March 14, 2005-- Home Textiles Today,
Consider it one of the small ironies of unfettered trade.
Now that quotas have dropped and offshore manufacturers are free to sell as many goods as they can into the U.S. market, the time has come for those who haven't already to begin putting together U.S. offices. Indeed, in some cases, their retail customers are demanding it.
Happily — from an offshore producer's point of view — there are plenty of experienced, well-connected U.S. textiles veterans available for employment these days. Unhappily — from an offshore producer's point of view — they come at U.S. prices.
In fact, the New World Order that was supposed to eliminate the middle man in the buyer-to-supplier-to-manufacturer equation seems not to be the model that is coming to fruition. Instead of a three-pronged process devolving into a two-pronged process, the industry seems to be instead adding a fourth prong. Depending on the company, that fourth prong is either a U.S. office or sales rep for offshore manufacturers, or an overseas office for U.S.-based suppliers.
And sometimes, there are more than four prongs. Major U.S. retailers operate offices in multiple countries. Although the number of countries (or in-country agents) is expected to contract, it's a safe bet that the majors will operate and hold onto existing offices in countries other than China. (Hello, India and Pakistan.)
At the same time, U.S. suppliers that haven't already are opening offices and looking for joint ventures in key overseas countries so that their offshore people can deal with their customers' offshore people.
And the offshore manufacturers are either being told, or figuring out, that they need to have some boots on the ground to deal more directly with U.S. headquarters offices.
All of this, at a juncture when the industry is supposed to produce more rapidly turning in-and-out fashion programs and shave costs by streamlining the supply chain. Kurt Salmon Associates, which does a lot of work with both retailers and suppliers, has warned of the creeping costs of supply chain rationalization. The idea: that no sooner has a company eliminated costs in one area than it finds a need to begin incrementally building them out in another.
At the end of the day, it takes a finite number of hands to complete the work at hand. Some of those hands may be in the United States; some may be in Shanghai, Karachi, Mumbai or elsewhere.
All of which is to say that the business of global trade is likely to get more complex in the interim before it becomes more simple.
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DayThree from the NY Textiles Market