Upstream Focus is Sourcing Journal’s series of conversations with suppliers, associations and sourcing professionals to get their insights on the state of sourcing, innovations in manufacturing and how to improve operations. In this Q&A, Kim Glas, president and CEO of the National Council of Textile Organizations (NCTO), discusses the U.S. textile industry’s pivot to PPE and the outlook for trade with China.
Name: Kim Glas
Title: President and CEO
What’s the number one question or concern you hear from your members now that was never really a consideration before?
U.S. textile companies have faced unprecedented challenges during the Covid-19 pandemic, but the industry came together to mobilize the production of personal protective equipment (PPE). Our members pivoted virtually overnight to convert their production lines to produce millions of face masks, isolation gowns, testing swabs and other critical medical items for desperate frontline workers.
Nearly a year into this pandemic, the overarching concern that I hear from members is whether and how the federal government will enact a long-term strategic plan to support U.S. manufacturers in making the necessary investments to create new jobs and reshore the PPE supply chain. Many are heartened to hear the renewed conversation about onshoring, but are wondering what the legislative path is ahead to ensure these key production chains.
Throughout the current crisis, we have demonstrated repeatedly that we have the capacity to make high-quality PPE. In addition to fibers, yarn and fabric for consumer and medical products, the domestic industry supplies nearly 8,000 different textile products for the U.S. military and next-generation textile materials. The U.S. textile and apparel industry employs nearly 600,000 workers and shipped $75.8 billion in 2019.
Unfortunately, the industry’s PPE orders are dwindling. Some U.S. companies are pulling out of the PPE business altogether due to lack of demand, and we are starting to see parts of the supply chain revert back to Asia.
We have a once-in-generational opportunity to bring this critical supply chain onshore. But we need the government to ensure long-term PPE contracts by prioritizing domestic industry requirements in order to utilize and expand upon today’s existing capacity.
Resiliency has become a buzzword since the pandemic’s disruption. How can the fashion supply chain start preparing for the next unforeseen event?
One of the most important lessons learned for the fashion supply chain is that China—the dominant PPE supplier and the top apparel exporter to the U.S. market—was not a reliable supplier, as evidenced by the breakdown in its supply chains during the pandemic.
The pandemic caused severe disruptions in the global sourcing supply chain, as factories in Asia and around the globe were forced to shut down at the height of the crisis. It is critical that the fashion industry continue diversifying and re-shoring more production to this hemisphere over the next several months—before the next crisis hits.
Through our elaborate system of existing free trade agreements and preference programs, we have well-established textile production relationships throughout the Western Hemisphere. Fashion companies must utilize these sourcing relationships to the fullest extent possible and take advantage of reliable production sources in this hemisphere, particularly under the revamped U.S.-Mexico-Canada Agreement (USMCA) and the long-established Dominican Republic-Central America Free Trade Agreement (CAFTA-DR).
If they aren’t already, why should companies consider manufacturing in the U.S.?
There are a multitude of advantages to producing more traditional apparel and other items in the United States, including proximity to market, access to reliable and competitively priced energy, access to high-quality cotton, benefits from free trade agreement preferences and incentives from local and state governments.
We have seen solid investments from U.S. and foreign suppliers in our industry over the past decade, but there needs to be more onshoring and expansion of production and supply chains to spur investment and create new jobs.
Companies cannot ignore the significant duty-free benefits afforded by several free trade agreements that have created well-established supply chains in the Western Hemisphere and Caribbean basin. This hemisphere offers an existing manufacturing platform and capacity to companies that are reshoring.
Finally, the stunning revelations in recent months regarding the egregious forced labor abuses and other atrocities in China should serve as a strong impetus for brands, retailers and sourcing agents to scrutinize their supply chains, provide more transparency and verify the products being made in China are not using slave labor.
Sourcing in the U.S., or at least the Western Hemisphere, may be the best way to insulate businesses from these incredibly disturbing practices.
What’s one piece of pending legislation that should be on fashion firms’ radars? How can companies proactively prepare for this potential policy?
The top priority legislation for NCTO is the American PPE Supply Chain Integrity Act, sponsored by Rep. Patrick McHenry and Rep. Bill Pascrell.
We need a new procurement requirement modeled on the Berry Amendment that requires all federal purchases of PPE and critical medical supplies to meet a 100 percent U.S. content and labor standard. This legislation would apply such a requirement to the departments of Health and Human Services, Homeland Security and Veterans Affairs.
It has broad reach covering all related purchases by the Strategic National Stockpile, agencies within DHS like Customs and Border Protection, and the entire VA health care system—the critical demand volume needed to drive investment and sustain U.S. PPE production. In addition, the bill supports American manufacturing by strengthening the contracting threshold for Defense and Homeland Security purchases.
The Trump administration’s trade policies tended toward protectionism. What tone do you expect the Biden administration to strike?
The Trump administration levied tariffs on Chinese apparel imports, following an investigation into the theft of U.S. trade secrets and then negotiated a Phase One deal that to this day remains in place. In addition, in the final days of Trump administration, U.S. Customs and Border Protection imposed an import ban on cotton and cotton products from the Xinjiang region of China for the use of forced labor, as well as documented reports of atrocities against Uyghur Muslim minorities that came to light.
China remains a top concern to the Biden administration. The big question now is what approach the Biden administration will take on China over the next four years.
We believe the most effective approach to forcing the Chinese to address massive subsidies and other trade inequities and abuses is one that targets important sectors of the country’s economy. And one of China’s top exports to the United States is finished textile and apparel products.
We would like to see the Biden administration maintain the penalty tariffs on finished products from China. We also urge both the administration and Congress to develop policies that effectively confront China to end decades of unfair trade practices that have put U.S. manufacturers at a competitive disadvantage.
We support additional aggressive action to eradicate forced labor from all global textile and apparel supply chains and the adoption of trade policies that promote U.S. textile production and textile and apparel products made in the Western Hemisphere FTA region.
What keeps you up at night?
Resources are my single biggest concern. As noted earlier, the onset of the Covid-19 pandemic ushered in an extraordinarily busy workload for NCTO. Virtually overnight, we were confronted with an overwhelming challenge and a completely new set of policy and procurement issues. NCTO became the key contact point for the White House, several federal agencies and Congress in terms of supply chain issues for emergency textile PPE. This critical new responsibility was layered on top of an existing multi-faceted agenda—including trade policy, defense procurement and regulatory matters.
The NCTO staff was pushed to the breaking point during the height of the pandemic, but this extraordinary challenge was met head-on by a fully committed staff working exhausting hours to cover all responsibilities. With that said, 2020 was a sobering reality. We need to continually expand our membership to ensure we have the resources capable of effectively representing our industry, even when sizable and unexpected situations arise.
What makes you most optimistic and inspired by the U.S. textile industry?
I have been amazed to witness the innovative and flexible nature of the industry as it constantly finds greater manufacturing efficiencies and develops ingenious end-use applications for textile products. I am also thrilled by the industry’s sincere commitment to sustainability; maintaining market competitiveness while also serving as the global leader in the adoption of the highest labor and environmental standards possible. The full capabilities of the domestic sector were on display as many American textile companies swiftly recalibrated their production and retrained workers to build supply chains for PPE and other vital medical supplies.
What’s in store for NCTO in 2021?
NCTO’s No. 1 priority in 2021 will be engagement with the White House, federal agencies and Capitol Hill on policies and legislation that bolster our domestic supply chains and establish a permanent PPE production chain in the United States.