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"Vietnam could become even more appealing to US through the Trans-Pacific Partnership, an expansive 12-nation trade deal that would phase out steep import tariffs on Vietnamese-made goods, but only if Congress puts its stamp on it. In campaign season that has ¬renewed public anxiety about US job losses to China, one Michigan shoe company stands as a stark example of how the economic -dynamics are changing quickly in Asia."
Vietnam could become even more appealing to US through the Trans-Pacific Partnership, an expansive 12-nation trade deal that would phase out steep import tariffs on Vietnamese-made goods, but only if Congress puts its stamp on it. In campaign season that has ¬renewed public anxiety about US job losses to China, one Michigan shoe company stands as a stark example of how the economic -dynamics are changing quickly in Asia.
Wolverine Worldwide exemplifies a sharp shift among American footwear and garment producers away from China toward an emerging manufacturing hot spot: Vietnam. During the past three years, the Rockford, Michigan-based maker of brands such as Keds, Hush Puppies and Saucony, has more than doubled its production in the Southeast Asian nation, taking advantage of the lower labour costs there. Vietnam now constituted nearly 30 per cent of Wolverine’s output, while China’s share had fallen from 90 per cent to 50 per cent, company officials said.
Favourite destination
Many other US firms have made a similar move, brightening the economic fortunes of Vietnam. The communist country will become even more appealing to US capitalists through the Trans-Pacific Partnership (TPP) if Obama has his way, an expansive 12-nation trade deal that would phase out steep import tariffs on Vietnamese-made goods.
The US president has touted the pact as a vehicle to help embed the United States in fast-emerging markets in Southeast Asia and exploit global economic trends to America’s benefit. Attempting its own economic transformation toward the service sector, China is pursuing a separate trade pact that includes Vietnam and other Southeast Asian nations. Congress has yet to ratify the accord, and lawmakers have been wary amid the anti-trade sentiment on the campaign trail.
A trade agreement that includes Vietnam, and that does not adequately protect domestic footwear manufacturers, will only accelerate this trend. For companies such as Wolverine, the deal could make an already lucrative business decision even more profitable. Said company officials said that eliminating an estimated $20 million in annual tariffs on Vietnamese-made products would reduce the cost of shoes for American consumers and boost sales. Furthermore, the officials said, declines in the company’s domestic manufacturing workforce had been offset by hiring in other departments.
Huge manufacturing boom
Under the trade deal, US footwear tariffs, which can be as high as 40 per cent, would be phased out over seven years in Vietnam. That would give Vietnam an advantage over China, Cambodia, Indonesia and the Philippines, which are not TPP members, and accelerate a manufacturing boom inside the country that is already under way.
From 2013 to 2015, US footwear imports from Vietnam rose by almost 50 per cent, growing from US$2.9 billion in 2013 to US$4.3 billion in 2015, according to an analysis by the US International Trade Commission. The study found that shoe company imports to the US would rise by another 23 per cent among TPP countries, mostly from Vietnam, over 15 years.
Matt Priest, president of the Footwear Distributors and Retailers of America, estimated that US companies in Vietnam stand to save $500 million in footwear import taxes under the trade pact. Incidentally, critics said the deal would deliver another blow to an industry that had been decimated in the United States. Former Democratic congressman Michael Michaud said in a letter to the Obama administration in 2011 that domestic footwear production fell by 75 per cent between 1999 and 2007 and that 28,000 US jobs were lost.
But Obama has received support from the industry’s heaviest hitters. Last May, he visited Nike’s headquarters in Beaverton, Oregon, to highlight a pledge from Nike to create 10,000 new domestic jobs in advanced manufacturing if the TPP accord is approved by Congress. That figure is dwarfed by Nike’s workforce in Vietnam, its largest manufacturing base. Obama emphasised that the TPP would require Vietnam to raise working standards, set a minimum wage and allow workers to form labor unions.
Surprisingly, Obama’s message also has not gone over well with one of Nike’s competitors, New Balance, which employs 1,400 manufacturing workers in the Northeast United States – the largest domestic workforce of any athletic shoe maker. This spring, New Balance formally announced its opposition to the TPP, citing broken promises from the Obama administration.
Matt LeBretton, a company spokesman, said the administration had agreed to set up meetings between New Balance and the Pentagon. The company has been lobbying the Defence Department to expand a congressional requirement that mandates military boots and dress shoes be made entirely in the United States to also cover athletic shoes.
