Thread: Is Made In USA back?

Is 'Made in U.S.A.' back in vogue?
Insiders say a manufacturing boom is underway in California as U.S. retailers look closer to home to offset the challenge from "fast fashion" sellers like H&M and Zara.
By Parija Bhatnagar, CNNMoney.com staff writer
March 1, 2006: 9:47 AM EST


NEW YORK (CNNMoney.com) - As the need for speed in fashion retailing becomes ever more crucial to merchants, industry observers say "Made in U.S.A" is once again looking more attractive to some U.S. retailers versus importing from China.

Marshal Cohen, chief retail industry analyst with the NPD Group, a market research firm, points out that several specialty retailers are very interested in moving at least part of their product sourcing either back home -- for instance to California -- or closer to home to countries like Mexico, Guatemala or Honduras, for example.

"U.S. retailers are finally looking at lost sales as lost revenue," said Cohen. "They know that in order to capture maximum sales they need to turn their inventory much quicker." The disadvantage of importing from China, he said, is that it requires a longer lead time of between three to six month from the time an order is placed to when the inventory is stocked in stores.

"By then the trends may have changed and you're stuck with all the unsold inventory," he said. "If retailers want to refresh their merchandise quicker, they will have to consider sourcing at least some of the merchandise locally."

Trying to catch the "fast fashion" wave
Retail analysts say "fast fashion" pioneers like H&M, Zara, Mexx and Mango have redefined the terms of fashion retailing in such a way that their U.S. rivals have little choice but to adapt by changing their own gameplan.

The competitive advantage that these European chains have over their American rivals in the U.S. market is their ability to quickly bring new designs into their stores cheaply, thus keeping their inventory looking fresh and in-step with the fad of the moment.

"The name of the game in fashion is newness. These companies have set the standard by being able to change their floorsets faster than anyone else," said Howard Davidowitz, chairman of a retail consulting and investment-banking firm in New York.

For instance, H&M maintains that the retailer changes inventory daily at its stores. Zara also frequently refreshes its stores with new items.

How are these retailer able to replenish their stock so quickly?

Because Swedish retailer H&M manufactures some of its inventory in Europe while Zara's parent Inditex produces a large percentage of its inventory in its home country of Spain. This allows for a faster response time in ordering and stocking new products as well as making quick design changes to items that may not be selling too well.

Said Davidowitz, "Zara also owns its factories and design systems. So if customers say they don't like the length of a trouser, the manager communicates that to the design team, the design team tells the factory and Zara can get the new products in a week. Something like this would take the Gap two months or more to do."

But U.S. retailers are catching on.

Hot Kiss is an California-based company that manufacturers and supplies trendy women's clothing to such chain stores as Hot Topic (Research),deLia's (Research), Dillard's (Research) and Nordstrom (Research).

The company used to import 70 percent of its merchandise from China and elsewhere and manufactured a smaller 30 percent of it in the U.S. Today it manufactures 60 percent locally and imports 40 percent, according to CEO Moshe Tsabag.

By shifting manufacturing back home, Tsabag said he's able to deliver his order to retailers in about 45 days versus the 120 to 150 days it would take to source the same items from China.

"The cost is higher but retailers feel that it's worth it because it's faster to replenish their inventory versus bringing goods from China," Tsabag said. "For me, I don't have to go back and forth dealing with import quota restrictions."

Retailers are also eager to shift more production to countries like Honduras, Guatemala, Costa Rica and El Salvador, or nations that belong to Central American Free Trade Agreement (CAFTA), for two reasons.

The geographic proximity to the United States means a shorter lead time in receiving orders versus importing from China, about 75 days.

Second, the trade agreement also ensures minimum regulatory hurdles in the flow of goods between the United States and the CAFTA member nations, according to retail analyst Burt Flickinger.

"Until about four years ago, all our domestic retail clients were pressuring us to go overseas because of better prices. Now they're more focused on quick delivery," said Tsabag.

As a result, he said local contracting has picked up in southern California, a region that dominates the bulk of the U.S. apparel manufacturing industry .

"Apparel manufacturing is booming again. Three years ago we were losing jobs in the industry. Now I think we are going through a revival."

But others say it's still premature to call it a manufacturing "rebirth"
Llse Metchek, executive director of the California Fashion Association, a non-profit trade group, agrees with Tsabag that U.S. retailers would love to shift more of their sourcing closer to home.

"Forever 21, Bebe, American Apparel, Pacific Sunwear are already doing it," Metchek said. At the same time, she's not optimistic about any kind of broad-based resurgence in manufacturing activity in the state, citing what she calls California's "restrictive" labor policies.

"The two major apparel manufacturing states are California and New York. California is definitely more restrictive than New York," she said. "If a retailer contracts a manufacturer in California, the retailer is still responsible for all wage and hour violations that may occur at a factory. This is also a very litigious society with very aggressive workers compensation laws. Retailers won't want to deal with these issues."

"Retailers have been putting up with outsourcing headaches for years such as quota allocation, transportation issues, etc," said Jack Kyser, chief economist with the Los Angeles County Economic Development Corporation (LAEDC). "Of course retailers would like to source more locally but I don't think it's going to work out yet in California because of the labor laws."

However, Hot Kiss' Tsabag said his company has found a way to work within the system. "We work with independent monitoring agencies. They check that manufacturers have proper licenses, they're paying taxes, employees are on the books and there's no child labor employed in the factories. It's worked for us."
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No, I don't think so. Not if they are planning to eventually build below the borders.....hence the SUPER HIGHWAY???

About the only way we can be assured it's made in America is to make it yourself.

http://www.wketchup.com/

RED WHITE and BLUE all over W Ketchup hmm hmm good made in America from the seed up

About the only way we can be assured it's made in America is to make it yourself.

LOL too true! Too True! but then you'd have to find fabric produced in American and that might be a bit difficult so you will also need to build a loom and weave your own fabric.

Uhoh, sounds like something's up and I don't just mean the excuse of moving closer (back home or south of the border) to cut costs, that's definitely part of it, but I have a bad feeling about this.

When I get more info, I'll be sure to let you guys know. Erm, that was March 1, 2006?