A report issued by a Seattle, Washington-based international consulting firm reveals that supply chain contributions added almost three-fourths to the value of a group of apparel categories imported by US retailers, which supports the case for expanding importation of finished goods.
The study was commissioned by the TPP (Trans-Pacific Partnership) Apparel Coalition, which is made up of five organizations, representing US retailers, apparel brands, apparel manufacturers, and importers.
“American consumers and policymakers tend to look at clothes and finished products and put them into one of two categories, either imported or Made in America,” said Moongate Associates Managing Partner Susan Hester, Ph.D., the report’s lead author.
“This approach is outdated and inaccurate,” she contended. “The study we published indicates US workers are extremely valuable in delivering affordable clothes to American families.”
Data were gathered on five specific products: men’s and women’s cotton knit shirts, men’s and women’s woven cotton trousers (included denim and non-denim), and women’s man- made fiber outerwear (including water-resistant and non-water-resistant). These products were then sub-divided into 20 company-product combinations.
Study participants included seven US-headquartered apparel and retail companies that employ more than 500,000 people globally and 350,000 in the United States. Combined retail sales in 2011 totaled more than $92 billion. US apparel retail sales totaled more than $270 billion in 2011.
-- Today’s global value chains utilized by US apparel brands, manufacturers, and retailers include a full range of activities that firms and workers contribute to bring a product from its conception to the consumer. The study found that the US value-added, as a percentage of the final retail price for a variety of product categories – from shirts to pants in a variety of price points– averaged 70.3 percent, meaning 70.3 percent of the retail value of a garment is directly related to business activities executed by US workers.
-- US value-added specifically is from both blue collar and white collar workers in product design, research and development, transportation, logistics, distribution, product safety compliance, customs compliance, quality assurance, social compliance, environmental monitoring, labor compliance, legal support, marketing, merchandising, and sales.
-- An analysis of publicly available data for the respondent companies revealed single digit profit margins for all companies and a group average of four percent in 2011.
-- US-based activities related to selling products supported 2.6 million US workers in 2011 and total US apparel employment from the beginning of the value chain through sales to the consumer totaled 2.9 million US workers during the same year.
-- The positive ratio of US-value-added to foreign-value-added translates directly into US jobs. These jobs are primarily medium- to high-skilled positions, and many are professional and managerial.
-- Removing tariffs under trade agreements would lower prices to consumers, increase demand, and create jobs and profits all along the apparel global value chain, especially in the United States.
-- Efforts to support these global strategies by American apparel companies will contribute to their success and growth, and these will in turn lead to a more competitive marketplace that will not only benefit the US labor force, but also create new high-quality jobs for workers throughout the global value chain.
The entire report may be found here.