Smaller labels may bear the brunt of EU tariff on US denim
As the EU imposes counter tariffs on American denim, the US side of the industry remains on edge. However, large companies such as Levi’s and True Religion, as American as they seem, actually create the largest portion of their goods overseas. The EU tariffs affect US-manufactured goods only. Levi’s sources products from 26 countries to service 110 countries around the world. Levi’s feels this diversifies their source base and spreads the supply chain. The brand is an American business but with an international footprint.
The same goes for True Religion, a brand with entirely American roots that moved production to Turkey long ago. The counter tariffs do not affect True Religion since it does not produce denim in the USA anymore. And it’s the smaller American denim labels that are still producing entirely in the US but selling overseas that are left facing a challenge that could cost them their entire European market share.
However, the mood is definitely tense. Apparel imports were already taxed high before the trade standoff, so the additional 10 per cent import tax on everything coming into the US from China, like apparel and textile and apparel production machinery, coupled with the 25 per cent tariff China has placed on raw cotton imports from the US, could have a serious impact on prices for both brands and consumers.
Progress seen in supply chain cleansing of global brands
The fashion industry has made progress toward purging its supply chain of hazardous chemicals. Brands are taking responsibility for the whole production, the whole supply chain, instead of just focusing on the finished products.
Greenpeace has signed on 80 apparel companies to detox by 2020, including sportswear brands such as Puma, Nike and Adidas, fast-fashion giants including Primark and H&M, as well as outdoor brands, suppliers and denim brands including Levi’s and G-Star Raw.
Detox implies ending the use of hazardous chemicals in the fashion supply chain and products. Almost all detox-committed brands have moved towards greater transparency by implementing regular water-waste testing and disclosing the results. In addition, 72 per cent of brands either already publish or have committed to publishing an extended list of suppliers to include wet processing suppliers (typically washing and dying) lower down the supply chain.
However, the luxury sector is unwilling to commit to detoxing. Only two luxury houses, Burberry and Valentino, are among the detox-committed brands. Suppliers have also helped reduce the use of hazardous chemicals in the luxury sector, even if high-end brands haven’t committed to the campaign. Zara-owner Inditex committed to detoxing in 2012. Making corporations legally responsible for their supply chains wherever they produce in the world is a way forward.
Levi Strauss records double digit growth
Levi Strauss’ Q2 results beat the company’s own expectations with a third straight quarter of double-digit sales growth across all regions. Levi Strauss has had a good run over the past three quarters, continuing to outpace industry peers even in a strong denim fashion cycle.
Levi’s growth was the strongest in Europe, with net revenue up 31 per cent and operating income up 51 per cent through the quarter ended May 28, about a month before the EU put a 25 per cent tariff on imported jeans.
Women’s apparel and tops were the strongest sales drivers in the quarter in Europe. Revenue grew 13 per cent in Asia compared with the year prior and 11 per cent in the Americas.
The company has a fairly complex supply chain so diversification is important. It sources from about 26 countries. No country supplies more than 20 per cent of its needs. Its direct-to-consumer business and retail partnerships are both growing. Direct to consumer, both store and online combined, logged its tenth straight quarter of double-digit sales growth. But the new 25 per cent tariffs on US jeans in the European Union and a trade war with China could spell trouble for Levi's and other iconic American brands.
Kenya’s slow delivery affects Agoa exports to US market
Kenya's incapability to deliver orders has been responsible for the country’s inability to fully benefit from the apparel industry's duty-free access to the US market. Jas Bedi, Head, Kenya's Export Promotion Council, says it takes an average of 135 days to deliver goods to US buyers from the time an order is placed in Kenya.
Kenya’s total exports to the US under the Agoa peaked at Sh35.2 billion in 2015. The 75 days it takes for fabric from Asia to reach manufacturers in Kenya accounts for most of the delivery lag of finished products to the US. The varieties of fabrics needed to keep pace with the rapidly changing demand are not available to Kenyan factories in a timely manner.
