US nearshoring vision closer than ever on global supply chain snafu

A recent documentary has explored US nearshoring, and Kristi Ellis, VP of communications at the National Council of Textile Organisations (NCTO) believes it is closer than ever to becoming a reality, but policy is needed to secure its long term sustainability. (Read the column on Just Style here.)

By Guest Author

Nearshoring, probably a pipe dream for many US brands just a short while ago, is now closer than ever.

The Financial Times and its global business columnist, Rana Foroohar, have produced one of the most honest and accurate portrayals of the adverse effects of globalisation on US textile manufacturing over the past two decades, while capturing the industry’s current renaissance in the wake of the Covid pandemic.

In this documentary film entitled “Manufacturing in America, postglobalisation,” Foroohar looks at why the US should bring manufacturing jobs back home and highlights the existing textile industry which has played an instrumental role in supplying thousands of products for all industrial segments, the military, consumer market, and personal protective equipment (PPE) to the public and private sector.

In the second of three films, based on her new book, “Homecoming: The Path to Prosperity in a Post-Global World,” Foroohar follows the all-American supply chain of clothing company American Giant to see how it impacts jobs, businesses and communities.

American Giant CEO and founder Bayard Winthrop, Parkdale chairman and CEO Anderson Warlick, Carolina Cotton Works president Bryan Ashby, and National Council of Textile Organizations (NCTO) president and CEO Kim Glas, among others are all featured in the newly release film.

“I wanted to make this film about US manufacturing, because I believe that we are at a turning point. Since the 1980s manufacturing jobs have plummeted. In the constant drive to make things cheap, factories and jobs were moved overseas. Textiles were hit especially hard,” Foroohar says in the opening of the film. “But I want to show you how post pandemic there is a new regionalisation of industry taking place. And jobs are starting to move back. It’s about being focused not on what is cheapest but about creating better jobs for local communities.”

Globalisation’s impact and the China Effect

 The film opens in a cotton field in North Carolina and takes us on a US manufacturing journey stretching from the field to all points in the production chain and finally to a store shelf in New York.

It is a narrative within a broader narrative about how “prioritising efficiency over resilience, and profits over local prosperity, has produced massive inequality, persistent economic insecurity and distrust in our institutions,” which was expertly outlined in Foroohar’s new book.

Foroohar provides new arguments on why a post-global industrial strategy is needed and the “rise of local, regional and homegrown business is now at hand.”

Thirty years ago, the US was leading the textile sector, Foroohar explains in the film, but globalisation advocates and forces coupled with other seismic international trade actions, such as China’s accession to the World Trade Organization (WTO), exacted a heavy toll on the US manufacturing sector.

“What we were told was that we needed to normalise our relationship with China so that they would play by the rules,” says Glas in the film. “So their accession to the WTO, granting them Permanent Normal Trade Relations (PNTR) status — there’s nothing normal about it. We have suffered greatly.”

On globalisation and China’s accession to the WTO former US trade representative ambassador Robert Lighthizer notes: “There was this kind of hubris that the world had changed and that market forces forever now were going to move us in the direction of economic growth and freedom throughout the world and all these notions, which were lovely except they just don’t exist.”

Foroohar notes that many in the US manufacturing sector “feel that free trade was never really free, because it didn’t account for the lower labour and environmental standards that allowed a lot of countries overseas to make things more cheaply.”

“Free trade is about price optimisation and consumption,” Lighthizer says. “I think the important thing is production. Production leads to good jobs, good wages and solid fundamental American communities.”

Lighthizer believes the drive to globalisation saw the US effectively giving away its prosperity, Foroohar notes.

“If there is a sacrifice of a price of a T-shirt or your third television set, in order to have strong communities in America, that’s the sacrifice that I’m willing to make,” Lighthizer adds.

On globalisation and access to US markets, Parkdale chairman and CEO Anderson Warlick notes: “This is the largest economy in the world and the price of admission is not that high and it should be. They should pay their share just like every American taxpayer.”

