Cost Questions Loom Off-Shore

By Jennifer Marks -- Home Textiles Today, 9/3/2007 12:00:00 AM

When the sourcing frenzy took off a few years ago, skeptical importers cut through off-shore manufacturers' claims of being the biggest and the best producer in XYZ category with a simple question: How many people do you have?

Now the global leaders have been identified, and enough factories have made the transition from small regional producer to serious exporter that emerging manufacturers worth their salt are easier to recognize.

Which leads me to wonder whether yesterday's critical query isn't about to be turned inside out: How many people don't you have?

Remember, the same market forces that in the late 1980s and early '90s drove U.S. mill owners to merge and then build out their production capacities to service large retail accounts, ultimately shifted to demands for improved manufacturing efficiencies and broader automation.

The last U.S. towel plant I visited was so highly automated it was practically a ghost town. The last U.S. sheet plant I toured had a few more hands on deck, as did the last U.S. cut and sew facility I stopped by. But all three were operating with decidedly fewer workers than they had been only a few years before, a fact the plant managers emphasized energetically.

That stands in contrast to many of the bustling off-shore factories of today. I recently toured an operation whose worker population exceeded that of my hometown. No knocks against it — it's a large plant running on modern equipment and churning out more than one product line.

Nevertheless, the times, as ever, are a-changing. The triple whammy of rising raw material costs, growing labor costs, and painful currency valuations in textiles-producing nations has lately prompted talk of price increases. When manufacturers and importers plead for relief, there's a possibility they'll hear: If you can't make money with your current pricing structure, you obviously haven't taken enough cost out of your system.

It's a song veterans of the U.S. mill industry remember all too well.