Apparel imports from China fell even more sharply in October year over year than in September, as the Trump administration’s tariffs continued to propel a shift in sourcing.
Apparel imports from China to the U.S. fell 30.4 percent by quantity in October compared with October 2018, according to the Commerce Department’s Office of Textiles and Apparel (OTEXA) monthly report released on Dec.5.
The administration began imposing retaliatory tariffs on finished apparel and textile on Sept. 1, as part of its crackdown on China’s intellectual property abuses.
“The steep decline in apparel imports from China in October on a year-over- year basis, marks the second month of declines since the Trump administration imposed tariffs on finished apparel and textile products from China and is a strong indicator that there is a shift in sourcing,” said NCTO President and CEO Kim Glas. “As U.S. manufacturers that have suffered enormously from China’s illegal IPR activities and state-sponsored export subsidies, we have long supported the administration’s crackdown on intellectual property violations. The tariffs on finished products are the only way to maintain leverage and truly resolve China’s rampant IPR abuse.”
For the year-to-date, apparel imports from China fell 2.25%, while apparel imports declined 1.2% for the year ending Oct. 31, according to OTEXA.
Glas said the administration’s actions against China could ultimately help lead to sourcing shifts to the Western Hemisphere, which is the U.S. textile industry’s largest export market.
Textile mill product exports to the Western Hemisphere declined 2.5 percent for the year-to-date as well as for the year ending Oct. 31.
But textile exports to some individual countries in the region increased. Honduras, a partner in the Central American Free Trade Agreement or (CAFTA-DR), posted an 8.5 percent increase by quantity for the year-to-date through October
There were also other bright spots in the data, particularly in apparel imports from the Western Hemisphere, which largely incorporate U.S. textile inputs. Apparel imports to the U.S. from the region rose 0.88 percent for the year ending October.
“Early indications in the trade data show that sourcing is shifting. Apparel imports from the Western Hemisphere that largely incorporate U.S. textile inputs increased modestly and if it continues, this is a trend that will have positive implications for the U.S. textile industry,” Glas said.
Unifi executives recently met with Under Armour leaders in Baltimore to present the company with its REPREVE® Champions of Sustainability award. To date, Under Armour has recycled 69 million bottles through its use of REPREVE recycled fiber, which offsets the use of petroleum needed to produce virgin fiber. This conserves enough water to nearly fill Baltimore’s National Aquarium to capacity.
Two National Council of Textile Organization (NCTO) member companies are making giant strides in the area of sustainability with the production and use of recycled performance fibers.
Unifi Inc., a global producer of synthetic and recycled performance fibers, which launched sustainability awards two years ago, has awarded Under Armour Inc. its REPREVE® Champions of Sustainability award.
By incorporating Unifi’s REPREVE recycled fiber in its athletic performance wear, Under Armour has recycled the equivalent of 69 million bottles, which offsets the use of petroleum needed to produce virgin fiber. Taking this step, the company has conserved enough water to nearly fill Baltimore’s National Aquarium to capacity.
“The REPREVE Champions of Sustainability Awards are meant to honor and inspire companies to source responsibly and take sustainability strategies to the next level,” said Jay Hertwig, senior vice president of Global Brand Sales at Unifi. “We’re proud to partner with Under Armour to create eco-friendly apparel for the good of tomorrow.”
For an industry that is often not given its due for developing and employing advanced sustainable technologies and practices that mitigate their impact on the environment, these awards highlight how Unifi and other major brands and textile partners are playing a role in sustainability.
Unifi’s REPREVE recycled performance fibers transform more than 18 billion plastic bottles into recycled fiber for new clothing, shoes, home goods and other consumer products made by leading brands. The company is on track to hit its goal of 20 billion plastic bottles by 2020.
Recognizing the importance of incorporating more sustainable inputs and practices into business models, Unifi joined teams with The Olio, a nonprofit organization based in Winston-Salem, N.C. that focuses on teaching and empowerment through entrepreneurship, glassblowing, art and sustainable practices. The Olio uses sustainable materials to make the trophies given to winners of the awards program each year.
The Champions of Sustainability awards continue to recognize brands, retailers and textile partners that are committed to sustainable sourcing.
In 2018, Unifi recognized 68 companies as Champions of Sustainability, which represented a 36 percent increase over the total in 2017. Nike and Target joined Polartec in the “Billion Bottle Circle” for recycling more than one billion bottles each, while Ford and H&M were recognized for recycling more than 250 million bottles.
Adidas, Hanesbrands, Volcom and Williams-Sonoma were also recognized for reaching new milestones in 2018.