It’s like letting other athletes start a 100-metre race closer to the finish line, she says citing Warlick.

“Competition is good and Americans thrive on competition. Now free trade? That’s a unicorn I’ve been chasing for 30 years, trying to find anybody in the world that practiced it,” Warlick says. My best way of describing it is, it’s economic treason.”

Resurgence of resilient nearshoring US textile supply chain

 Yet, even as companies rushed to offshore production, gutting the US manufacturing sector’s workforce, a core industry remained here and thrived.

The film focuses on one US company’s perseverance and success, under the leadership of American Giant’s CEO Winthrop.

“The original idea behind the company was to reclaim the very high quality American-made stuff. I had felt that… the care and the passion and skill and craft and work that goes into making a product was not just important from an understanding about how you build quality product but emotionally important and societally important,” Winthrop says.

“The idea that there isn’t a good textile capability in the United States anymore is nonsense.”

Foroohar observes that American Giant’s supply chain encompasses cotton gins, mills, knitting and sewing factories all within a 120-mile radius.

“That not only cuts down on shipping costs. It also means he knows his clothing is in line with American environmental and labour standards.

For Bayard, it’s about keeping relationships and expertise close to home.”

Winthrop embraces that proximity to the entire supply chain, noting that standing in a cotton field talking to farmers about varietals and crop production is critical. “It’s creating that connection to the men and women involved in highly complicated processes of making the things we consume today.”

For Parkdale Mills, a major cotton yarn spinner and supplier to American Giant, “it’s all about being able to compete in a global marketplace, leveraging efficient production in the US to go up against the cheap cost of labour overseas,” Foroohar explains.

“We invest heavily in technology to create better efficiencies, to create better quality, roughly US$500m in the last 10 years to create more automation to have the latest, greatest equipment to prepare the fibre and to spin the yarn,” says Davis Warlick, executive vice president of Parkdale.

Warlick adds, “We are constantly striving to make things more automated in order to compete, I think that’s been one of the reasons we are still here.”

Cautious optimism prevails in the US textile industry. The pandemic and ensuing global supply chain crisis has turned the long-standing global sourcing paradigm on its head, forcing retailers and brands to diversify out of China and move production closer to home. And that is driving a renewed sense of optimism.

But Bryan Ashby, president of Carolina Cotton Works, stresses that policymakers must provide a long-term commitment to building the domestic supply chain.

“It’s great for a politician to stand in front of a microphone and say: ‘Let’s bring jobs back to America,’ but show us the commitment by giving us some sort of reason to believe that 18 months from now the narrative doesn’t flip and we all of a sudden want to sell industries out.”

One need look no further than the latest US government trade data as evidence that onshoring and nearshoring is ticking upward.

“We have seen historic investment in the US textile production chain as well as in our Central America free trade agreement partners, including Honduras, Guatemala, and El Salvador,” Glas said. “We expect over $1bn of new investment to go into Central America this year alone for textiles. That’s an indication the world’s changed.”

About the author: Kristi Ellis is vice president of communications at the National Council of Textile Organizations (NCTO). The NCTO is an association that is the voice of the entire spectrum of the textile industry. There are four separate councils that comprise the NCTO leadership structure, and each council represents a segment of the textile industry and elects its own officers who make up NCTO’s board of directors.

NCTO New Member: Richloom

NCTO welcomes its newest member, Richloom. Richloom is a global, multi-faceted textile and finished goods company supplying customers from upholstery, decorative jobbers, hospitality, over-the-counter retail to finished product. 

Talk Textiles: NCTO & WPRC Discuss the HOPR Act

This video on the Homeland Procurement Reform Act (HOPR Act), which was produced by NCTO in collaboration with the Warrior Protection & Readiness Coalition (WPRC), provides an overview of the HOPR Act as it relates to the domestic textile and apparel industry.

