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Mexican Manufacturers Poised to Take Potential Backlash from US Trade Changes

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.

As more brands and retailers look to source closer to home to cater to quick-to-market demands, Mexico has picked up in popularity.

Booths were bustling at the Apparel Sourcing USA show in New York which took place in conjunction with Texworld USA Jan. 23-25, as buyers—big and small—stopped to see their options in the Mexican pavilion.

The country’s biggest competitive advantage is that more and more retailers are starting to look past Asia as their only option for manufacturing.

“What is happening for Mexico is that people around the world don’t want Asian products as much as they did before,” said Maribel Ochoa of Giga Fitness, which manufactures sportswear and casual wear. “And it’s because of the taxes and the prices of sending the products to the U.S. and because the minimums of the Asian fabrics are much bigger. That has come to be a benefit for us in Mexico.”

For Seamless Global Solutions, or SGS, a garment manufacturer based in Puebla, Mexico, innovation in addition to its quick turn capabilities have set it apart.

The company specializes in producing a wide range of seamless garments for sportswear and shapewear, and recently acquired new technology for ultrasonic bonding to eliminate even more seams from the garments. With SGS’s Virtus garments using Emana intelligent fabric, microcrystals are inserted into the fiber, providing performance benefits like improved muscle recovery, UV protection, and stimulating properties that even reduce the appearance of cellulite.

“A lot of companies are good for duplicating but not creating,” Toni Aldave from SGS said. “What makes us different is we have a group of people that are always doing research for innovation.”

Improving quality has also been on the agenda for many manufacturers in Mexico, and upgrades in know-how, training and new technology has come along with that.

Gerardo Gendrop, export sales manager for the Puebla Apparel Association, which represents manufacturers in Puebla, Mexico, that are known mostly for their expertise in denim, said it’s all about elevating the country’s offering.

“Definitely we’re trying to reach the American market on a full package basis,” Gendrop said. “Not just production, we want to sell the entire garment and with the advantage that—for now—is duty free because we don’t know what’s going to happen with Trump.”

Turning to that very pressing present topic, Aldave said Trump’s trade strategies—which look likely to include renegotiating NAFTA—have put Mexico on edge. And now that Trump has proposed putting a 20 percent tax on all imports from Mexico, concern among manufacturers could increase.

“There was a moment that this caused us a lot of crisis, now it is a little better…but right now everybody is worried,” Aldave said ahead of the 20 percent tax announcement. If Mexico ends up unable to trade with the U.S. in the manner it has been, SGS plans to put more focus on its domestic market.

“Instead of buying most of our yarn from the U.S…we will have to change to local yarns,” Aldave said. “These are the decisions that will need to be taken. But so far, nothing has changed. Even our prices have stayed the same. Now we are just waiting to see what is going to happen.”

According to Ochoa, drastic change in trade relations with Mexico may not prove as beneficial as the new U.S. administration might expect.

Until things become clearer, Ochoa said she aims to grow Giga Fitness exports by at least 40 percent this year and will look to develop relationships with more buyers in Europe if relations with the U.S. become increasingly strained or costly, or both.

“I think they [the Trump administration] are not going to be able to close everything because it will be a cost for the U.S.,” Ochoa said.

Gendrop and the collective of Puebla manufacturers he represents also plan to start looking at other markets, like Europe and Latin America, for their exports as an alternative strategy, though there’s still optimism before Trump announced the potential 20 percent tax, that any changes to NAFTA won’t affect the apparel industry all that much.

“We hope that everything will remain the same regarding apparel business and textiles and definitely we are looking forward to exporting to the U.S. and trying to match the best prices,” Gendrop said. “We have to be confident that everything will be fine.”

Mexico has also been facing steeply rising gas prices and riots against the raises, but manufacturers there said the protests have been controlled and haven’t yet plagued the apparel sector.

Deliveries haven’t been affected either, as far as Ochoa has experienced, and as she explained, the scenario won’t likely push many manufacturers to raise prices.

“The people that are going to raise the price are the people that take all the benefits for themselves and not for the good of the company and the country,” Ochoa said.

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