The REPREVE Champions of Sustainability were awarded to 28 brand and retail partners in 2018 that each used the equivalent of 10 million or more bottles, and 30 textile partners that each used the equivalent of 50 million or more bottles, through the inclusion of REPREVE performance fibers.
The full list of third annual award winners will be announced in January 2020.
The U.S. textile industry is poised to take advantage of a policy instituted by the United States Postal Service (USPS) in October 2018 that requires all materials, apparel, accessories, insignia and applicable findings such as thread, buttons and zippers to be produced domestically and assembled in the United States by September 30, 2020.
Federal domestic sourcing requirements have led to a significant amount of business for the U.S. textile industry. In fact, the U.S. government is the textile and apparel industry’s largest customer.
The National Council of Textile Organization’s (NCTO) membership, representing the full spectrum of the American textile industry from fiber through finished sewn products, has been a staunch supporter of the Berry Amendment, a 50-year-old provision in the law that requires most textiles and clothing purchased by the U.S. military to contain 100 percent U.S.-made fibers, yarns, and fabrics and be cut and assembled in the United States.
The Department of Defense alone purchases more than 8,000 different textile items for the U.S. military and other allied organizations, which increases to more than 31,000 line items when individual sizes are factored into one item mix. The U.S. government routinely spends more than $2 billion annually on textiles and clothing.
As part of our ongoing commitment to the men and women of our military services and working with military procurement teams at the Defense Logistics Agency (DLA) and Natick we remind them that most of the clothing and textile products that are procured by DLA are touched in some way by a NCTO member company.
Whether it is yarns fibers threads, dying finishing, laminating, knitting or weaving, the U.S. textile industry spends millions of dollars per year of its own R&D money on the quest to build the next generation of textile products for the U.S. warfighter.
Within that context, the industry has many producers that can fulfill the requirements needed to supply the USPS–an independent agency under the executive branch– domestically sourced uniforms for nearly 500,000 postal employees.
“Our members have identified able and qualified cut and sew operators to make the finished goods in the event current vendors are unable to comply,” stated NCTO President and CEO Kim Glas in a letter to the USPS earlier this month. “We are confident that other fabrication companies are ready to serve your needs.”
“…Berry Amendment-compliant fabric and yarn manufacturers, coupled with American cut and sew operators, have proven to be reliable partners to the U.S. government. Procurement officers in both the Department of Defense and the Department of Homeland Security will attest to the commitment the domestic industry has demonstrated over the decades to deliver a top-notch quality product, train exceptional technical staff, and invest for the future,” Glas noted.
We recently communicated the scope of our production capabilities to both the DLA Troop Support and the USPS and will continue to closely work with both to help the textile industry expand its government procurement business, workforce and investments.
There are several pending legislative proposals and policies on which NCTO has been actively engaged in October and November. NCTO has consulted with members of Congress and administration officials to advance policies that will benefit the U.S. textile industry, ranging from the United States-Canada-Mexico Agreement (USMCA) to a thorough examination of de minimis shipments, which have seen a sharp increase. We could see some traction on our issues this fall and will be closely monitoring the following:
U.S.-Mexico-Canada Agreement (USMCA): Consultations between U.S. Trade Representative Robert Lighthizer and House Democrats to address concerns about the trade agreement’s provisions addressing labor, the environment, and other areas continued throughout October and into early November. The administration has not yet submitted an implementing bill to Congress, and it is unclear when a bill is expected or whether it would receive a vote this year.
National Defense Authorization Act (NDAA): Negotiations between the House and Senate on the FY 2020 National Defense Authorization Act have broken down over differences between the chambers over topline spending numbers and funding for the administration’s border wall. The Senate has proposed a pared down measure that would fund only necessary defense programs, but this has been essentially rejected by the House. Negotiators are seeking a path forward with a December funding deadline and potential government shutdown looming in the coming weeks.
NCTO Letter on De Minimis: NCTO President and CEO Kim Glas sent a letter to CBP Acting Commissioner Mark Morgan highlighting the problems that U.S. de minimis policy poses for domestic manufacturers and asking for the agency’s help to better understand the scope and impact of the problem. Currently, any direct-to-consumer shipment valued at less than $800 avoids all duties regardless of country of origin, and these shipments have increased exponentially in recent years at the expense of public health and safety, U.S. manufacturers, and American workers.