The Homeland Procurement Reform Act (HOPR Act, H.R. 2915), encourages domestic sourcing and “aims to support U.S. small businesses by increasing the ability of the Department of Homeland Security (DHS) to purchase high-quality, American-made uniforms and personal protective equipment for frontline personnel.” Specifically, HOPR would require domestic procurement of the following items:

  • Uniforms and footwear provided as part of a uniform
  • Holsters and tactical pouches
  • Patches, insignia, and embellishments
  • Chemical, biological, radiological, and nuclear protective gear
  • Body armor components intended to provide ballistic protection for an individual, consisting of 1 or more of the following:
    • Soft ballistic panels
    • Hard ballistic plates
    • Concealed armor carriers worn under a uniform
    • External armor carriers worn over a uniform
  • Any other item of clothing or protective equipment as determined appropriate by the Secretary

Further, these new requirements extend to each of the following agencies at the Department of Homeland Security:

  • U.S. Customs and Border Protection.
  • U.S. Immigration and Customs Enforcement
  • The United States Secret Service
  • The Transportation Security Administration
  • The Coast Guard
  • The Federal Protective Service
  • The Federal Emergency Management Agency
  • The Federal Law Enforcement Training Centers
  • The Cybersecurity and Infrastructure Security Agency

For complete details, please see a link to the HOPR Act fact sheet from the House Committee on Homeland Security.

NCTO is actively working with Congress to ensure that HOPR will be included in the 2023 NDAA (see attached joint letter to Senate and House leaders). The 2023 NDAA is expected to gain approval at the end of the year and go into effect 180 days after its approval.

Bloomberg Exposé on Shein Reveals Clothing Contains Banned Forced-Labor Cotton, Underscores Urgency to Close a U.S. Loophole

Bloomberg News has published a hard-hitting investigative story this week that released findings of lab testing results that confirms certain clothing sold by e-commerce juggernaut Shein has been found to contain banned cotton produced with forced labor from the Xinjiang region of China.  Furthermore, the story details how Shein is utilizing a trade loophole called “de minimis” that is facilitating the entry of these banned products into the U.S. market with minimal scrutiny.

The Bloomberg feature story by reporter Sheridan Prasso titled, “Shein’s Cotton Tied to Chinese Region Accused of Forced Labor,” outlines how “laboratory testing conducted for Bloomberg News on two occasions this year found that garments shipped to the U.S. by Shein were made with cotton from China’s Xinjiang region.”

The exposé chronicles how cotton grown and harvested by Xinjiang forced labor continues to bleed into global textile and apparel supply chains and is further facilitated by a little-known trade loophole called the “Section 321 de minimis exception”. This exception, which is routinely utilized by Shein and certain other e-commerce companies, allows imports valued under $800 to come into the United States with minimal review and without paying duties, taxes, and fees.

Through this massive and rapidly growing loophole, approximately 2.7 million individual shipments falling below an $800 value enter the U.S. market each day, according to the latest data. In fact, the U.S. is on record pace for 1 billion de minimis shipments this year alone.

The explosion in e-commerce shipments using the Section 321 tariff waivers spawned new companies, like Shein, to create a multi-billion-dollar empire built on the foundation of a legal, but severely damaging tariff loophole.

We don’t know who is making these products, if they are safe, or if they use forced labor. In fact, unbelievably, these products get rewarded duty-free status. What’s the point of a free trade agreement with high labor and environmental standards, if there is a “click here” workaround that facilitates a race to the bottom?

According to the report, Agroisolab GmbH in Jülich, Germany, tested the garments using stable isotope analysis, “which measures variations in the isotopes of carbon, oxygen and hydrogen present in the cotton’s fibers to indicate the altitude and other climate characteristics of the region where it was grown.”

The lab compared Shein’s cotton fabric with fabric from Xinjiang that Bloomberg obtained from a U.S. apparel company with operations in China. A second test compared the Shein item with another sample the lab had previously obtained from Xinjiang, according to the Bloomberg report.

“We have to conclude it is a typical sample from Xinjiang, China,” Agroisolab’s CEO Markus Boner told Bloomberg.

The test results also ruled out “with more than 95% probability” several other cotton-growing regions, including India, Egypt, Australia, the U.S. and China’s Shandong province, according to the story.