Shortening supply chain would enable Kenyan manufacturers to reap greater gains through the US preferential trade program Agoa. As per US trade agency, 40,000 Kenyans currently hold Agoa-related jobs. Kenya ranks among the top supplier of apparel to the US, having exported $340 million worth goods to the US last year. Agoa is set to expire in 2025 and US officials have warned that duty-free exports from Africa are unlikely to continue after that date.
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Members of the US Congress are signaling they probably will not extend Agoa's envisioned 25-year lifespan.
Kenya aims to push up textile exports
Kenya is taking steps to expand exports and raise the country’s share of new investments. The country will particularly be focusing on trade windows such as the African Growth and Opportunity Act (AGOA) and the European Economic Partnership Agreement (EPA) which have not been fully exploited.
AGOA, for instance, grants quota and duty-free access to the US market of more than 6,000 product lines but has been dominated by exports of textile and apparel, which account for 65 per cent of total exports. The US is Kenya’s largest apparel export destination.
The aim is to increase manufacturing to 20 per cent of the GDP. Kenya’s textile sector seeks to grow exports to 20 per cent annually by 2022. Kenya is looking to expand the list of products it exports. With the country becoming more visible on the global map, local traders are increasingly opening more supply channels to the US, helped by increased interactions with American investors. Kenya’s volume of international trade in 2017 expanded by 15.4 per cent.
Textile and apparel products continue to dominate Kenyan exports under AGOA since it was enacted in 2000. AGOA exports constituted 60 per cent of all Kenyan goods shipped to the US in 2017.
Interfilière focuses on innovation
Interfilière Paris was held July 7 to 9.
The event chose this year to highlight the latest eco-responsible innovations for the lingerie, swimwear, and activewear markets.
The innovation forum presented an overview of the environmental and social impact of fabrics and textile processes in order to guide the visitor through the latest innovations, following the major guiding principles of eco-design, reduce, reuse, recycle.
A range of sustainable exhibits included Billon’s jersey fabrics in environmentally friendly botanical polyamide, Brugnoli’s collection of functional knits made from 100 per cent bio-sourced polyamide, Aquafil’s Econyl, the polyamide made from fishing nets, Sofileta’s knits made using fibers recycled from post consumer waste, Maglificio Ripa’s knits that included Evo bio-sourced nylon fibers, a polymer made from castor oil.
A collection of knits including recycled 6.6 polyamide Q-Novafibres by Fulgar was also on display.
Consumers are asking more questions about the origin of fabrics and the chemical substances used, as well as the entire manufacturing process.
Many industrial stakeholders in the textile sector have already experienced this awakening and are now placing all their ingenuity at the service of protecting the planet and mankind by creating raw materials that meet the needs of the environmental and social challenges faced by this industry.
ARD focusing on improving denim’s image
Alliance for Responsible Denim (ARD) is taking steps to make the denim industry more sustainable and better prepared for the future. ARD fosters collaboration and conversations between suppliers and brands with the goal of improving denim production’s ecological and sustainability impact. It is underscoring the importance of collaboration by highlighting how its members are advancing post-consumer recycled denim, minimizing their water, energy and chemical consumption, and designing for circularity.
ARD was founded in 2016 as an initiative from the Amsterdam University of Applied Sciences, Centre for Applied Research in Economics and Management, House of Denim, Circle Economy and Made-By.
By working with global platforms and showcasing a united front, ARD hopes to connect with the right policymakers and other global do-gooders to help scale its projects. Through highlighting the achievements of its members and giving insights into the inner workings of a multi-stakeholder collaboration, ARD hopes to align with other organizations who can aid in ARD’s mission.
Even veterans of the industry concede that sustainability is too big a challenge for any one company to tackle by itself, and that it will take a joint effort by the industry as a whole to focus on the biggest challenges. To be able to enact real change in this complex system, all stakeholders need to rally around the cause.
