About 40% of the clothes Americans wear come from China. And because of dislocations caused by the virus, retailers are looking elsewhere to fill the supply chain gap.
For a suit, the materials (the fabric, buttons and zippers) may come from China. It might then get sewn in Vietnam.
“But, if you don’t have fabric you can’t make a coat in Vietnam,” said Gary Adelman, CFO of Texas-based menswear company Trybus. Trybus clothing lines are sold at Nordstrom and Kohl’s.
Roughly 30% of the company’s supply comes from China — it uses factories in five countries. Trybus is looking at spreading the work around to rely less on China.
“I don’t think we’re at losing sleep level yet, but we’re definitely taking it very seriously,” Adelman said.
Sucharita Kodali, an analyst at Forrester, said most apparel companies aren’t in a state of emergency yet. They started moving business out of China a decade ago because of increasing costs and, in the last couple of years, because of the trade war. Those changes are paying off even more now that supply from China is at risk.
“The fact that these companies often do have diversified supply chains enables them to shift some of the production where possible,” Kodali said.
Asia has a hold on the apparel market, with Vietnam and Bangladesh coming in after China. And according to Julie Hughes, president of the U.S. Fashion Industry Association, more companies are moving production to Africa. What about American factories stepping in?
“You need to be able to move immediately for production. And we don’t have a lot of apparel production in the U.S. today,” Hughes said.
U.S. factories can’t compete with Asia’s quick churn. And, Hughes says, China is still the place to make complicated pieces like sweaters and difficult-to-make fabrics like cashmere and silk.
For Adelman, the production slowdown in China isn’t affecting what’s on shelves now, but what’s coming down the line a few months from now. The company’s fall 2020 collection could look a bit like fall 2019.
“Fashion is fickle. It’s hard,” he said.
Adelman says Trybus may have to reuse some of last year’s inventory and update it with different buttons or new trim.
COVID-19 Economy FAQs
Millions of Americans are unemployed, but businesses say they are having trouble hiring. Why?
This economic crisis is unusual compared to traditional recessions, according to Daniel Zhao, senior economist with Glassdoor. “Many workers are still sitting out of the labor force because of health concerns or child care needs, and that makes it tough to find workers regardless of what you’re doing with wages or benefits,” Zhao said. “An extra dollar an hour isn’t going to make a cashier with preexisting conditions feel that it’s safe to return to work.” This can be seen in the restaurant industry: Some workers have quit or are reluctant to apply because of COVID-19 concerns, low pay, meager benefits and the stress that comes with a fast-paced, demanding job. Restaurants have been willing to offer signing bonuses and temporary wage increases. One McDonald’s is even paying people $50 just to interview.
Could waiving patents increase the global supply of COVID-19 vaccines?
India and South Africa have introduced a proposal to temporarily suspend patents on COVID-19 vaccines. Backers of the plan say it would increase the supply of vaccines around the world by allowing more countries to produce them. Skeptics say it’s not that simple. There’s now enough supply in the U.S that any adult who wants a shot should be able to get one soon. That reality is years away for most other countries. More than 100 countries have backed the proposal to temporarily waive COVID-19 vaccine patents. The U.S isn’t one of them, but the White House has said it’s considering the idea.
Can businesses deny you entry if you don’t have a vaccine passport?
As more Americans get vaccinated against COVID-19 and the economy begins reopening, some businesses are requiring proof of vaccination to enter their premises. The concept of a vaccine passport has raised ethical questions about data privacy and potential discrimination against the unvaccinated. However, legal experts say businesses have the right to deny entrance to those who can’t show proof.
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