Reports

APPAREL AND ASSEMBLY: REINVENTING THE REGION TO BE INNOVATIVE AND FASTER
TUESDAY, DECEMBER 5
2:00 – 4:30 PM

Moderators: Mike Todaro, AAPN

Discussants: Jill Coleman, Avery-Dennison; Richard Coles, Multi Tex; Alfonso Hernandez, Argus Group; Wayne Gray, Williamson Dickie Manufacturing Co.

The Context:
Does CAFTA and other legislation, like HERO, truly allow the region to effectively compete with Asia?

Challenge:
While proximity to the market provides a competitive edge, does the region understand the sourcing and certification requirements to take advantage of these types of agreements?

Points and comments brought up in the session –

• What are the big trends?
  • Too many factories
    • There will be winners and losers. These winners and losers will be determined based on the quality of the companies and their leaders, rather than on the country in which the factories are based.
  • Educational opportunities abound: factories need technology and training to improve efficiency.
• Accordingly, there are two recent major changes in the industry: 1) the consolidation of retailers has resulted in a restructuring of the apparel market in the U.S; and 2) there is a surge in private labels that has led to a greater emphasis on speed to market, product design and value-added merchandise.
• Given these new competitive pressures, many factories in the Caribbean Basin have not been able to remain afloat, and this has resulted in the closing of factories as well as in the loss of apparel industry jobs on a region-wide basis.
• While China is consistent in all efforts to be competitive, the Caribbean Basin is not.
  • There is increased pressure from the WTO for the Caribbean Basin to improve the way it conducts business.
    • For instance, in recent years, Haiti’s apparel and assembly industry has experienced a decrease of approximately 18 thousand jobs (from 30 thousand to 12 thousand).
    • For the Caribbean Basin to compete on a global basis, the region’s leaders must invest in creating an effective chain of communication.
    • Haiti is the most competitive country in the region, but the country operates far below its potential. For example, Haiti has a very competitive workforce, with relatively cheap wages.
  • Lack of financing in the Caribbean Basin, while companies operating in Asia benefit from easy access to capital. In the Caribbean Basin, the cost of financing is 11-12 percent, while in Asia the cost of financing is 6.25 percent.

Questions and Answers brought up in the session:

• Currently, supply chain management within the Americas is very complicated. So, what do suppliers need to improve the situation?
  • More services in ports.
  • Cheaper transportation options.
• In the Caribbean Basin, how does tourism affect the apparel and assembly industry?
  • As the Caribbean Basin becomes more competitive in the tourism industry, labor costs increase. This change indirectly affects the apparel industry in a negative way because increases in labor costs mean higher wages. The apparel industry, in turn, becomes less competitive.

Recommendations made:

• Need for increased investment in textiles.
• All Factories must be certified by the Worldwide Responsible Apparel Production (WRAP).
  
• Key issues for factory owners to focus on: 1) speed to market, 2) cost and 3) excellence of service.
• Market research: find out what retailers want and you, as the supplier, go out and make it.

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