FTA urges UK government to confirm Brexit position does not disturb trade
With just a year to go for UK’s departure from the European Union, the Freight Transport Association (FTA) is urging the UK government to up the pace on the negotiation of trading arrangements, or risk damaging integrated supply chains. Pauline Bastidon, Head of European Policy at FTA stated it is unrealistic to expect logistics companies and supply chain managers to wait until the eleventh hour to learn what their new operational arrangements will be and change everything at the last minute.
The FTA made its call ahead of this week’s publication of the government’s Brexit White Paper. A meeting of the government last week has seen high profile ministers quit their positions, including Foreign Secretary Boris Johnson and Brexit Secretary David Davis, because they disagree with the proposals.
Businesses urgently need a confirmed action plan for how a smooth and efficient Brexit is to be achieved, without the constant political posturing and power grabbing which has dominated the past few days, says James Hookham, Deputy Chief Executive of FTA.
The FTA has produced an eight point roadmap, designed to ensure that the UK’s departure from the EU does not compromise or curtail trade across the Channel.
Bots will spell job losses in apparel manufacturing countries
Automation is revolutionizing routine manufacturing processes. It’s estimated 56 per cent of workers in key apparel sourcing countries, including Cambodia, Indonesia, Thailand, the Philippines and Vietnam, will lose their jobs to automation by 2040. Because of their reliance on low-skilled labor and the already apparent labor rights violations, these countries will be particularly at risk when the impact of automation starts to fully set in.
The impending job losses bots are set to bring are expected to produce a spike in slavery and labor abuses across global supply chains. Displaced workers without the skills to adapt or the cushion of social security will have to compete for a diminishing supply of low-paid, low-skilled work in what will likely be an increasingly exploitative environment.
While it may not be news that the advent of automation will mean the ouster of certain human manufacturing jobs, the underlying effect on ethical labor has largely gone undiscussed. Automation is revolutionizing routine manufacturing processes and lowering labor costs to the extent that companies in China and even the US may be able to undercut cheaper rivals.
The apparel, textile and footwear industry employs 39 per cent of all manufacturing workers in Vietnam, and the number climbs to a higher 59 per cent for Cambodia. In both countries, 85 per cent of jobs in the sector are at high risk of automation.
Bangladesh needs to focus on producing blended denim
In 2017 Bangladesh’s exports of denim products to the US grew 9.55 per cent compared to 2016. Bangladesh also imports denim fabrics. The top sources of denim imports are: China, Pakistan, Hong Kong, India, Thailand and Turkey.
But Bangladesh produces mostly 100 per cent cotton denim fabrics and not the blended denim variety which has high demand globally. Denim enterprises in Bangladesh will do well if they give due consideration to manufacturing blended denim as well. The Bangladeshi denim sector needs to consider the increasing global market preference for blended denim. Slim fit and stretch jeans are the preferred casual wear for men and women in the West. Fashion trend is shifting towards more body contour, flexibility, ease of wear, breathability and lightness of fabric -- all properties of blended denim. Those currently planning for investment in production of denim fabrics will be better off to include blended denim in their product line.
For cotton denim, the largest exporter to Bangladesh is Pakistan, followed by China and India. For blended denim fabrics, the top exporter to Bangladesh is China. China holds about 70 per cent of the import market share in Bangladesh for blended denim.
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American industry fears tariff shocks
The US decision to impose tariff on an additional $200 billion worth of imports from China is expected to hurt American consumers, workers and businesses resulting in inflationary costs throughout the supply chain, ultimately paid for by American consumers. The list includes numerous textile, accessory, and travel goods products such as handbags, hats, and textiles on this additional list of products that will directly impact the American apparel and footwear industry and its retail partners.
More than 84 per cent of US travel goods come from China. The United States may ultimately target over $500 billion worth of Chinese goods, or roughly the total amount that the United States imported from China last year. The US has railed against China for intellectual property theft and barriers to entry for US businesses and a 375 billion dollars US trade deficit with China.
The dispute has roiled financial markets including stocks, currencies and the global trade of commodities from soybeans to coal in recent weeks. While the initial volley of tariffs is not expected to have a major immediate economic impact, the fear is that a prolonged battle would disrupt makers and importers of affected goods in a blow to global trade, investment and growth.
