A USFIA report reveals, despite reduced optimism about the industry's future due to the outbreak, 90 per cent of fashion companies plan to increase hiring over the next five years, particularly in production and supply chain roles. China remains the foremost location for apparel sourcing and manufacturing even as fashion companies diversified their sourcing throughout Asia, and to lesser extents, in Mexico and Sub-Saharan Africa this year. The long-term focus of these companies is to find partners outside of China that meet quality and compliance standards.
The widespread economic impact of the pandemic has forced many firms to operate with less cash. In USFIA's survey, 90 per cent of companies expect decreased sales revenue this year due to the collapse in consumer demand. Fashion companies have delayed and/or canceled orders because of low demand, which in turn has negatively affected suppliers in Bangladesh and India especially, according to the report. The report states, respondents seem to be more careful about canceling orders from Vietnam due to many regarding it as the next China for apparel sourcing.
The report noted a renewed interest in shifting sourcing and manufacturing outside China due to finalization of the US-Mexico-Canada agreement in July. The agreement allows textile fibers to be produced globally but components such as sewing thread, pocket bag fabric, and narrow elastic bands need to be sourced in one of the three participating countries to qualify.
Tim Yu, Supply Chain Risk Intelligence Analyst, Resilience360, said that firms should use supply chain mapping work to understand whether their current sourcing mix will allow them to take advantage of the USMCA's benefits.