keep workers and shoppers safe according to global health guidelines—and those measures have taken a devastating toll on their bottom lines.

“This health crisis has also triggered a potentially deadly economic crisis,” the signatories wrote, describing store closures that have dried up cash flow, along with canceled contracts and furloughed workers. “The resulting liquidity squeeze has adversely hit many companies, their workers, and multiple layers of suppliers all around the world,” they said.

The groups called on international governments and financial institutions to enact temporary stimulus measures to ensure liquidity, with enough flexibility that employers across supply chains can gain access to relief quickly. They asked that the measures be easily extendable should the virus persist longer than currently expected.

Related Stories

On Tuesday, the U.S. Senate approved a massive cash infusion to the existing stimulus package, the CARES Act, which will funnel $484 billion into measures like the Paycheck Protection Program (PPP) and emergency grants and loans for small businesses.

Signatories also called for a temporary deferral on duties to support cash flow and allow businesses to create some liquidity that could result in keeping workers employed. “At a minimum, governments should immediately defer collections of duties for a period of 180 days,” they wrote.

Taxes on PPE and other items being used by low-income consumers should also be subject to suspensions, they said, and governments should refrain from imposing new trade restrictions that could impede the production and delivery of these important goods or their components.

The signatories also urged businesses to be good partners to their suppliers. “Individual companies should take actions that minimize disruptions, facilitate payment for work that has been undertaken, and ensure workers continue to be treated with full respect while ensuring their health and safety,” they said. Working together is necessary to ensure that supply chains are well-positioned to weather the crisis, they added.

“These actions in the next 90 days will not only help dictate how fast we can recover, but also will say a lot about who we are as an industry and as a people,” the signatories wrote, adding that the fashion industry touches “everybody on the planet.”

Lamar urged governments to act swiftly or “risk burning a hole in the global supply chain.”

“It is essential that leaders act now,” he added, “to support these networks that employ millions around the world.”