Report: US fashion industry remains optimistic

19 Jun '15

3 min read

The US Fashion Industry Association (USFIA) benchmarking study for 2015 says the American fashion fraternity remains optimistic about the five-year outlook for the US fashion industry, according to report published on the association’s website.

This optimism seems it will lead to job growth in the industry. More than half of respondents expect to hire more employees in the next five years, including sourcing specialists, fashion designers, supply chain/logistics specialists, buyers and merchandisers, and market analysts.

The study found that like last year, they are most concerned about increasing production or sourcing costs, but they expect increases to be more modest this year.

US fashion companies are not moving away from China, and Bangladesh remains a popular sourcing destination with high growth potential, though not quite as high as last year. A hundred per cent of respondents reported sourcing from China, and 50 per cent from Bangladesh in 2015. The country is regarded as one of the top five sourcing destinations with the highest growth potential.

The study found that companies continue to diversify their sourcing, though free trade agreements (FTAs) and preference programs remain underutilized. The results further show that abandoning the strict “yarn-forward” Rule of Origin and reducing documentation requirements could lead to more companies taking advantage of trade agreements.

FTAs and preference programs remain underutilised. The top FTAs and preference programs among respondents—CAFTA-DR, NAFTA, and the U.S.-Jordan FTA—are utilized by more than 50 percent of respondents. The fourth-ranked program, AGOA, is utilized by 37 per cent of respondents.

The US fashion industry is a critical stakeholder in the Trans-Pacific Partnership (TPP), as close to 80 per cent of respondents expect implementation will impact their business practices. However, the restrictive rules in the agreement limit the potential.

Respondents currently source from five TPP partners: Vietnam, US, Peru, Mexico, and Malaysia. According to the study, 72 per cent of respondents indicated they will source more textiles and apparel from TPP partners after the implementation of the agreement. Additionally, 48 per cent expect to strategically adjust or redesign their supply chain based on TPP. But the restrictive rules limit TPP’s potential. In fact, 45 per cent of respondents say the TPP Short-Supply List should be expanded, and comments indicate the proposed “yarn-forward” Rule of Origin is a major hurdle to the industry realizing real benefits from TPP.

For companies to increase sourcing from the African Growth and Opportunity Act (AGOA), long-term renewal as well as renewal of the “third-country fabric” provision are critical, the study found.

Respondents currently source from five AGOA beneficiaries: Mauritius, Kenya, Lesotho, Madagascar, and South Africa. Around 37 per cent believe AGOA’s renewal will benefit their companies while 26 per cent will source more from AGOA if the program is renewed for a longer term.

American fashion companies continue to express interest in expanding sourcing in the US in the next two years as they further diversify their sourcing. However, the study found no evidence that companies are shifting their business models back to manufacturing. (SH)

Fibre2fashion News Desk – India

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