Posts Tagged ‘Washington Post

02
Feb
17

Under Armour debuts ‘made in the U.S.’ gear

Under Armour Debuts ‘Made in the U.S. Gear – and tests what we think we know about manufacturing in America

From the Washington Post

Source: Under Armour debuts ‘made in the U.S.’ gear — and tests what we think we know about manufacturing in America – The Washington Post

January 30, 2017

The black sports bra and matching leggings that Under Armour began selling Monday don’t look particularly distinctive from the rest of the workout attire on its website.

But, in fact, the garments are different in a key way: They were made in the United States, marking a key milestone in the company’s ambitious bid to significantly rethink its manufacturing strategy.

They are the first batch of clothing to be made at UA Lighthouse, a sprawling Under Armour facility that opened this summer in Baltimore. A 35,000-square-foot design and product development hub, it is an anchor of Under Armour’s attempt to figure out how to make clothing in the United States — an unusual venture in an industry where manufacturing has largely been done overseas for a generation. About 97 percent of clothing sold in the United States is imported, according to the American Apparel & Footwear Association.

Just 2,000 of the garments are available for sale — 1,000 each of the bras and leggings — so it’s a small-scale start. But the process of creating them offers a look at what the future of Under Armour — and the wider apparel industry, for that matter — might look like. The company says that it was able to operate on a sharply shorter timeline for bringing the gear to market, and it says it believes the Lighthouse setup is cost neutral compared to making clothing overseas.

With President Trump talking frequently of finding ways to bring manufacturing jobs back to the United States, Under Armour’s experiment might end up drawing particularly close observation from retailers and Washington alike to see if it can be a blueprint for similar initiatives.

Kevin Haley, Under Armour’s president of innovation, said that the process for creating garments such as the bra and leggings would typically take 18 to 20 months. For the Baltimore-made pieces, though, it took just three months.

Haley said that’s because the Lighthouse setup has enabled the company to compress the creation process in several ways. Perhaps most important, when designers and manufacturers are in the same building instead of on different continents, they can combine their contributions to the supply chain into a single step.

“The designer is sitting in the Lighthouse facility with the person who’s actually going to perform the operations to assemble that garment,” Haley said. “So the person who’s actually going to be putting it together is effectively going to be teaching the designer, ‘Look, here’s how to simplify this design and do it more efficiently.’ ”

Haley also said that the technology in the Baltimore facility has enabled speedier garment production. By using 3D body scanners, Under Armour can figure out how a certain piece of clothing is going to fit and flatter a body without going the traditional route of producing a physical prototype.

The company also hopes this setup will generally enable it to work in a more iterative way on clothing, allowing the team to fine-tune pieces after they’ve started to hit stores. In the future, Under Armour might ship out a small batch of clothes from Lighthouse and see how customers react to the gear before making tens of thousands of pieces of it. If shoppers, for example, say that a waistband is fitting a little snugly on a pair of shorts, they could tweak that for a bigger production run of that item. And being able to adapt to that feedback in real time could be powerful: It could be the difference between selling thousands of those shorts at full price, or having to mark them all down because shoppers were just lukewarm about them.

Here’s why it matters that making clothes in Baltimore could shave time off Under Armour’s speed-to-market process: because doing so has become something of a holy grail in the retail world. Because of social media, live-streamed runway shows and other cultural changes, fashion trends go boom and bust faster than ever before.

You might be tempted to think these tectonic shifts mostly matter for fashion companies and not for performance athletic brands such as Under Armour. But, in fact, exercise attire has become a deeply trend-driven business. Printed yoga pants, leggings with mesh paneling, workout tanks with strategically-placed cutouts: These popular looks are all riffs on what’s happening on the catwalk.

“It enables us to effectively pull forward materials, fabrics, textiles, yarns that the consumer maybe wasn’t going to see until 2018, 2019 — and bring that into 2017,” Haley said.

But speed-to-market wasn’t the only reason Under Armour pursued U.S. manufacturing capabilities. The company has a lofty goal of contributing to a revitalization of Baltimore by creating jobs at Lighthouse and a planned roster of other facilities.

So what kind of labor force was needed to create these garments? After all, jobs going overseas is only part of the reason that the United States’ manufacturing industry has contracted — many such positions have been lost to automation.

The company said some 50 people worked on this particular garment collection, including design, manufacturing, marketing and other roles. Haley said the headcount of workers needed to create the products in Baltimore was “not all that different” from if they were made abroad.

“It’s not like these are being made by a robot,” Haley said. “These are being made by human beings using advanced manufacturing methods.”

Lighthouse staffers also work on Under Armour sneakers, though, and that manufacturing process is one for which the company has been working for years to reduce the number of workers and steps needed.

