cfa presents made in usa at magic (las vegas, nv)

MAGIC“Made in U.S.A.”

Can We Make it Here?

August 19,2013

Presented By: Ilse Metchek, CFA President

Outline

• Economic Value of Made-in-USA• Consumer Interest• Going Global• Barriers• Constructive Choices

Economic Value of Made-in-USA

Ex: Apparel Manufacturer

A firm specializing in Domestic

Production of Apparel in LA County

has 100 workers.

These are the direct jobs!

Source of this and next 4 slides – LAEDC “Why Manufacturing Matters” Report, 2012

33 indirect jobs in LA County

887 4 338

Administrative ServicesProfessional and Technical ServicesManagement of companiesContract ManufacturingWholesale SuppliersAll Other Sectors

The Multiplier: 100 direct jobs create

These are the indirect jobs!

27 induced jobs in LA County

6 Health and Social Services5 Retail trade3 Food Services3 Other services, ex: dry cleaning, delivery, etc.2 Finance & Insurance8 All Other Sectors

The Multiplier:100 direct jobs create:

These are the induced jobs!

Total Employment

100 direct jobs

33 indirect jobs

27 induced jobs

160 jobs

Multiplier Impact in Selected Industry Sectors

Industry Direct Indirect Induced Total

General Merchandise Stores 100 9 13 122Ornamental & Architectural Metal Mfg 100 36 32 168Bread and Bakery Product Mfg 100 33 27 160Upholstered Household Furniture Mfg 100 19 20 139Women’s Cut and Sew Apparel Mfg 100 113 46 259

Source: LAEDC “Why Manufacturing Matters” Report, 2012

Consumer Interest Data

Likely to Buy 2010 2011 Age (% of Group)18-34 35-44 44-54 55+

More Likely to Buy it 59% 61% 44% 61% 66% 75%

“Made in America”......By Age(% of All U.S. Adults… “When you see an ad emphasizing

that a product is “Made in America,” are you….”)

Source: Harris Interactive October 2012

Likely to Buy Region (% of Group)East Midwest South West

More Likely to Buy it 60% 67% 61% 57%

“Made in America”......By Region“When you see an ad emphasizing

that a product is “Made in America,” are you….”

‘Made in USA’ is the most influential attribute when I buy a new product

0%

10%

20%

30%

40%

50%

60%

70%

2008 2009 2010 2011 2012

PercentageWho

Agreed:

Source: Cotton Inc. Lifestyle Monitor Survey 2013

GOING GLOBAL“Designed in LA”

U.S. IMPORTS vs. EXPORTSAPPAREL

ALL PORTS64,300,000,000

3,500,000,000

77,900,000,000

4,800,000,000

Source: LAEDC July, 2013

Value $USD

U.S. IMPORTS vs. EXPORTSTEXTILES

ALL Ports

Source: LAEDC July, 2013

Value $USD

5,200,000,000

9,400,000,000

7,400,000,000

14,300,000,000

U.S. IMPORTS vs. EXPORTSFOOTWEARALL Ports

Source: LAEDC July, 2013

Value $USD

17,500,000,000

940,000,000

23,900,000,000

1,300,000,000

Opportunities for U.S. Apparel Brand Expansion..IF non-tariff duties permit

• Brazil – The country is young, more than 60% of population below age 29

• China – Color palettes and design tastes are different, but brand names are important

• India – Apparel retail growth is on the rise thanks to a booming middle class

• Turkey – The market is growing for luxury retailers• Russia – Opportunities are strong but there is a higher cost of

operation • Argentina – High-end retailers are returning because of the strong

economic recovery• United Arab Emirates – Companies are focusing on associating

their presence with significant real estate developments, not free-standing retailing.

Opportunities for Global Growth

• North America and Western Europe (England, France, etc.) account for 65% of the current world-wide consumer apparel market.

• Engine for future market growth will be in countries like China and India, particularly at lower unit prices.

Sources: HSBC Report, March 2013

China - What’s Happening Now?

“Manufacturing production shifts out of China have been seen primarily in basic commodity categories such as apparel/textiles.”

Source: GDSL&K, March 2012

Wages’ Map in China

400 Cities over 1 million People –What will happen to wages?

Source: GDSL&K, March 2012

Country Wage Comparison

Country ‐ Total costs for sewing worker at factory (US$ per month)

China ‐ $310 ‐ 630 ‐ In some cases more expensive than Mexico!

Indonesia $202 ‐ 346

India $132 ‐ 296

Vietnam $134 ‐ 290

Bangladesh $62 ‐ 110

Even when factoring in efficiency expertise – China is NOW expensive

Source: GDSL&K, March 2012

What Third World Growth Offers• Fastest growing economies in the world• Low labor cost• Skilled resources• Strong government support• Very large domestic market

WHAT THEY NEED :* US Management (sales marketing distribution)* US technology* Business services and Intelligence

The RIGHT Combination

ADD U.S. Company and U.S. Management

PLUS ‘Third World’ assets (manufacturing, labor supply, etc)

EQUAL Global Reach!

Barriers to Domestic Manufacturing

California Denim in London

Selfridges LONDON – May 2012

The Retaliation Effect of Trade

Effective May 1, 2013:

• EU announces that tariffs on women’s denim trousers jump from 12% to 38%.

• The women's 'premium' jeans business represents 22% of the entire global jean's market. US shoppers spent nearly $16 billion on denim in 2011...and 75% of the premium denim market comes from Southern California!

• Jobs - jobs - jobs! This ruling affects domestic sewing contractors, cutting services, dye and wash facilities, textile suppliers, and a myriad of other indirect employee-based companies working on US-made denim brands.

Manufacturing Challenges .......with continuing

strong competitive pressure from offshore production

• Immigration Status Ruling• Industrial Training ...where will the ‘new’

workforce come from?

• Manufacturing Tax Credits• Equipment Financing... machinery,

technology, and workforce training

Constructive Choices

CHINA CANADA

U.S.A.

“Trans-national” Fashion

FRANCE

CHINA CANADA

U.S.A.

“Trans-national” Fashion

FRANCE

A Strategy for LA Fashion

Hollywood Reporter,

June 2013

MISSION: To gather information about California manufacturing, designing and creative services To promote these services and products to retailers and media.

New CFA Program:California Fashion Manufacturing (CFM)

CFM Company SnapshotSeptember 12th, 2011

“Use the best equipment, have the best design, train the best workforce, and educate the consumer with branding.”

....Don Randolff, President, Brooks Brothers

The Secret of Success…

The California Fashion Association (CFA) is the Business-to-business forum for California's

Apparel and Textile Industries.

Please visit our website:www.CaliforniaFashionAssociation.org

Email: info@calfashion.org