215.628.2557 Not a short time ago, Bob Dylan wrote that, “The Times Are A Changin’.” While the words and prophesies sounded reasonable and accurate then, I can say now with certainty that the times have actually changed. But they have been changing for a while.
A quick look at history proves the point. During the Colonial Era of George Washington, the country had seemingly unlimited land for farming and expansion. Indeed, soldiers of the Revolutionary War were granted land rights to their new country in payment for their military service, and our self- proclaimed manifest destiny was to move westward.
And then we ran out of country. Sure, the addition of Alaska helped a bit but all in all our country’s borders were soon defined. Politics notwithstanding, fast forward to President Obama. He was raised in Hawaii with what has been termed the ‘island mentality’ for negotiation of disputes. On an island there is not much room to run and no property on which to expand. The concept is that people discuss the issues until a consensus is achieved. That does not mean that one or both parties may be satisfied; in reality, most successful negotiations may leave each side slightly disgruntled. Now, however, we have run out of world.
That lesson has now been driven home on a global platform as we have the Facebook and Twitter revolts in Africa and the Mid-East. Now with social networking, even despotic leaders can’t keep the Internet turned off for very long. Sure they can use violence, but the ‘whole world is watching.’
In sourcing apparel and textile manufacturing there are no unknown havens. The tried and true China of many years has a middle class as large as ours in the USA. They are becoming a consumer nation and while that bodes well for those exporting to China, sourcing managers have had to run to every hinterland seeking cheaper production. And following China, rates of labor have risen and are rising in Bangladesh and Vietnam. The AGOA treaty with Africa has been less than successful for a number of reasons. If you are not aware that cotton is higher than it was during the US Civil War, then you are not in this industry. Wool is higher. Oil (read: polyester) is higher. Geopolitics affects economics to a tremendous extent and more regularly and rapidly than in the ‘old’ days.
What’s to be done given this changed reality? First, admit that the ‘waters around you have grown’ – don’t waste time rearranging the deck chairs on the Titanic. The old times are probably not to return soon. The new program involves honest communication with all members of the supply chain. The large, well-financed manufacturers were smart enough to lock in future purchase contracts for raw materials. Sure, more cotton will be grown in the future and the price should come down, but we don’t know when and can’t continue to absorb the increases without passing the extra costs onto customers. There’s still a lack of robust job growth so we risk the dreaded stagflation. Look to cut costs with better design, planning and logistics.
Information technology will assist in the reduction of excess inventory. Quick turn and speed to market are advantages to producing in the USA and this hemisphere. We should emphatically enjoy our trade law benefits with NAFTA, DRCAFTA, Cumulation and the like. Learn about the fabric availability and duty free treatments. Look at soft costs like travel and executive time expense when determining the real price of manufacturing a product. One company I know of spent $1 million in air freight to bring garments in from China because fall delivery was late. The Chinese government decided to keep some sewing operators down on the farm versus sending them to complete purchase orders. How much of that million could have been saved by sourcing closer to home?
Supporting sustainability can result in measurable cost savings in materials and energy. Programs are being applied in Sri Lanka as we read this. China chose to close one day per week to reduce pollution but productivity suffered. Just because a government may have complete control doesn’t mean that the most effective methods are utilized or benefits completely realized.
What are some other solutions? We can get with our colleagues at the end of April and beginning of May and attend the NAUMD annual convention in Orlando and the AAPN meeting in Miami Beach. Find out what’s going on globally and initiate or enhance your strategy. The slow one now will later be fast as the present now will later be past. So get in the new world and lend a hand. You have only your world to help as the times will keep changing. We can prosper by working together.