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Why does underwear come from Guatemala?

Garment Workers
Garment Workers
Photo by Oli Scarff/Getty Images

If Andy were still alive, he would probably ask: “Did you ever wonder why”? [1]

But it’s not just underwear or Guatemala. Practically every article of clothing one picks up in a department store these days either comes from the Near East, Far East, Central America or Latin America. Almost nothing worn in the United States is made in the United States anymore, including shoes.

It’s strange the United States has fallen so far behind the rest of the world in apparel manufacturing. After all, the country used to be the cotton supplier to the whole world, thanks to Eli Whitney and his cotton gin, patented in 1794.[2]

And, let’s remember America’s E.I DuPont Company’s basic research that led to the invention of nylon (the miracle fiber) introduced in 1939 for stockings, clothing and other applications.

What about polyester? Another fabric that also came into existence by E.I. DuPont’s basic research in 1926 and the company’s market development work on a related product called Dacron. [3]

We can’t forget Stephanie Kwolek, one of the first women research chemists in America. She discovered a polymer solution that led to the invention of Kevlar. A material five times stronger than steel and used for bulletproof vests and other products, like helmets and camping equipment.

Most popular of all, the creation, if not invention, of Blue Jeans by Jacob Davis and Levi Strauss in 1873. They turned denim thread and a little metal into the most popular apparel in the world. [4] Unfortunately, Blue Jeans, a symbol of American creativity in apparel design, abandoned the Made in America label in 2002 and outsourced manufacturing to countries with low-cost labor.

Thus, America’s manufacturing ingenuity metamorphosed into international economics, logistics, distribution and marketing. In other words, a transformation into the art and science of getting products made cheapest anywhere in the world, and delivered to the most lucrative markets in the world, at the fastest and lowest possible cost of distribution. To paraphrase a Grayhound commercial, “and leave the manufacturing to rust.”

So, that’s what Globalization is all about. And, that’s why underwear, outerwear and all forms of textiles come from countries, like: China ($32.1 billion in exports to U.S.), Vietnam ($7.1 b), Indonesia ($4.9 b), Bangladesh ($4.4b), Mexico ($3.9b), India ($3.2b), Central America ($5.9b), and all others ($19.7b) for a total of $81.2 billion or about 11% of the total U.S. trade deficit.[5]

As a consequence, the apparel industry’s output contribution to GDP has “tanked” dramatically from $112.9 billion in 2005 to $73.0 billion in 2012 or a decrease of 35% due, in large measure, to foreign imports. However, for some economic observers, the declining value of domestic apparel output, as a result of competition from cheap imports, benefits American consumers by lowering domestic prices. Albeit, it also broadens international welfare, but that’s another story.

According to the U.S. Department of Commerce, Economic Research Service, “liberalization of trade policies will cause apparel prices to drop roughly four percent a year, and domestic workers will bear the brunt of market dislocations.” To boot, the Economic Institute and the Brookings Institute, both non-profit and non-partisan organizations, affirm that liberal trade policies “have decimated the apparel industry.” Therefore, 114,000 American apparel workers that are now employed in over 7,000 factories face job elimination, along with an annual payroll of over $2.9 billion.[6]

Much of America’s trade deficit is obviously conjoined with declining employment that started in 2008 with the elimination of trade quotas and duties vis-à-vis the 1994 North American Free Trade Agreement with Canada and Mexico.[7] Overall, unemployment was a mere 5.4% in 2008 and surged to 7.9% in 2012. In about the same time frame, the trade deficit with NAFTA rose to $94.6 billion in 2010, thus increasing 36.4% over 2009. NAFT accounted for a hefty 26.8% of the total U.S. trade deficit.[8]

Notwithstanding the bad effects of liberalized trade agreements on jobs, new liberal trade accords were recently enacted for South Korea, Panama and Columbia. Combined, these countries export about $1.2 million worth of apparel goods annually into the United States. That volume will certainly increase.

Additionally, there’s an on-going initiative to expand free-trade with Europe and the Pacific Rim countries under a Special Trade Authority known as Fast-Track. According to the Washington Bureau of the Baltimore Sun, “these ambitious plans … face growing opposition from Democrats and Republicans.”

The premise of Fast-Track is that it will double U.S. exports and lead to even bigger liberalized trade pacts; i.e., the Trans-Pacific Partnership and Transatlantic Trade & Investment Partnership involving 11 countries covering more than 40% of the world’s output (GDP).[9]

Finally, manufacturing jobs in the United States are being lost due to industry’s own strategies in coping with changing world conditions. The basic strategies are: Firstly, “to be highly responsible in foreign outsourcing.” That stratagem is cited as, “among the biggest challenges facing the apparel industry in 2014.”

Secondly, “to create a solid and sustainable production base for future needs.” That means expansion of overseas product supply. And thirdly, engage in “more value-added activities, like creative design, brand management, product innovation, performance, and technical solutions” … the art and science side of the business.”

What’s troubling about these strategies is they imply giving-up on domestic manufacturing and shifting to quasi ownership of “solid and sustainable production” plants overseas. That would advance the idea of siring a trade organization called the Sustainable Apparel Coalition to overseer single purpose manufacturing facilities and ensure product quality, environmental compliance and social impact issues that are congesting management time and expense.

Therefore, the industry emphasis would be solely on marketing, logistics and omni-channel distribution.[10] Omni-channel distribution is a merchandising technique using multiple customer contact venues; such as: Internet devices, computers, direct mail, catalogs, TV, radio and brick and mortar (retail stores) as part of an overall marketing strategy. In basketball, it would be called a full court press.

So the next time, if you wonder why so much underwear is made in Africa, Asia, South America, Guatemala -Central America, and not in the United States, you’ll know why.

Thanks for reading

[1] Andy Rooney a humorous Essayist at CBS News who died in 2011.

[2] Revolutionized the Southern economy, but helped perpetuated slavery.

[3] Basic research by E.I DuPont which led to England actually developing the fiber known as Terylene.

[4] The Best Idea Finder. Levi jeans are made overseas. Wrangler and Lee brands are manufactured in the United States.

[5] U.S. International Trade Commission U.S. Custom Value of Apparel Imports 2012 (NAICS 315 apparel)

[6] Bureau of Economic Analysis, U.S. employees by detailed industry2012 and USDC County Business Patterns 2011 (latest available).Of course, benefits accrue to U.S. entrepreneur in the form of profits and competitiveness.

[7] Canada represents only $644 thousand worth of the combined total of $5.9 million for both countries in 2012

[8] Office of the U.S. Trade Representative

[9] President’s Export Council

[10] Omni – from Latin meaning many

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