Case studies
May 2, 2022

Reshoring and Nearshoring: emerging strategies in fashion and the role of upcycling

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Jacopo Tronzano

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It is always a matter of money and, currently, public perception. The fashion supply chain went for an almost absolute trend of delocalisation since the early 90s. It was a choice based mainly on labor cost and marginality. But now something has changed.

Made in China tag on a USA flag

Every mass-appealing iconic item in the last 30 years of fashion was most likely manufactured in China, a choice based mainly on labor cost and marginality.

Every mass-appealing iconic item in the last 30 years of fashion was most likely manufactured in China : Nike Jordans, Guess t-shirts, GAP trousers and Benetton sweaters. But since the middle of the 00s, the cost of labor in China has been spiking up, reaching a growth of +260% from indexed 2000 to 2016, improving both USA and Europe competition.

But salaries in the West are still far from being the most attractive in the industry. The rise of Chinese salaries lead to the emergence of a new manufacturing pole in South-Asia (Vietnam, Cambodia, Indonesia) where salaries still average under 300$/month.

Cambodian fashion woman worker

Still, when calculating the cost of one’s company supply chain, manufacturing isn’t the only addend to the equation. Transportation, logistics, warehousing, cleaning, taxes also come into the balance leading to unpredictable situations such as Mexico offering more attractive manufacturing costs than China even before the pandemic, from a US perspective. And the issues do not stop at costs. Delocalization poses other issues such as lower quality from production to logistics, intellectual property theft in places where it is harder to enforce justice, poor conditions of health and safety standards, visits that burn great expenses for personnel and monetary policies that might fluctuate too much.

Transportation, logistics, warehousing, cleaning, taxes and quality stardards are equally important factors to take in consideration in every supply-chain assessment.

Delocalization, in a broader spectrum of inquiry, is part of the unsustainable and unethical approach to produce fashion. Disasters such as the fire in Karachi in 2021 (300 deaths), the collapse of a factory in Lahore in 2015 (40 deaths) and the Rana Plaza collapse (1100 + deaths), countless interviews of garment workers not able to live up to decent standards and testimonies at events such as the Copenhagen Fashion Summit, have shaken the public perception and are modifying both brands and consumers behavior.

The sum of all these factors resulted in USA and European based brands testing new manufacturing lines of productions by reshoring or nearshoring them (brands like New Balance, Fred Perry, FashionCube, Benetton…etc).

New Balance made in US

Upcycling fashion naturally embraces all these new market requirements, relying on local production and non-distant sourcing.

The place of upcycling fashion in this phenomenon is relevant. In fact, almost every single upcycling brand makes a point of producing locally with mainly fabrics from non-distant sourcing points. And as a form of neo-craftsmanship in the fashion sector, upcyclers could be seen as a new radical wave of anti-globalization, at least in the manufacturing sense (probably not when it comes to finding a new customer base).

All of this comes with a cost for the end consumers which is represented by a higher price-point imposed by the brand. This is most of the time followed by an increase in quality, a guarantee of slave-free labor and improved attention to sustainability. We will just need to monitor the market to understand if this is a long lasting trend that will stick to our cultural way of purchasing clothes.

Burberry reshoring production in UK

What do you think will be the consequences of this strategic shift towards Nearshoring? Let us know your point of view by leaving a comment!

Posted by

Jacopo Tronzano

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