Congress overwhelmingly supported and passed the Uyghur Forced Labor Prevention Act (UFLPA) banning products made of forced labor, including Xinjiang cotton. This law took effect in January 2021. Yet, this loophole in our tariff structure, has created an enormous workaround that is allowing these banned forced labor products to  make their way to our doorsteps and into our closets on a daily basis.

House Ways and Means Trade Subcommittee Chairman Earl Blumenauer (D-OR), who has authored and continues to push for key legislation to help close this loophole, has noted: “This loophole also makes it easier for people to import illegal goods and harmful products, because there is virtually no way to tell whether these packages contain products made through forced labor, intellectual property theft, or are otherwise dangerous.”

Until Congress and/or the administration acts to close the de minimis loophole, Chinese companies like Shein will continue to run a speeding train right through this loophole tunnel.

The National Council of Textile Organizations (NCTO) has been very active over the past several years working in a broad coalition to amplify the urgent need for the administration and Congress to use their authorities to close this enormous trade gap.

In congressional testimony before the House Ways and Means Trade Subcommittee last December, I outlined recommendations for Congress aimed at confronting unfair Chinese trade practices, including closing the de minimis loophole.

We must ensure this loophole is addressed immediately to combat the use of forced labor in China and in other areas of the world. Failure to address the de minimis loophole will continue an “open door” policy that invites China and others to ship duty free to the United States illegal and unsafe products that undermine American businesses and jobs, while also diluting any efforts to rein in its abhorrent human rights abuses.

What cannot be ignored is that these practices and this loophole continue to hurt domestic manufacturers, undermine our forced labor laws, and weaken our carefully negotiated free agreement trade structure.

This is why we need Congress and the administration to urgently act and make the policy changes we need to close this damaging loophole once and for all.

Valdese Weavers: Taking Sustainability to the Next Level

Valdese Weavers has been working with recycled yarns for nearly 20 years but in a bid to elevate its sustainability profile, the company turned to the SEAQUAL INITIATIVE based in Spain.

A leading fabric and textile producer that has been manufacturing residential and contract textiles for the furniture market in the foothills of North Carolina for more than 100 years, Valdese Weavers is widely considered to be an industry leader for designing and innovatively weaving beautiful decorative fabrics.

While the company takes pride in being a Made-in-USA manufacturer, one of its loftier goals has been to minimize its impact on the environment and the planet’s natural resources.

Valdese Weavers has used yarns recycled from plastic bottles for the past two decades to produce its environmentally-conscious products, especially in its contract division, but company officials began searching a few years ago for new ways to expand their sustainability efforts and achieve more innovative, sustainably-minded solutions to attack the existing problem of ocean pollution.

Fast forward to today and the journey has led Valdese to a dizzying array of new initiatives, including: a licensing arrangement with a Spanish non-profit organization named the SEAQUAL INITIATIVE; the launch of a new line of performance fabrics made from recycled ocean fabrics, InsideOut Performance Fabrics®; a collaboration with an award-winning artist; and a museum exhibit that opened on Friday (Nov. 4) at the Hickory Museum of Art in Hickory, N.C.

“We have been trying to find next steps of sustainability in terms of materials for several years,” says Christy Almond, vice president of product development and marketing at Valdese Weavers. “We have said ‘no’ to a lot of product material ideas that did not have an authentic story or durability, did not meet where we felt industry was headed, had inconsistent supply chains, or the price was out of line.”

In 2018, Valdese discovered the SEAQUAL INITIATIVE. After studying the non- profit organization’s mission, Almond says Valdese determined it could “take our recycling story to the next level.”

This organization founded on creating a collaborative community against pollution has brought together an extensive network of individuals, organizations, and companies “working together to help clean our oceans, raise awareness of the issue of marine litter and highlight those helping to fight it.”

“Their goal is to organize the individual organizations, cleanup committees and fishermen to bring their cleanup efforts together to incentivize them, clean up oceans, collect ocean trash, and use collective power to go to recycling agencies to process products and sort through it to use materials that can ultimately be upcycled,” Almond explains.