Adidas objects to Rockport bankruptcy sale
Rockport has agreed to a sale to private equity firm Charlesbank Capital Partners, following its bankruptcy. Rockport expects the sale, which will require approval by the court overseeing the shoe seller's Chapter 11 case, to close by July 31. Reebok and its parent Adidas former owners of Rockport that continued an operating relationship with the company after selling it in 2015 have objected to the sale, stating it cannot transfer key assets to Charlesbank while failing to account fully for $54 million owed to the shoe brands.
The German sportswear multinational brought Rockport under the Adidas umbrella in 2005 when it bought Reebok, the brand's parent company since 1986. Adidas, known for actively protecting its intellectual property rights, added in its court papers that it has not yet given consent to Rockport to use its intellectual property rights. The company clarified that it does not object to the sale of the company in itself and actually wants to work together with Rockport, but it does have issues with the current terms proposed to the court.
Technology and its slated expanse for apparel value chain
"Apparel value chain comprises of downstream functions (retailing) managed in advanced economies and upstream functions (manufacturing) managed by least developed economies. Given the small and medium enterprise status of apparel manufacturing and mostly entrepreneurial ventures, cheaper access to technology will be an incentive towards adoption by apparel manufacturing organisations, stresses Dr Prabir Jana, NIFT, Delhi. He says, for the first time, the developed and the developing worlds are creating, collaborating, communicating, and consuming on similar technology platforms, spurring global innovation. Of the 253 ‘unicorns’ tracked by CB Insights, 65 are from China, and 10 from India."
Apparel value chain comprises of downstream functions (retailing) managed in advanced economies and upstream functions (manufacturing) managed by least developed economies. Given the small and medium enterprise status of apparel manufacturing and mostly entrepreneurial ventures, cheaper access to technology will be an incentive towards adoption by apparel manufacturing organisations, stresses Dr Prabir Jana, NIFT, Delhi. He says, for the first time, the developed and the developing worlds are creating, collaborating, communicating, and consuming on similar technology platforms, spurring global innovation. Of the 253 ‘unicorns’ tracked by CB Insights, 65 are from China, and 10 from India. In the global list, only three unicorn companies are related to clothing, while as many as 35 are e-commerce related. Apparel product development hasn’t still come to terms with the adoption of technology for process improvement.
Alluring advantages
As per Digital IQ survey by PwC, companies that are technology leaders in their industries are twice as likely to
achieve rapid revenue and profit growth as the laggards. Originally seen as a tool largely for improving efficiency – doing the same things better and more cheaply – technological innovations are now the fastest means of opening up new revenue streams and transforming traditional industries. Added to that, individual technologies build on each other and amplifying each other’s effects, set the stage for ‘Industry 4.0’. While AI – an emerging technology – is the motive force behind robots, IoT is the key driver behind cyber-physical systems transforming the factory floor into a co-working space with robots. Similarly, Augmented Reality (AR) will give a fillip to training and instruction-related functions and real time physiological data of humans will give fillip to simulation or digital twin technology and so on. The sky is the limit when one wants to opt for technology in apparel value chain.
Artificial Intelligence algorithms are capable of performing tasks which normally would require human intelligence such as visual perception, speech recognition, decision-making, and language translation. AI is an ‘umbrella’ concept that is made up of numerous subfields such as machine learning, which focus on the development of programs that can teach themselves to learn, understand, reason, plan, and act (i.e., become more ‘intelligent’) when exposed to new data in the right quantities. Augmented reality or the addition of information or visuals to the physical world, via graphics and/or audio overlay has the potential to improve the user experience for a task or a product. This ‘augmentation’ of the real world is achieved via supplemental devices that render and display the said information.
