The notion of bringing manufacturing back to America has ended free trade agreements, started a trade war and won an election. More than a desire for the “Made in America” label, other factors are continuing to add to the appeal of domestic manufacturing.
The Demand Model
Consumers ideas are shifting at an unprecedented pace. Speed-to-market has become crucial to staying afloat in a fickle business. The apparel industry has been evidence of this shift. Marketing firms and fashion brands no longer control trends. Influencers and consumers themselves are deciding are controlling demand. It’s up to companies to streamline the process to meet that demand. Or, someone else will.
The speed, or lack thereof, involved in international manufacturing does not allow for leeway and changes in the production process. The market has become much my dynamic than ever before, adaptability of that nature can only be accomplished close to home.
Costs of Doing Business
In addition to the demand model and speed to market, sustainability and rising labor costs have furthered the desire for domestic manufacturing. Two decades ago, production moved East in search of cheaper labor costs.
Now, the rising wage for factory workers in Asia, compounded new tariffs have been a catalyst for brands to move production home. The McKinsey Report on the state of the fashion industry stated that current labor costs in China have risen 10 times what they were in 2005.
On top of rising costs, a lack of adaptability and speed-to-market costs companies in overstock goods and surplus waste. Also, missed opportunities to capitalize on trends are causing larger companies to lose to micro brands and other disrupters. As digital technology changes market demand and the prices between domestic and international manufacturing lessen, American manufacturing is making a comeback.