Those meetings never materialised, LeBretton said, even though New Balance invested millions of dollars in new domestic machinery.
Obama administration officials said they tried to work with New Balance, providing longer tariff phaseouts than are required in other parts of the deal, and they noted that the company also makes most of its shoes in China and Vietnam. Still, Nike, with a far larger Vietnamese operation, stands to gain more from the trade deal.
Jonathan Akeroyd has been appointed new CEO of Italian luxury fashion house Gianni Versace. He succeeds Gian Giacomo Ferraris, who joined Versace in 2009. Akeroyd served as CEO of Alexander McQueen from 2004 till May 2016. At Alexander McQueen, Jonathan was responsible for the growth and international expansion of the brand, working with the creative and leadership teams during one of the label’s most robust periods.
Alexander McQueen is known for its dramatic, gorgeously constructed pieces, combining elements of British tailoring with French couture. He brings a proven track record in building global brands, steering growth and driving strategic development. His industry expertise and vision will be key to advancing the next phase of Versace’s development.
At Versace Jonathan Akeroyd looks forward to implementing a long-term business strategy that supports the visionary and creative direction of Donatella Versace and her team. Donatella Versace is the vice president and artistic director.
Versace is an iconic lifestyle brand recognised globally as a premier name in luxury. It designs, manufactures, distributes and retails fashion and lifestyle products including haute couture, women’s and men’s ready-to-wear, accessories etc. The brand’s products are available globally through a network of over 180 Versace retail stores.
Vietnam one of the poorest members of TPP’s first round of members. But the nature of its economy – manufacturing and export-driven – means that falling tariff barriers with the US and other member states could be a huge boon to its economy. TPP (Trans Pacific Partnership) offers Vietnam preferential access to markets representing 40 per cent of global GDP. This can provide producers in Vietnam with a significant advantage over non-TPP countries in areas such as apparel or agriculture. In such sensitive sectors in some TPP countries, duties can peak well into the double-digit range.
Moreover, TPP will tackle non-tariff barriers to trade as well, which often impose significant barriers to trade. For example, TPP will streamline customs procedures and improve transparency of related regulations. Such trade reforms will offer Vietnam an economically important expansion of market access to the TPP region.
Vietnam’s competitively low cost of labor, compared to the other Asean nations in the TPP like Brunei, Singapore and Malaysia, and its young and growing middle-income economy, makes it an appealing destination for companies to expand into. The TPP will significantly enhance Vietnam’s attractiveness both as a market and a production hub. However, even if it is immediately implemented, TPP will not have a major impact on trade until at least 2021.
Techtextil/Texprocess NA, which finished its three-day run recently, brought North American performance and protective apparel and industrial product manufacturers together with some 519 exhibitors of the latest textile materials and manufacturing processes. The Messe Frankfurt GmbH show took place in Atlanta in conjunction with the JEC Americas Composites show.
Confirming the importance of the North American technical markets and there is an increase in foreign manufacturers setting up textile operations in the US Dave Gardner, Managing Director, Sewn Products Equipment & Suppliers of America (SPESA), which co-sponsored the Texprocess show said that their industry is really coming back home, and China and India are seeing the advantages of manufacturing in the USA.
With 40 per cent of the total volume share, North America has become the leading consumer of technical textiles for personal protective equipment (PPE), according to Mary-Lynn Landgraf, senior international trade specialist for the US Dept. of Commerce/OTEXA. Rich Lippert, marketing director at Glen Raven Technical Fabrics (GRTF), concurred. In general, we are seeing an increased demand for the traceability and peace-of-mind afforded by US-sourced FR materials. Lippert also commented that GRTF was seeing growth in the geosynthetics market, particularly in India and China.
The ultimate take-home message from the 85th IWTO Congress, the annual conference of the wool textile industry was - Opportunities for wool exist where they never have before. Stand-out sessions from among the more than 30 featured speakers emphasized the role of Generations Y and Z in creating demand for wool, as well as an often overlooked demographic: empty-nesters with the power to spend. Co-hosted by the Federation of Australian Wool Organisations (FAWO), more than 420 delegates from 25 countries attended the three-day event.
