CEO & President American Apparel & Footwear Association
Trade war -- 'War rooms' by brands to review sourcing strategies
Founded in August 2000, the American Apparel & Footwear Association (AAFA) represents more than 1,000 brands, retailers, and manufacturers. The AAFA provides expertise in supply chain management, trade policy, and brand protection, to its members. CEO & President Rick Helfenbein describes the impact of the trade war with China on the US apparel and footwear industry, and how companies have already set up 'war rooms' to deal with sourcing strategies.
Can you provide us with a snapshot of the American apparel and footwear market?
The American apparel and footwear market contributes more than $383 billion in retail sales each year and directly employs nearly four million Americans. Approximately 98 per cent of the products we sell are imported; so, the industry is a quintessential example of how global value chains not only provide jobs overseas, but also here in the America. All this is evolving as we see growth in American manufacturing, with nine years of continuous enhancement.
What kind of impact will the trade war have on businesses? Will the trade war with China lead to boycotting of American clothing & footwear brands?
The American apparel and footwear industry is already highly tariffed. We represent six per cent of all imports, and currently pay 51 per cent of all duties collected by the US government. More tariffs and trade barriers are just not welcome or helpful.
At the same time, it is important to clarify what a tariff is and its impact. A tariff is a hidden tax on consumers. Tariffs lead to higher prices, lost sales, and ultimately can result in job losses. The Trump administration's use of tariffs to deal with legitimate concerns with theft of intellectual property, are self-inflicted wounds that will hurt American consumers, American companies, and American workers.
Understandably, many of our trading partners have responded with retaliatory tariffs on American exports. While we are not happy that American denim will face added tariffs when selling in the EU, the American farmer will be hit the hardest. For example, China has issued tariffs on $1 billion worth of American cotton.
Are brands looking to alter sourcing strategies? Besides, China, Vietnam, and Bangladesh, which new apparel sourcing hubs are American brands and retailers looking at?
Brands are certainly looking for ways to diversify their supply chains. In fact, many of our members have set up 'war rooms' to review sourcing strategies and ensure that the trade war does not have a catastrophic impact. Certainly, other countries around China are possibilities, though there are also concerns with finding capacity. China currently represents 41 per cent of all apparel imports to the US, 72 per cent of all footwear, and 84 per cent of all travel goods. It is difficult to move that much production on short notice. Of course, the move to diversify further increases costs when working with other partners.
You mentioned growth in Made in USA manufacturing. Can you expand upon that?
Since 2009, we have seen a 50 per cent increase in domestic apparel and footwear manufacturing production. While Made in USA still represents a relatively small part of the overall market, we are extremely proud of the work many of our members are doing to manufacture more here in the US. The AAFA is very focused on expanding Made in USA production by supporting policies that increase opportunities, such as selling into the US military.
What is the focus of AAFA's activities and events in 2018-19?
As always, our focus is on supporting the growth and success of the apparel and footwear industry. Through the course of the next year this will include educating legislators in Washington on the needs of our industry and pain points the industry experiences. At the same time, the AAFA spends a lot of time providing opportunities for industry professionals to collaborate and learn by producing events around the world. (HO)
Published on: 10/08/2018
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