Is t-shirt manufacturing coming back to the USA? In our opinion, the answer is some of it. We believe that low cost manufacturing countries such as Honduras, Haiti, El Salvador, Mexico and of course China will always get a large share of US apparel manufacturing. However, there is becoming a more and more compelling argument to bring manufacturing back. Here are 4 reasons why:
1. Automation– The rise in technology has made apparel manufacturing more and more automated so less people are required which cuts down on labor costs. Back in the 1980’s when basically all apparel manufacturing was done here, human capital was one of the largest expenses. Now robots and other technological advances can really cut down on costs. We understand this will not help job growth in the USA, but it would bring manufacturing back.
2. Rise of Chinese Labor and Transportation Costs– Over the past decade, US labor costs have remained relatively flat while Chinese labor costs continue to rise. If this pattern continues the savings from manufacturing overseas will continue to dissipate and more manufacturing will be brought back home. Additionally, transportation costs have risen in China. Here in the US, gas prices are at record lows which means even more savings.
3. Flexibility– In today’s apparel market, fashion trends are changing at a greater pace than ever. That means retailers need to be able to change directions quickly based on consumers tastes. Making huge production runs overseas with long lead times is not what many retailers are looking for. Also ecommerce does not require companies to take as large of inventory positions as traditional retailing. For these reasons, manufacturing closer to home just makes sense.
4. Made in the USA – The good ol’ “Made in the USA” stamp in a t-shirt still means something to consumers. People are patriotic and are proud to wear t-shirts made on their home soil. In fact, studies show a certain amount of people are even willing to pay more for shirts made in the USA.
For these reasons (and many others) you can make a compelling argument that, to some degree, manufacturing will return home. However, we believe that on many basic items like plain white t-shirts, it still makes sense to produce abroad.