Among the featured speakers were Craig Vanderoef, Senior Director at adidas, Germany and Phil Dickinson, Founder and Creative Director of Some Ideas, UK, both back by popular demand, along with Ermenegildo Zegna CEO Paolo Zegna, Parlour X Founder/Owner Eva Galambos and Emerald Group CBDO Melinda O’Rourke who joined Australian fashion journalist Mitchell Oakley-Smith for the latest installation of the Woolmark-led Retail Forum on the last day of the Congress.
The intermix of supply, demand, upstream and downstream has been perfect, IWTO President Peter Ackroyd said of the Congress in his closing remarks.
Falling productivity and rising infrastructure costs are putting Cambodia’s garment industry at a disadvantage as it tries to compete with rivals Vietnam, Bangladesh and Myanmar, according to a leading union. The Garment Manufacturers Association in Cambodia (GMAC) recently urged the government to launch a productivity campaign to improve the situation in one of the country’s biggest industries. GMAC quoted the ILO’s bulletin between 2011 and 2014, which said labor productivity in the garment and footwear sector dropped by about 14 percent. It said labor productivity appears to have fallen as the growth in employment has outstripped the value the sector added to the economy.
GMAC’s secretary-general Ken Loo was quoted as saying that the decline in productivity appears to have continued into 2016 and the organization has asked workers, unions and the government to focus more on improving productivity in the industry, as competition is increasing globally.
Outlook Plus Latin America will be held in Brazil from March 7 to 9, 2017. The focus will be on hygiene, personal care and medical nonwovens for the Latin American market. Speakers will analyse trends in components and raw materials for those products.
Latin America is seen as a key region for future growth and investment of the broad nonwovens industry. With the national economies of countries like Chile and Mexico predicted to gain momentum in 2016, the region’s diversity offers both local and international businesses opportunities for development.
Additional highlights on medical nonwovens and their role in a healthy society will be addressed. A tabletop exhibition will also be offered for local and international companies to showcase their products and services. Opportunities for participants to meet and network will be offered during the conference.
The inaugural event was held in São Paulo in March 2015, and attracted more than 250 attendees with participants declaring the first-ever Latin American event a success for their businesses. The event is organized by Edana and Inda. Edana serves more than 240 companies across 36 countries in the nonwovens and related industries. Edana is to create the foundation for sustainable growth of the nonwovens and related industries. Inda serves hundreds of member companies in the nonwovens/engineered fabrics industry in global commerce. Inda events help members connect, learn, innovate, and develop their businesses.
www.edana.org/education-events/...and.../outlook-latin-america-2015
Cotton USA kicked off Cotton Days in four key consumer markets of Asia—Japan, Korea, Taiwan and Thailand. Cotton Day in Japan began with a fashion event with innovative Japanese designer Kunihiko Morinaga and Momentum Factory Orii, a company that uses traditional techniques in an innovative way to process copper. Actors Norika Fujiwara, Junpei Mizobara and Fuka Koshiba received Cotton USA awards. Cotton USA also announced the winners of the annual Cotton Day T-shirt design contest.
Cotton Day celebrations in Korea were marked by a fashion event directed by the young and trendy Korean fashion designer Munsoo Kwon. He translated seersucker and other cotton fabrics into hip and modern men’s and women’s wear during a dynamic fashion show.
To celebrate Cotton Day in Taiwan, Cotton USA sponsored Kevin Kern’s 2016 world tour. Kern is an American pianist, composer and recording artist of new-age music who was born legally blind.
This year’s Cotton Days concluded in Thailand with the launch of Cotton USA collections from two Cotton USA licensees, Blue Corner and Khaki Bros, during a high profile fashion show. Famous Thai models and actors modeled the Cotton USA clothes. These distinctive women’s and men’s apparel collections reaffirm that cotton is an ideal fiber for fashion apparel.
"This is happening within the industry itself as brands try to engage the new consumer - and lure back the old. Fashion industry is certainly seems to be in a state of flux. The collapse of the Asian market, an exodus of designer talent from the big houses and the sluggish performance of ready-to-wear has precipitated several radical announcements."
This is happening within the industry itself as brands try to engage the new consumer - and lure back the old. Fashion industry is certainly seems to be in a state of flux. The collapse of the Asian market, an exodus of designer talent from the big houses and the sluggish performance of ready-to-wear has precipitated several radical announcements.