Moreover, another rapidly growing technology, blockchain has been rapidly seeping into industries. It is essentially a distributed electronic ledger that uses software algorithms to record and confirm transactions with reliability and anonymity. The record of events is shared between many parties and information once entered cannot be altered, as the downstream chain reinforces upstream transactions. Autonomous land-based vehicles can also prove to be beneficial. These are air unmanned land-based vehicles that move without an on-board human pilot and can be operated autonomously (via on-board computers) on a predefined flight plan or can be controlled remotely. The most popular of all, Internet of Things (IoT) enables devices to be connected and be remotely monitored or controlled. Next comes robots that automate, augment or assist human activities, autonomously or according to set instructions – often a computer programme. Besides these, virtual reality (VR) and 3D printing is increasingly finding space in the apparel industry.
Stretch properties the mainstay in jeans today
"Growing craze for athleisure among millennials is giving tough fight to traditional jeans manufacturers. As Jane Singer, Director and Head of Market Intelligence, Inside Fashion points out the two biggest challenges faced by the denim segment are convincing consumer, who already owns several pairs of jeans, to buy one more pair; and increasing profit margins on products for both retailers and manufacturers. The ‘new consumer’ is more demanding. They read labels, research products before buying, and will return products if they are not satisfied. During a session at Intertextile Shanghai, Singer said new technologies are providing brands with fairly easy ways to elevate their products. Many brands have turned to Lycra T400 technology to add improved stretch and retention to jeans. This has helped to give consumers jeans that fit better."
Growing craze for athleisure among millennials is giving tough fight to traditional jeans manufacturers. As Jane Singer, Director and Head of Market Intelligence, Inside Fashion points out the two biggest challenges faced by the denim segment are convincing consumer, who already owns several pairs of jeans, to buy one more pair; and increasing profit margins on products for both retailers and manufacturers. The ‘new consumer’ is more demanding. They read labels, research products before buying, and will return products if they are not satisfied. During a session at Intertextile Shanghai, Singer said new technologies are providing brands with fairly easy ways to elevate their products. Many brands have turned to Lycra T400 technology to add improved stretch and retention to jeans. This has helped to give consumers jeans that fit better.
Daniel Fang, Garment Center Marketing Dept Manager, Guangzhou Conshing Clothing Group, feels in recent years, the denim industry has benefitted from the successful use of new technologies throughout the supply chain. The wide use of super-stretch and bi-stretch has greatly improved comfort and shaping performance of denim garments.
Innovation, sustainability key to success
As Amy Wang, GM, Advance Denim observes, advertising and marketing does not equal innovation. There needs to be concerted focus on developing
crossover materials and eco-friendly denim fabrics. Even a 1 per cent change in fibre and chemistry can make a huge difference in denim fabrics. Moreover, sustainability is a key concern in the denim sector. For manufacturers, the ultimate goal is to hit sustainability targets without compromising the look and feel that has made denim a consumer favourite.
Newly released Lycra T400 fibre with EcoMade technology is made in part from a combination of recycled PET and plant-based materials. 50 per cent of the fibre is made from recycled materials while another 18 per cent is plant based, bringing the total sustainable content to 68 per cent, according to Jean Hegedus, global segment director – denim & apparel, Invista. LYCRA T400 fibre with EcoMade technology has similar performance to standard Lycra T400 fibre, and the use of recycled PET means that there is less waste going to landfill. Hegedus added that most recycled fibres are not stretch fibres. At the same time, most stretch fibres made partly from renewable sources don’t offer the level of stretch performance that Lycra T400 EcoMade technology offers.
Stretch the mainstay
Almost every consumer today is looking for stretch fabrics, especially in jeans. Even loose silhouettes are looking to stretch fibres to boost shape retention and provide greater comfort to the wearer. Invista offers three options for bi-stretch functionality. Dual Warp technology provides easy-to-control levels of shrinkage and stretch, while retaining the authentic look of the fabric. Easy Set Lycra fibre (T562B) is for fabrics with low to moderate stretch, and offers easy to handle warping, sizing and beaming. Popular Lycra dualFX technology offers excellent growth and shrinkage, even for high stretch fabrics. For true 360-degree flexibility, Lycra XFIT technology is developed to add stretch to the warp for more even stretch in key areas including the seat, thigh and knee. In short, function is replacing fashion as consumers want comfort.
