Hossen Sohel of DOT
In what could be seen as an ominous sign for Bangladesh’s apparel exports, a new report predicts that by the middle of the next decade, more and more Americans and Europeans will wear clothes made closer to home, reports Bangla Tribune.
Speedy shifts in fashion trends needing quick turnaround, rising automation and the impact of tariffs will make “nearshoring” far more attractive for apparel chains, says the report released by consulting firm McKinsey and Company.
Based on a survey of 188 apparel industry representatives, the report notes that 79 percent executives admit “nearshoring for speed is somewhat or highly likely by 2025.”
Titled “Is apparel manufacturing coming home?”, the McKinsey report says a US apparel company that moves production of basic jeans from either Bangladesh or China to Mexico can maintain or even slightly increase its margin.
For Europe, unit costs still remain significantly lower when sourcing from Bangladesh, but reshoring from China to Turkey is economically viable.
It says a pair of jeans in 2016 and 2017, including 30-day ocean freight shipping, cost $12.04 a pair when made in China, and only 17 percent more, or $14.05, to be made right in the US. That cost premium would be worthwhile, the study said, considering the shipping time saved and thus the possibility of selling products more likely to be on-trend.
It cost $10.68 in Bangladesh, but considering two-day truck shipping, making that pair of jeans in Mexico actually cost just $10.57, says the report.
The report says that by reducing “time-to-market”, the apparel companies can react to latest trends within a single season.
“It used to be that a six-month fashion cycle was considered fast.