The future of Sustainability and Near Shoring

Two decades ago, the USA and European apparel brands and retailers rushed to shift production to Asia to gain a cost advantage.  Now they are moving production to better cost-efficient regions with a focus on nearshoring, automation, and sustainability. 

Buyers need to deliver products that consumer’s want at competitive prices, taking into consideration product quality, speed to market, and compliance. 

Consumers are becoming increasingly aware of the environmental impact of traditional linear apparel production models. The new circular economy is changing the way we do business today.  

Product stagnation and the emergence of Internet shopping have made competition fiercer than ever; the market is more volatile and difficult to predict.

It is critical for companies to bring new styles to market more quickly. Individual celebrity, social media influencers, and consumers now determine today’s hottest trends. 

Companies need to be more agile and lean by bringing new styles to market more efficiently, possibly even switching outlines mid-season.  Today, top companies can replicate popular styles and get them to customers within weeks. 

The pressure for smaller batch sizes and on-demand replenishment is driven partly by profitability, but also by a desire for sustainability.


Rising wages for factory workers across Asia mean production in the Far East is no longer so cost-efficient as it used to be.  Today, the gap between near-shore and offshore labor costs has disappeared.

The chart compares costs for USA (top) and Europe (bottom) for the Offshore, Nearshore, and Onshore buyers. The chart below does not take into consideration any additional tariffs.

In some cases, Mexico offers lower average manufacturing labor costs than China.  Back in 2005 manufacturing hourly labor costs in Turkey were five times higher than those in China, in 2017 the gap was only 1.6 times.

From a landed-cost perspective it is becoming more attractive for production to move closer to home with: 

  • Shorter lead times
  • Reduction of the time-to-market
    • Brands can produce more closely in line with demand
    • Reducing overstock
    • Increasing full-price sell-through


Nearshoring and automation go hand-in-hand. 

Buyers will consider automation capabilities when deciding where to manufacture products in the future.  They may take into consideration the commercial importance of shorter lead times and cost efficiencies.   

Local governments and vendors need to build the skills and capabilities for advanced manufacturing and automation among their workforces.

The apparel industry lags other sectors when it comes to automation.  As on-demand production gains importance and technologies develop, automation is becoming more relevant for US and European buyers. 40 to 70 percent of labor time can be reduced through automation. 

The next decade will be critical for the adoption of automation.

In a recent survey, 82 percent of respondents believe that simple garments will be fully automated, leading to an 80 percent labor reduction by 2025. 70 percent think that it is highly or somewhat likely that more complex garments, such as dresses and jackets, will be significantly automated (resulting in a 40-percent labor reduction.)


The current import volume from the five biggest near-shoring markets (Mexico, Guatemala, Colombia, and El Salvador) to the US, for example, does not even account for half of the US imports from China.

The industry is more fragmented as its not so centralized. Quality and labor productivity in some near-shore countries (e.g. Mexico) are more volatile. 

The main challenge currently is sourcing raw materials, fabrics and trims for mass-market apparel.  The current bulk of production and consumption of the main fiber types is still centered in Asia, especially China.


It is important that buyers know where they want to go and how are they going to get there: taking into consideration the feasibility of nearshoring and the commercial value of reducing lead times.  

A possible solution is bringing product supply closer to home and more investment in advance manufacturing that will help companies become more sustainable and less wasteful.   

The usual approach of determining costs from the more traditional sourcing optimization is not sufficient.  There is a need for a demand orientated supply chain that is more consumer-centric and agile.  

Recommended For You