Is America Ready for "Made in the U.S.A." Clothing?

by Foley & Lardner LLP
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While the reshoring tide is undeniably rising, the prospect of clothing and apparel manufacturing returning to the United States remains uncertain. Back in the 1960s, about 95% of clothing worn in the U.S.A. was also made here. Today the opposite is true. Can we flip the switch again?

The Clothing Industry’s “Skills Gap”
As apparel manufacturing moved overseas, the next generation of American labor did not learn the technical skills necessary to manufacture clothing. Many companies domestically manufacturing clothes are relying on older workers who learned and mastered their skills in another generation. For instance, North Carolina denim manufacturer – Raleigh Denim – identified former Levi Strauss employees to produce premium jeans.

As intellectual property attorney Scott Kaspar recently mentioned, training is essential. Investing in training a new generation of skilled apparel workers would boost our national economy, hopefully decreasing unemployment and increasing GDP. If U.S. workers are not trained to do this work, then the future of apparel manufacturing in America will certainly be limited.

Production Costs and Labor Concerns

Everyone loves a bargain. But the dark side of low-priced clothing remains: those low prices are oftentimes only possible through cheap, overseas labor. The 2013 factory fire in Bangladesh put a spotlight on the problematic labor conditions that are prevalent where some clothing is made. As a result of that incident, however, many companies have taken some responsibility for worker safety by signing the Accord on Fire and Building Safety. Yet, many mainstream U.S. clothing retail giants have not signed the Accord.

The fact remains that when clothing is made in the U.S.A., it will be produced in factories held to much higher labor standards, resulting in much higher production costs. At least in the short-term, U.S. customers would pay higher prices for American-made clothes. The million-dollar question is: will U.S. consumers vote with their dollars for “Made in the U.S.A.” clothing?

American Production’s Low Volume

Although some trailblazing companies produce clothes in the states, few, if any, of these companies operate on a large scale. Wherever clothing is made, manufacturers must be prepared to feed the voracious appetite of American consumers, who purchase multiple articles of clothing on a relatively frequent basis. The current U.S. clothing manufacturing industry is not operating at the level required to produce the amount of goods which the market demands.

Despite these significant challenges, opportunities exist for clothing manufacturers to bring production back into the states.

Next Generation Technology and Processes

American manufacturers can increase efficiency to counteract labor costs by adopting “smart” manufacturing technologies and methods. According to Manufacture New York, the nation’s first fashion, design, and production incubator, smart sourcing and sustainable practices increase the viability of “Made in USA” clothing. Designers are learning that sustainability and waste-reduction are smart, practical ways to do business in the fashion industry.

Simplifying Supply Chains

Domestic manufacturing eliminates the management headaches caused by coordinating a supply chain spanning thousands of miles, multiple governmental entities, and languages. These and other international hiccups frequently cause delays and inefficiencies.

In addition, local production reduces transportation costs and avoids international legal and customs fees. Plus, partnerships with local suppliers compound these advantages by incorporating the same savings into another layer of the supply chain.

Government Incentives

Many state governments, and even the federal government, offer attractive cost-savings to domestic manufacturers, as well as for those reshoring those operations. For example, Florida manufacturers may be eligible for significant tax credits and exemptions.

Streamlined Customizations

Domestic and local manufacturing gives designers and management more control over the products they bring to market. It allows them to tweak their designs and products without confronting the delays and inefficiencies involved in ordering from overseas manufacturers. Designers can also shift their manufacturing orders to respond to market demands for styles, colors, and other trends; these adjustments can be difficult or even impossible when relying on overseas manufacturers.

So what does the future hold for clothing manufacturing in the United States? Only time will tell. But companies like American Apparel and Karen Kane demonstrate that state-side clothing production is not only possible but potentially profitable.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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