The slowdown has been profound. According to Philip Gajzer, managing director of Move Now Commercial Brokers, which advises luxury brands on property, footfall has dropped by around 20 per cent in recent months, and as much as 50 per cent in certain areas. An increase in first-quarter sales at luxury conglomerate Kering came in below expectations at 2.6 per cent, while earlier this month retailer Hugo Boss said it would cut costs by €50m this year after a 4 per cent fall in sales over the same period.
Beginning of the slowdown
According to some fashion houses, this slump began with the global economic downturn in 2008 and sharpened in the wake of the Paris and Brussels attacks. A new system of Chinese import taxes introduced in April has contributed further to luxury’s woes. The Chinese, who account for one-third of all luxury purchases globally, are being more frugal.
Disruption is happening within the industry itself as brands try to engage the new consumer - and lure back the old. In February, British fashion house Burberry announced it would start selling collections directly from the catwalk from September - a ‘see now, buy now’ strategy. Commentators heralded the decision for subverting forever the traditional show format, where clothes are normally delivered in store six months after their catwalk appearance, and upsetting the sanctity of a twice-yearly show schedule that has existed for 50 years.
Burberry chief executive and creative director Christopher Bailey explained that it’s doing what feels right for our audience. It wasn’t supposed to be a ground shift within the industry. Or even that radical. But we’re in an industry which is supposed to embrace change and so this format felt like part of that journey, he said.
Tom Ford will shift his show to a see now, buy now model in September, while Prada, Michael Kors, Coach and Diane von Furstenberg all offered a small number of accessories and apparel for sale immediately after their autumn/winter presentations this spring.
Some are less enthusiastic. It’s a mess, said Karl Lagerfeld, also in February, of the decision by some brands to re-tailor the business of fashion. The creative head of Chanel, Fendi and his own brand acknowledged the capabilities some companies might have to deliver high volumes in shorter timeframes through direct distribution. But Lagerfeld said the system would be disastrous for smaller designers still dependent on wholesale to achieve sales. He echoed the sentiments of many when he said, ‘This way is chaos.’
In fact, ready-to-buy may be less disruptive than it seems. Our model of business is already ready-to-buy in that most of our sales are in the pre-collections, said Michael Burke, chief executive of Louis Vuitton. Only 5-10 per cent of store merchandise is presented on the runway. For us, the show is not about commercial product. It’s about being transgressive and remaining interesting, so that we have something to talk about.
Disruptive moves
Meanwhile, more disruptive are the plans to merge the men’s and women’s shows. Again, Burberry was among the first to announce such an approach. But the mixed catwalk was already well established, with Gucci, Prada and Saint Laurent among those experimenting. Gucci has made the shift permanent.
This gender blending is profound. First, it makes for an editorial nightmare, as fashion editors work out what should be covered, in which month, and where. For business, it makes some sense by showing women’s clothes on menswear catwalks, brands can use the earlier calendar dates to increase their in-store shelf life.
Incidentally, the women’s season is a source of frustration for designers who want to keep their product in store for longer before sales begin. Sales are the terror of our industry where a piece of fashion has a lifetime of four months, says Albert Kriemler of fashion house Akris, which has no plans to change its practice. The menswear dates would be much more reasonable to the industry in terms of delivery.
Meanwhile, discounting remains the scourge of the industry. Gucci has a plan - last December the Kering-owned company renounced the sale season, saying its products will simply hang alongside new season stock with no reduction. Likewise at Saint Laurent, which claimed the creation of the ‘permanent collection’ that is never discounted has contributed to the company breaking the $1bn revenue barrier last year.
The Trans-Pacific Partnership trade agreement is expected to have a positive impact on both retailers and American consumers. Tariffs on goods from TPP countries totaled nearly $6 billion in 2015, and most of it would eventually be eliminated after the measure is enacted, which would benefit consumers through lower prices.
TPP will lower costs across global supply chains in the TPP region, and those lower costs will be reflected in US price tags. Families will benefit from greater spending power both from lower prices and higher wages.
International trade is a major supporter of US employment, accounting for 6.9 million US jobs in the retail industry. TPP will have a significant positive impact on American families, workers and retailers who seek to provide them with a wide range of goods at affordable prices.
TPP is seen as making it easier for retailers to ensure that factories in TPP countries adhere to labor and environment conditions in their codes of conduct. Retail is the nation’s largest private sector employer, supporting one in four US jobs – 42 million working Americans. Contributing $2.6 trillion to annual GDP, retail is a daily barometer for the nation’s economy.
