MIAMI BEACH — Remaining competitive in the apparel industry comes down to making smart sourcing decisions and using the latest technology and the best materials, said exhibitors at the Material World and Technology Solutions show.
“Cost of business is going up, prices are going down, big manufacturers are also retailers, and it’s tougher to make the bottom line,” said Kevin Burke, president and chief executive officer of the American Apparel & Footwear Association, which sponsors the event that ran April 4-6 at the Miami Beach Convention Center. “It’s means there’s a lot of pressure on manufacturers.”
The show, produced by Atlanta-based Urban Expositions, is broken into three distinct areas — fabrics and trim, technology solutions and sourcing solutions. However, 25 percent of the show’s 400 exhibitors were technology providers.
An AAFA-sponsored sourcing summit kicked off the event on Tuesday, where panelists stressed that the business environment made global sourcing decisions more complicated than simply chasing the cheapest labor. Sourcing strategies are increasingly influenced by a strong vendor partnership, rather than the merit of a particular country, the panelists said. Suppliers have to offer speed and efficiency, as U.S. companies turn over more aspects of production, from raw materials to delivery.
Gary Ross, corporate vice president of global manufacturing and sourcing at Liz Claiborne Inc., said vendors have to provide value-added capabilities.
“Only 17 percent of the price is pure labor,” Ross said. “We have to maximize the transaction without fighting over pennies.”
In a post-seminar interview, Ross said fierce competition from retailers producing private label goods puts higher expectations on vendors.
“We want first quality, all the time,” he said. “We want to issue ‘specs and checks,’ without having to baby-sit vendors. We want to be able to do what we do best — design and market.”
Rick Helfenbein, president of Luen Thai Holdings USA, a Hong Kong-based global manufacturer for brands including Polo Ralph Lauren and Jones New York, said his company addresses all needs through the construction of supply chain cities — huge facilities in China that house everything from design and development to logistics and distribution.
Wilbur Ross, chairman and ceo of WL Ross & Co., which owns Burlington Industries and Cone Mills, said given current trends, China and other Asian countries will become competitors.
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“There’s an inevitable shift from cheap labor to value-added creativity and design,” he said. “The West can’t be the only ones doing it. Every year since 2000, China has graduated three times more engineers than the U.S.”
Wilbur Ross said China was still the “800-pound gorilla,” but he pointed out that India is emerging and Vietnam is “where China was 20 years ago.”
Despite passage of the Central American Free Trade Agreement in August, the slow implementation process has stalled growth in the region, panelists said.
Burke said some AAFA members estimated lost business of as much as 30 percent in the region, because of CAFTA’s logjam.
“But the good news is U.S. companies are limiting production in China because of safeguards and the industry knows it has to diversify production to protect interests,” he said.
The Argus Group, an apparel producer headquartered in San Salvador, with factories throughout Central America, said business is strong after CAFTA’s passage, aided by the reestablishment of quotas on China.
“We took a risk investing in denim plants before CAFTA and it paid off,” said Alfonso Hernandez, Argus’ ceo. “Some clients that moved aggressively to China have come back because of reliability and cost of doing business.”
Hernandez said the biggest challenges facing the region are product development, human resources and raw materials.
“Behind all of it is the need to offer full-package services to clients,” he said.
As offshore operations become more sophisticated, technology is increasingly important to global suppliers as it is to U.S. companies.
“Five years ago we targeted U.S. brand owners here at the show,” said Sinuet Zayas, global implementation manager of Avery Dennison in Brea, Calif. “Now, offshore factories are hungry and competitive, and we’re empowering them.”
Visibility was the buzzword among technology providers exhibiting at the show, as attendees looked for software that allows them and their partners to view global production in real time.
“We can communicate with vendors and we all see the same documents at the same time, without all the faxes and e-mails,” said John Bailey, director of finance for Columbia Sportswear, who said his investment in a software program by Tradecard this year paid off in higher margins and profits. “It allows us to run our business without hiring more people, and cuts down on chargebacks.”
In the fabric area, spring-summer trends included a return to bright colors, retro and whimsical prints, mixed textures, finishes, washes, dyes and treatments, such as ombré or shadow effects. Silk and linen were big, along with stretch blends.
Performance qualities such as moisture management and antimicrobial continue to be important in activewear and in niche markets, such as military or service uniforms, which have become key sectors for smaller U.S. manufacturers.
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