To view the entire process—from collection of ocean plastic waste to the production of the end product of Valdese Inside Out Performance fabrics, click here.

“When we met with SEAQUAL before COVID they were in 42 countries and now they are in 60 countries,” Almond says. “The amount of waste and upcycled materials has dramatically increased. We know they are making a difference.”

SEAQUAL has processed 600 tons of marine litter from the ocean. Of that total, the organization has transformed 200 tons of plastic into upcycled marine plastic and yarn for companies like Valdese to use.

“They actually embed the yarn with tracers, so that they know it is authentic. They are very serious about that process and they have certification at each of the steps in the supply chain that companies must adhere to,” Almond says. “As their network cleanup committees and processing grows, we are hoping that is going to continue to increase as more material becomes available.”

Hundreds of global brands and retailers are listed as licensing partners with SEAQUAL on its website, including such well-known retailers as American Eagle Outfitters, Bed Bath and Beyond, and Ikea.

“We had seen a lot of different ocean plastic stories out there. No one had this multi-faceted story about cleaning up the ocean, upcycling and properly disposing of the trash,” she said. “It’s one thing to sift through and take out the parts that you want, but you are not really making a difference.”

SEAQUAL, on the other hand, properly disposes of the ocean materials that are not recyclable.

“Taking on new yarn SKUs is an investment. To meet their 20 percent content, we had to invest in the right tools to get that content assured. In terms of raw materials, we felt like it was in line with our existing cost structure,” Almond notes.

Valdese Weaver’s goal is to expand development with SEAQUAL and bring awareness to the initiative and “challenge our industry to think about sustainable materials.”

“Just regular upcycled plastic is not enough,” Almond notes. “How do we move this journey forward? More needs to be done.”

One way to move the story forward is to partner with an award-winning artist and amplify the story to the public.

SEAQUAL and Valdese Featured in Museum Exhibit

That’s just what Valdese and SEAQUAL have done.

Valdese is collaborating with MacArthur Genius Award winning artist, Mel Chin, as part of an exhibit at the Hickory Museum of Art in Hickory, N.C. “to promote the power of design to fuel change in our industry.”

Chin, an ecologically and environmentally-minded artist, has been behind projects seeking to raise awareness on issues such as contaminated soil in New Orleans and abandoned homes in Detroit.

The Hickory Museum of Art has opened a new exhibit highlighting the problem of ocean pollution, in conjunction with an experiential exhibit, SEA to SEE, that has been created by Chin and is housed at the Mint Museum in Charlotte.

The Valdese exhibit at the Hickory Museum showcases the company’s partnership with the SEAQUAL INITIATIVE and explains how the company and the furniture industry is working together to help solve the problem of ocean pollution.

“We bring so many people through our facility to train them on the textile process, including salespeople with furniture manufacturers, furniture dealers, and large-scale retailers. These are big companies that are trying to help their sales team understand how to sell fabrics. I thought it would be great to connect our SEAQUAL story with what is happening at the museum and tell a bigger picture story about how the industry is using design to propel change,” Almond says.

“Textiles get a bad rap, not just in terms of manufacturing, especially if you’ve grown up in a textile town. You’ve seen and heard people lose jobs that go to China, or say that furniture is not a reliable career, or that furniture is not an innovative industry,” she adds.

“We wanted this exhibit to highlight technology and design and innovation and cool things happening in this community that are impacting not just Hickory but the United States.”

Barnet Hosts Congressman Greg Murphy (R-N.C.); Highlights the Importance of Supporting Policies that Bolster the Competitiveness of the U.S. Textile Industry

WASHINGTON, DC – Congressman Greg Murphy (R-N.C.) met with executives at William Barnet & Son LLC (Barnet) and toured a facility in Kinston, N.C. today, where the company’s innovation, advances in sustainable practices and its important contribution to the North Carolina economy were on full display.