Miscellaneous Tariff Bill (MTB): In October, the U.S. International Trade Commission began accepting miscellaneous tariff bill petitions through its web portal, https://mtbps.usitc.gov/external/. MTBs provide duty relief on manufacturing inputs not readily available from a domestic source, valued at up to $500k annually. NCTO members are encouraged to both file petitions for inputs that will make their manufacturing processes more competitive and monitor filed petitions that would negatively impact their businesses. The MTB portal will accept petitions through December 10.
Please contact Todd Ethington at email@example.com for further information.
The Trump administration’s tariffs on Chinese imports—imposed as part of the administration’s crackdown on China’s intellectual property abuses—are having an impact on sourcing, early data shows.
According to a pair of new reports, imports from China across a broad range of categories currently subject to tariffs, including apparel and textiles, have fallen sharply, as companies look to divert production to other countries and/or source domestically in the face of the additional tariffs.
Apparel imports from China to the U.S. fell 13.2 percent by quantity in September—the first month the U.S. applied tariffs on those products—compared with September 2018, according to the Commerce Department’s Office of Textiles and Apparel (OTEXA) monthly report.
On a dollar basis, the decline in Chinese apparel imports was even steeper—down 18.2 percent—to $2.55 billion.
“We have long supported the administration’s crack down on intellectual property violations and tariffs on finished apparel and textile products appear to be having a strong impact on China’s sourcing dominance,” said NCTO President and CEO Kim Glas. “This is why we have urged the administration to keep the tariffs on finished apparel and textile products—pillar sectors of the Chinese economy. Maintaining tariffs on finished products is the only way to maintain leverage and truly resolve China’s rampant IPR abuse.”
It is critical to addressing not only China’s IPR abuses but also other illegal trade practices, particularly the use of forced labor which has recently come to light and prompted U.S. officials and members of Congress to take action.
Major news outlets have reported that detained Uyghur minority groups are being forced to make clothes and textiles for global companies in China’s western Xinjiang Uyghur Autonomous Region (XUAR) that are shipped to the U.S. and around the globe. It is well documented that the Uyghur people have faced years of oppression and are forced into labor programs and internment camps in the region.
U.S. Customs and Border Protection (CBP) recently blocked a large shipment of imported garments made by the Hetian Taida Apparel Company located in that region on suspicion of forced or prison labor violations.
That action prompted the chair and co-chair of the Congressional-Executive Commission on China to pen a letter to acting Customs Commissioner Mark Morgan, calling for aggressive enforcement action to stop the importation of manufactured goods made in the region with forced labor.
The commissioners stated there is “compelling evidence to suggest that manufacturing using forced labor is not only widespread but integral to the Chinese government’s campaign of repression in the XUAR.”
“For all of the reasons listed above, we feel tariffs should remain in place on finished apparel and textile products from China,” Glas added.
She also said the move could ultimately help lead to the re-shoring of some production to the United States and Western Hemisphere production platform.
“Early indications in the trade data show that sourcing is shifting. We saw an uptick in textile exports to some countries in the Western Hemisphere, as well as an overall increase in apparel imports from the region in the first nine months of the year compared with the same period last year. These apparel imports from the Western Hemisphere largely incorporate U.S. textile inputs,” Glas said.
A second report by the United Nations Conference on Trade and Development, examining the impact on products in the first two tranches of U.S. tariffs, shows that overall imports from China to the U.S. fell 25 percent, or $35 billion, in the first half of 2019 year over year.
While textile and apparel imports from China were not included in the first two tranches of U.S. tariffs studied by the U.N., the agency still found that China had an estimated export loss in textiles and apparel of $1.19 billion in the first half of 2019 compared with a year ago.
Of that loss, some $866 million in textile and apparel imports was diverted to other countries, according to the U.N. report.
The biggest beneficiaries of trade diversion from China in textile and apparel production in the first half of this year included the European Union with $66 million, South Korea with $48 million and Mexico (the largest export market for U.S. textile producers) with $47 million, according to the U.N. report.
Leib Oehmig, president and CEO of North Carolina-based Glen Raven, Inc., a 139-year-old global performance fabric manufacturer serving such markets as the awning, marine, furniture, protective, and military, has spent the past 30 years navigating the seismic changes in the industry brought about by globalization. As chairman of the National Council of Textile Organizations (NCTO), Oehmig has spent the past six months working with the association to help shape the policy debate in Washington and maintain a seat at the negotiating table on trade policy and regulations that have a significant impact on this expanding and dynamic industry that employs nearly 600,000 workers.
