Presentation from the California Fashion Association at the MAGIC tradeshow

1. MAGIC
“Made in U.S.A.”
Can We Make it Here?
August 19,2013
Presented By: Ilse Metchek, CFA President

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

3. Economic Value of Made-in-USA

4. 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

5. 33 indirect jobs in LA County
8
8
7
4
3
3
8
Administrative Services
Professional and Technical Services
Management of companies
Contract Manufacturing
Wholesale Suppliers
All Other Sectors
The Multiplier:
100 direct jobs create
These are the indirect jobs!

6. 27 induced jobs in LA County
6 Health and Social Services
5 Retail trade
3 Food Services
3 Other services, ex: dry cleaning, delivery, etc.
2 Finance & Insurance
8 All Other Sectors
The Multiplier:
100 direct jobs create:
These are the induced jobs!

7. Total Employment
100 direct jobs
33 indirect jobs
27 induced jobs
160 jobs

8. Multiplier Impact in Selected Industry Sectors
Industry Direct Indirect Induced Total
General Merchandise Stores 100 9 13 122
Ornamental & Architectural Metal Mfg 100 36 32 168
Bread and Bakery Product Mfg 100 33 27 160
Upholstered Household Furniture Mfg 100 19 20 139
Women’s Cut and Sew Apparel Mfg 100 113 46 259
Source: LAEDC “Why Manufacturing Matters” Report, 2012

9. Consumer Interest Data

10. 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….”

11. ‘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
Percentage
Who
Agreed:
Source: Cotton Inc. Lifestyle Monitor Survey 2013

12. GOING GLOBAL
“Designed in LA”

13. U.S. IMPORTS vs. EXPORTS
APPAREL
ALL PORTS
64,300,000,000
3,500,000,000
77,900,000,000
4,800,000,000
Source: LAEDC July, 2013
Value $USD

14. U.S. IMPORTS vs. EXPORTS
TEXTILES
ALL Ports
Source: LAEDC July, 2013
Value $USD
5,200,000,000
9,400,000,000
7,400,000,000
14,300,000,000

15. U.S. IMPORTS vs. EXPORTS
FOOTWEAR
ALL Ports
Source: LAEDC July,
2013
Value $USD
17,500,000,000
940,000,000
23,900,000,000
1,300,000,000

16. 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.

17. 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

18. 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

19. Wages’ Map in China
400 Cities over 1 million People –
What will happen to wages?
Source: GDSL&K, March 2012

20. 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

21. 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

22. The RIGHT Combination
ADD U.S. Company and U.S. Management
PLUS ‘Third World’ assets (manufacturing,
labor supply, etc)
EQUAL Global Reach!

23. Barriers to Domestic
Manufacturing

24. California Denim in London
Selfridges LONDON – May 2012

25. 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.

26. 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

27. Constructive Choices

28. CHINA CANADA
U.S.A.
“Trans-national” Fashion
FRANCE

29. CHINA CANADA
U.S.A.
“Trans-national” Fashion
FRANCE

30. A Strategy for LA Fashion

31. Hollywood Reporter,
June 2013

32. 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)

33. CFM Company Snapshot
September 12th, 2011

34. “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…

35. 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