New Study Finds US Apparel Value Chain Adds More Jobs Than We Can Risk

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The U.S. adds as much as 75 percent value to the final retail price for apparel made overseas—which makes U.S. trade relations ever important to a sizable amount of American jobs.

A study commissioned by the U.S. Global Value Chain Coalition, a newly formed organization with the aim of educating policy makers and the public about how much economic growth—not to mention American jobs—is generated through global value chains, shows the shift to world sourcing has come to support more apparel manufacturing jobs than the country can afford to risk.

[Read more about the U.S. losing steam as a global trade power: Trump’s Trade Policies Come Under Fire as Hurting U.S. Standing]

The newly released study builds on a 2011 version, which found U.S. value-added at the time was 70.3%. By product, the average U.S. value added as a percentage of retail price ranged from 65.8% for women’s man-made fiber outerwear, to 75.4% for women’s cotton knit shirts.

“It is widely known that most apparel sold in the United States is assembled overseas,” the report noted. “What is less well known is the fact that millions of American jobs are included in the global value chains that design, produce and market clothing sold in the United States.”

Most apparel goods—despite being labeled as made in one country—could really be considered “Made in the World,” when you factor in all the various sourced parts and components, as the recently published “Global Value Chain Development Report 2017” noted.

When it comes to U.S. workers’ role in these globally-made goods, they are designing and managing apparel production, U.S. carriers are transporting it, customs employees are handling apparel and clearing it, there are workers addressing compliance, workers managing warehousing and distribution once a garment lands stateside, others marketing apparel products on TV, in print media, online and via social media. American workers are also handling retail and customer service activities whether the apparel goods are sold in stores, online or in catalogues. The apparel value chain jobs for U.S. workers are often the ones that are higher skilled and better paid than those in the steps being done abroad.

“The total value-added by these U.S. workers far exceeds the value-added overseas in manufacturing activities even when the yarn and/or fabric is acquired abroad. Moreover, the level of U.S. value added varies little regardless of the kind of apparel product or the company involved,” the report noted.

The Trump Administration has been narrowly focused on U.S. manufacturing jobs, but disrupting the global value chain that’s in place today could impact global value chains in a way the administration likely isn’t aiming for.

“Saying manufacturing shouldn’t be done overseas is short-sighted because you’re ignoring all of the other jobs here in the U.S. supported by production overseas,” said Julie Hughes, president of the U.S. Fashion Industry Association, a member of the U.S. Global Value Chain Coalition.

When you look at the global value chain curve, most of the value is added in pre-production (management, design, sourcing) and post-production (distribution, marketing, logistics). Production is where the least amount of value is added.

The commercial components necessary for designing and selling garments made overseas, including things like material inputs, manufacturing and shipping, amount to as much as three times the value of manufacturing and input costs added abroad.

“Stepping back and looking at the value captured at each stage of the value chain, it is clear across all companies that the activities carried on in the United States in support of manufacturing abroad dwarf the value-added in foreign countries,” the report noted. “This ratio of U.S. value-added to foreign value-added translates directly into U.S. jobs.”

That’s precisely why—as the U.S. Global Value Chain Coalition makes clear—the U.S. can’t risk trade relations with key countries or policies that could hinder success of the apparel industry.

“Policies that recognize the benefits to consumers and workers of these global value chains would lower prices to consumers and thus increase demand and there jobs and profits all along the apparel global value chain including in the United States,” the report noted. “Efforts to support these global strategies by American apparel companies will contribute to their success and growth, and these will in turn lead to a more competitive marketplace for apparel consumers and a new high-quality U.S. jobs throughout the global value chain.”

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