NCTO spoke with Oehmig in a wide-ranging Q&A, where he outlined his priorities for NCTO, which represents the full spectrum of U.S. textiles from fiber though finished sewn products, and stressed the importance of building strong ties with allies on Capitol Hill and in the administration to manage rapidly evolving trade policies. The Q&A also touches on the industry’s efforts on sustainability, the U.S.-Mexico-Canada Agreement (USMCA) and the outlook for the industry.
Q: What is the biggest change you’ve seen in the U.S. textile industry during your tenure at Glen Raven?
Oehmig: I think the biggest impact that I’ve seen—and it’s not just the textile industry but industry and business broadly—is globalization. When I joined Glen Raven we were very much a North American-centric organization. We were selling products to other countries, but we were not a truly global business. Now with locations in 17 countries and selling to more than 100 countries, the evolution of global markets has certainly been the biggest change that I have seen in business.
Our industry has tried to help shape the legislation and free trade agreements to ensure fairness and a level playing field for all manufacturers. It has influenced everything we do and everything we think about.
Q: What are your key priorities for NCTO, following your first six months as chairman of the association?
Oehmig: My priorities from the beginning have been to support both the association and NCTO leadership as we continue to navigate this transition period. I think any time you have a leadership change in any organization it really gives you an opportunity to take a deep dive and to give thoughtful consideration to your objectives and strategy to ensure that you are focused on the right things. [Kimberly Glas took over as president and CEO of NCTO on April 29, succeeding Augustine “Auggie” Tantillo who retired from the association.]
Under Auggie’s leadership, NCTO made incredible progress in terms of our presence and the credibility that we, as an association, achieved on Capitol Hill.
I think Kim has been very clear in her 100-day plan about wanting to take that deep dive—to do membership outreach and get out into the industry, not only to reengage but in some cases to introduce herself—and hearing from our membership to confirm that the priorites that we have been working on over the last several years remain relevant. She and the NCTO team have done a really nice job of collecting and incorporating feedback into the objectives Kim has set for NCTO.
Q: How do you think NCTO can best achieve results?
Oehmig: One thing that would be most helpful for NCTO is having an increased engagement level across our entire membership base. There are some large players out there, whether individual companies or associations, with whom we often find ourselves on the opposite side of an issue. We need every member company to be engaged for us to ensure that our message is getting through to the right people.
We talk a lot about our membership density. We need members to help NCTO in terms of establishing relationships with members of Congress in those districts where our members have a presence. Members of Congress want to hear from their constituents, which requires participation from the entire breadth of our membership to be most effective. I am hopeful that we will continue to see an elevation in our engagement level.
Lastly, member recruitment and expanding our membership base are top priorities. We will focus on determining how we can make a compelling case to a broader range of companies so that we can expand our membership thereby providing NCTO with the resources it needs to do its best work for our industry. If a company has ever pursued private representation, then they know what an incredible value an investment in NCTO represents. Having this level of talent advocating for our industry is something that we simply cannot take for granted. The global landscape for business is changing faster than at any time in history. Therefore, if our industry wants to help shape that landscape, we must be invited to the table.
Q: The administration has placed a strong emphasis on trade. How is the industry positioned to address impactful policy changes?
Oehmig: One of the things that NCTO has really done well over the last decade is earning a seat at the table when it comes to trade policy. NCTO is now viewed as a thought leader on trade and a resource for government when they start contemplating either modifications to current trade agreements or negotiating new trade agreements. I feel that has done more for the industry in the area of trade than anything else for the fact that now we are not always reacting to provisions within a negotiated trade agreement, we are actually in a position to help shape those agreements.
Q: Congress could take up the U.S.-Mexico-Canada Agreement (USMCA) this year. How important is that trade deal to the entire textile industry?
Oehmig: I feel it is critical. It is critical not only for the industry, but also for this hemisphere. You think about our largest trade partners—Mexico and Canada. We had over $17.4 billion in yarn, fabric and textile made-up exports to the world in 2018, and the countries that were buying the most—Mexico and Canada—were responsible for $8.8 billion of that. They are our two largest trading partners, making the USCMA region our most important export market for textiles and apparel combined at $11.7 billion in 2018.
Our member companies and people across our industry over the last 25 years since NAFTA was negotiated were encouraged to really engage with the NAFTA region and to establish our value chain throughout the region. That is in fact what the industry has done. We all recognize there were some improvements and modernization that could occur and we supported renegotiating NAFTA. Fortunately, our industry, NCTO and its leadership were consulted and had a seat at the table when it came to shaping what is now USMCA. We are certainly doing all that we can to encourage members of Congress with whom we have a relationship to get this agreement across the finish line.
Q: What is the current state of the industry? What are the challenges and headwinds at the moment?