Some competitors, Haley said, “could have 300 pairs of hands touching every shoe that moves down the line. Which is at some level crazy, in 2017, to be introducing all that room for margin for error at each step along the way.”

Ultimately, Under Armour hopes that Lighthouse is a proof of concept for a bigger global initiative to embrace “local for local” manufacturing. In other words, Under Armour gear sold in Brazil would be made in Brazil; gear sold in the United States would be made in the United States, and so on.

The goal, Haley said, is to show that “if we can make it here, we can make it anywhere. And if we can make it here, anyone can make any product here.”


Editor’s Note

The plan to build the plant in Baltimore was finished well before tRump (pronounced “Tee” “Rump”,  like in Tyrannasaurus Rex, also, commonly known as T Rex) was elected, so the IPOTUS (Illegitimate President Of The U.S. or IP for short) can not take credit for it, but he will try anyway. In fact, I had reported the Baltimore plant previously on my blog entry: Reebok Is Bringing Back Shoemaking in the USA about some shoe companies bringing shoe production to the USA. The Baltimore-made sports bra and leggings hit digital shelves Monday, a milestone in the company’s ambitious bid to completely rethink its supply chain.

Thanks to Brad Bolin for showing me this article.

 

17
Aug
15

Why it’s now cheaper to produce some goods in the South than in China

Why it’s now cheaper to produce some goods in the South than in China – The Washington Post.

Why It’s Now Cheaper To Produce Some Goods in the South Than in China

August 4, 2015 from The Washington Post

Before World War II, red-brick textile mills that processed cotton and wove it into cloth were all over the southern United States, dotting the Carolinas, Georgia and Alabama. But in the past 50 years, automation, free trade agreements and competition from countries like China whittled down the historic industry until it was almost gone.

Now some textile jobs are coming back, but on much different terms. As the New York Times reported Sunday, some Chinese manufacturers are setting up shop in the United States, after finding it cheaper to produce their goods in the American South than in China.

Keer Group, a Chinese yarn-maker, is investing $218 million in a factory in South Carolina. Another Chinese manufacturer, JN Fibers, is investing $45 million in the state. And Indian company called ShriVallabh Pittie is investing $70 million in a yarn-spinning plant in nearby Sylvania, Ga.

The changes are happening in other industries and locations, as well: Chinese auto glass maker Fuyao is investing in a $230 million production facility in Ohio, and Chinese acquirers are expanding manufacturing capacity at Cirrus Aviation in Minnesota and Nexteer Automotive in Michigan.

An index created by Boston Consulting shows how much the difference between the cost of manufacturing something in the United States and making the same thing in China has narrowed. In 2004, a good that could be made for a dollar in the United States could be manufactured in China for 86.5 cents. One decade later, that $1 product in the United States would cost 95.6 cents to make in China – not a whole lot of savings.

The narrowing of the gap has a little to do with what’s happening in America and more to do with what’s happening in China.

Americans are still making far more in wages than Chinese manufacturing workers. Adjusted for productivity, Chinese factory workers made $12.47 an hour last year, a little more than half of what American workers made, $22.32 an hour, according to figures from the Boston Consulting Group.

But other attributes of doing business in America make up the difference in cost. For example, state and local governments offer ample tax breaks and subsidies to companies that set up shop in their jurisdictions. America’s natural gas boom has also lowered the cost of electricity, attracting energy-intensive manufacturing industries.

Overcoming trade barriers and taking advantage of free trade agreements can also make a big difference: For example, yarn manufacturers might set up shop in the United States to take advantage of agreements with Mexico and Central America, whose factories transform the yarn into fabric and clothes that are shipped back to American consumers.

And U.S. workers are relatively educated and productive, making them especially suited to advanced manufacturing, like auto parts and consumer electronics. All in all, the United States is now one of the lowest-cost locations for manufacturing in the developed world, BCG has said.

But Thilo Hanemann, a research director at Rhodium Group who studies Chinese investment in the United States, says that the return of these manufacturing jobs is not really due to changes happening in America. “I think what’s mostly being reflected is the change of commercial realities in China,” he says.

As China’s economy has developed, wages have risen, and so have the costs of land, energy and other raw materials.

The chart below, from Boston Consulting Group, shows how the competitiveness of manufacturing in China and Russia has changed over the past 10 years. Even when adjusted for productivity, Chinese manufacturing wages have risen by 187 percent over the decade. Industrial electricity costs have grown 66 percent, while natural gas costs are up 138 percent.

In the same time frame, U.S. wages have risen only 27 percent, while natural gas costs have fallen 25 percent, according to Boston Consulting.

Boston consultingBoston Consulting Group

For products where Chinese companies need access to qualified labor or proximity to American consumers, and don’t require lots of low-cost labor, it can make a lot of sense to manufacture in the United States, Hanemann says.