Congressman Murphy’s visit is critical and comes at a pivotal time for the U.S. textile supply chain, which produced $65.2 billion in output in 2021 and employed nearly 535,000 workers. Barnet is part of the broader industry that is a major factor in high-tech and sustainable innovation in the production of everything from heart valves and stents to aircraft bodies and advanced body armor.

Barnet is a global manufacturing, recycling, and trading company, specializing in a wide range of fibers, polymers and yarns. Founded in Albany, N.Y. in 1898 by William Barnet, the company has been dedicated to a vision of being the world’s most respected, creative, versatile and sustainable solution provider to its customers and suppliers. The company currently employs over 400 employees worldwide.

During the discussion with Congressman Murphy, Barnet executives discussed several policy priorities that have far-reaching implications for North Carolina and the entire U.S. textile industry.

They also outlined the importance of policies aimed at bolstering onshoring and nearshoring production, closing a legal loophole in U.S. trade law that continues to undermine American manufacturing and gives China an advantage, and U.S. trade policy on China.

“We are honored to have hosted Dr. Murphy at our Kinston facility today,” said Chuck Hall, president of Barnet. “The opportunity to discuss important policies that impact not only our everyday business operations but the entire industry’s operations is invaluable. It is critical that U.S. trade policy centers around keeping the industry competitive. In particular, we discussed the need to maintain China 301 penalty tariffs, to fix a loophole in U.S. trade law known as the de minimis mechanism, which allows a package of goods valued at $800 or less per person to come into the country duty free every day and gives China backdoor access to the U.S. market, and to find a better process for renewing the Miscellaneous Tariff Bill (MTB) which allows U.S. manufacturers duty-free access to raw materials that are no longer produced within our borders. We look forward to continuing to the work with the congressman on policies that help drive onshoring and nearshoring to the U.S. and the Western Hemisphere and those that support strong government procurement and American-made products.”

“It was wonderful to meet with Barnet’s officials and tour their impressive textile facility today. North Carolina’s textile industry is a huge driver for our economy, directly employing nearly 40,000 workers and generating over $2.7 billion in textile-related exports,” said Rep. Greg Murphy, M.D. “I am grateful to the industry leaders who took the time to discuss how we can expand this great industry, grow our state’s economy, and protect domestic manufacturing.”

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NCTO is a Washington, DC-based trade association that represents domestic textile manufacturers.

  • U.S. employment in the textile supply chain was 534,000 in 2021.
  • The value of shipments for U.S. textiles and apparel was $65.2 billion in 2021.
  • U.S. exports of fiber, textiles and apparel were $28.4 billion in 2021.
  • Capital expenditures for textiles and apparel production totaled $1.85 billion in 2020, the last year for which data is available.

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CONTACT:

Kristi Ellis

Vice President, Communications

National Council of Textile Organizations

kellis@ncto.org |  202.684.3091

NCTO New Members: American Fashion Network

NCTO welcomes the American Fashion Network (AFN) as its newest member! AFN has served the apparel industry as a source for design and production expertise for over 17 years. Listen as CEO & Founder Jackie Ferrari discusses her reasons for joining NCTO.

Washington Update: Homecoming by Rana Foroohar

NCTO celebrates the release of “Homecoming” by Rana Foroohar, a global business columnist for the Financial Times. Her book outlines why globalization has not delivered on countless economic promises & examines the shift toward localization taking hold in industries like textiles.

NCTO New Members: Gherzi USA

NCTO welcomes its newest member, Gherzi USA. Gherzi USA is the U.S. branch of Gherzi Organization, a leading textile consulting firm that has provided strategic planning and brand management to the global textile industry for over 90 years. Hear from Gherzi USA Partner & Manager Robert Antoshak in the video above.

U.S. Textiles: MMI Textile’s 25th Anniversary

Ohio-based textile manufacturer MMI Textiles celebrates its 25th year in business! Listen to CEO & Founder Amy Bircher discuss the company’s beginnings and future goals and the importance of making textiles in America. Happy 25th anniversary from NCTO!