Oehmig: If you look at the latest numbers that we had from 2018 over 2017, we saw growth in the domestic textile industry broadly. It wasn’t necessarily robust in terms of percentage growth but we did see growth. There were a lot of positive things that were benefiting the industry in 2018 and it has continued. There are still a lot of opportunities out there in the market.
In terms of the headwinds, it is just a general feeling of uncertainty. If you distill what keeps my peers up at night down into a single word, they cite general uncertainty, whether we’re talking about trade, geopolitical or global economic uncertainty. The fact that we are in the tenth year of this economic expansion, seems to have everyone waiting for the other shoe to drop.
While the fundamentals and metrics remain largely positive, there is just a growing sense of uncertainty. In my travels, I find that it is not just in the U.S., but a global sentiment. However, incredible opportunity remains for those who are prepared to adapt to the changing dynamics in global markets, and it is incumbent upon all of our members to continue to innovate, to continue to fill the pipeline with new products and services and to respond to those new opportunities.
Q: Are you seeing growth in the industry? The numbers are showing some growth over the past year or two.
Oehmig: If you look at the value of U.S. textile and apparel shipments, they were up from $73 billion in 2017 to $76.8 billion in 2018.
Those statistics reflect growth, which is also the case for U.S. exports of fiber, yarn, fabrics and apparel in 2018 vs. 2017. We do not have the benefit yet of knowing how 2019 will look in terms of the metrics, but I haven’t heard of anything that would completely unwind those statistics. It just depends on the market and the geography served.
Q: What are you seeing in terms of the industry’s commitment and efforts to incorporate more sustainable business practices?
Oehmig: Maybe it’s just because of the nature of who we are, but I feel that we do not do a very good job of highlighting all of the incredible work that our industry is doing in the area of sustainability. There are numerous examples where our industry is taking a leadership role and for that we should be proud. I know that our member companies want to be viewed as great corporate citizens in every community and market they serve. I do not feel this is new. However, it is clear that consumers are going to press us to increase our environmental consciousness in the things that we’re doing to create sustainable practices and to be even more thoughtful, both environmentally and socially. Not only do our member companies know that it is the right thing to do but they also recognize that we are going to be held accountable by our customers and consumers in general.
Q: What is the outlook for the industry with so many policy changes on the trade front and global business pressures?
Oehmig: I feel very optimistic and encouraged for our industry. Clearly there will always be challenges and we need every company to engage in the process. Every company or group that benefits from a strong North American textile industry must become a member of NCTO. We need for every industry participant to make an investment in ensuring that our voice is heard in Washington. It takes headcount. Therefore, the work and the investment cannot be left to a few.
Individual companies must continue to innovate. When we think about the markets our industry serves, the products and services we provide, we all must be focused on creating clear points of differentiation that are valued by consumers. If we continue to bring innovation to the market, that will give us the greatest chance of winning. We need to engage with policymakers to help shape policy, to give us an opportunity to bring innovative ideas and services to the marketplace and not get tangled up in an overly regulated environment. If those things happen then I feel really good where we are as an industry. And if we continue to invest in NCTO so that our team can do its best work, then I feel the combination of a strong group of companies who represent our membership, along with the leadership of NCTO in our engagement with policymakers, will result in some great outcomes for our industry.
The National Council of Textile Organizations (NCTO), a Washington, DC-based trade association representing the entire American textile industry from fibers to finished products, to machinery manufacturers and power suppliers, has long been a trusted source for industry-related news and data. Now, in support of their mission to mobilize support for the U.S. textile industry in the 21st century, NCTO will launch the “Textile in the News Blog” with their first feature on November 1.
The original content will be hosted on NCTO’s sister website www.TextilesintheNews.org. Each month, NCTO will provide readers with updates on legislative and trade developments in Washington that are relevant to the textile industry and offer unique spotlights on innovations and initiatives occurring throughout the industry.
NCTO’s mission is focused on creating powerful national and international alliances to advance the interests of the U.S. textile sector. Through the regular publication of original content, NCTO will be able to more effectively reach its targeted audiences with the information that will help support this vital domestic industry and shape policy in Washington.
As a lobbying group, NCTO is harnessing the influence of an array of associations and business groups that have a stake in the survival and prosperity of the U.S. textile sector to leverage our impact in the halls of our nation’s capital.
Domestically focused to ensure a prosperous future for the U.S. textile sector and globally positioned to work effectively with our international allies, NCTO is on the front lines meeting the challenges of the 21st Century.
Look for more original content from NCTO’s Textiles in the News in the weeks to come!