The yarn-spinning operations are in this mold. That industry is heavily automated and doesn’t require a lot of labor. More labor-intensive work, like actually sewing garments, still relies on inexpensive workers in Bangladesh, Vietnam, Mexico and elsewhere. Those types of jobs won’t be coming back to the United States anytime soon.

And because the industries that are returning to the United States are heavily automated, they won’t provide anywhere near the number of jobs that manufacturing facilities did in past decades. The Economic Policy Institute, a think tank, estimates that the U.S. trade deficit in goods with China eliminated or displaced 3.2 million American jobs between 2001 and 2013, three-fourths of which were in manufacturing. And that’s not to mention the millions of manufacturing jobs that were lost to automation and offshoring in the decades before that.

Chinese investment in the United States remains small, but, as the chart below by the Rhodium Group shows, it is bringing tangible economic benefits in the form of jobs.

Manufacturing in the United States may never return to the heights it reached in the 1980s, and the industries that come back onshore today are much more automated, creating fewer jobs overall. But these more skilled manufacturing jobs will still be a boon to the U.S. economy. For one, they tend to be better paid: Manufacturers these days need more highly trained workers who know how to operate automated systems.

China’s manufacturing prowess is also unlikely to disappear anytime soon. The move out of China mainly applies to new factories, rather than existing ones. Companies have invested lots of money over the past decade to build factories in China that may have life spans of 20 or 30 years, and most will likely see those investments through. And China offers manufacturers other advantages besides just price: It’s become a manufacturing hub where suppliers and consumers of all types of goods can coexist in proximity to each other, which brings down the manufacturer’s price.

But Hanemann of Rhodium Group sees Chinese manufacturing investments in the United States as a great opportunity, not just for individual workers but also the U.S.-China economic relationship. In the past, Americans also benefited from trade ties with China, but in less visible ways – like having cheaper price tags on TVs and sweaters. In contrast, the negative consequence of trade with China – the migration of manufacturing jobs overseas – was far more tangible and immediate to people, says Hanemann.

Now, with the rise in U.S. employment at Chinese firms, the benefits of trade with China will be a little more visible.

Editor’s Comment

With the increasing costs associated with manufacturing in China, to the point that the costs are getting close to the United States, one would think that more US businesses would bring jobs back or stop offshoring more jobs to China, but that still isn’t happening. But there is a new trend, Chinese businesses are coming to the US and hiring US workers in their factories. Chinese companies such as: The Keer Group, JN Fibers, Fuyao Auto Glass, Cirrus Aviation, Nexteer Engineering, Lenovo computers are hiring American workers. The United States should start getting used to be a a supplier of low cost laborers working for the number one Economy – China.

This presents a conundrum for traditional American thinking. It used to be the US economy was number one far and away. It used to be American companies hiring American workers. Then, it became multi-national (traditionally European but also Japanese) companies hiring US workers, while, at the same time, US owned companies were offshoring American jobs to China, Vietnam, Mexico – leaving America with chronically high unemployment. Now it is China that is hiring Americans. For some, it is difficult to get over our prejudices, but for the most part we have gotten over it in the past – we buy Anheuser Busch Beer (owned by Brazilian-Belgian company,In Bev) and Toyota American-made-automobiles. But, for some, China hiring Americans is a premise that is hard for some to swallow. Maybe because China is from Asia, maybe because they are “Communists”, or maybe because they were way behind us economically and zoomed right past us like we were in neutral.

Is it better for the U.S. that Chinese companies are coming to the US and hiring US workers or Ford Motor company opening a plant in Mexico and hiring Mexican workers? The math is simple – the Chinese company. How does Ford making autos in Mexico help the US in anyway? It doesn’t. And as long as US companies continue to offshore US jobs, the United States, in response, should be enticing other countries to open their businesses here in the United States.

Last week China once again devalued its Yuan, this time by 2%, making Chinese imports once again a little cheaper. China continues to devalue the Yuan year after year, at some point, they will no longer able to do this. Of course, the United States could protest to the World Trade Organization – the final arbitrator of the Free Trade treaties, but the United States will not do this because our major industries, the ones that offshore American jobs and benefit most when the Chinese devalues their monetary units, lobby to make sure the US government stay out of this.

Some people who are novices to economics and business-thinking wonder why don’t American companies stay in the U.S.? Aren’t they loyal to the U.S? The answer is from Business 101, capitalism is loyal only to profits rarely if ever to country. If more profits can be made by employing children in Bangladesh, then so be it. So, the question remains “why do we make it easier for companies to offshore US jobs?”  Good question, ask your Congressman.

Thanks to the Alliance of American manufacturing for highlighting this article.

 




April 2017
M T W T F S S
« Feb    
 12
3456789
10111213141516
17181920212223
24252627282930

Categories


%d bloggers like this: