2023 SPESA State of the Union
Updated: May 2
Embarking on our fifth year managing this association, it continues to be an honor to serve you and the sewn products industry. There is a lot we want to cover today, but we would like to start off by thanking all of our members for their continued support, and welcoming the new members who have joined SPESA in 2022 and so far in 2023. Welcome to AETAS, Apparel Machinery & Supply Co., Dematron Automation, Mid America Embroidery and Sewing, Optitex, SEDDI Inc., Texpak, and Twine Solutions LTD. We are so happy that you are here.
This is going to be a busy year for SPESA. In 2022, we completed the foundation for a new strategic plan that will shape the foreseeable future of our mission, membership, and activities. We have begun implementing a few of the tactics in our plan and will be reaching out to members throughout 2023 with new resources and benefits to improve your membership experience.
We have also begun transforming the Behind the Seams newsletter to ensure its continued value for members and subscribers. You may see a couple more tweaks in the next month as we nail down the best format to provide readers the latest sewn products industry news. As always, we encourage you to send us news or updates about your company to share in the newsletter. And, as a reminder, SPESA members receive one free month of advertising in Behind the Seams, so feel free to shoot us an email to get your company on the calendar.
You can always view the current SPESA member benefits and upcoming events on our website, and please feel free to reach out to the SPESA team at any time if you need help, have a question about your membership, or have an idea on how we can better serve you.
Right now, one of SPESA’s biggest focuses is organizing our upcoming 2023 events (we’ll get to those in more detail later). This includes working on the conference agendas, trying to find the best language to explain what our members and other attendees should expect to learn. There are only so many times you can say the “opportunities and challenges facing the sewn products industry” before it starts to sound cliche. But, in reality, almost everything we do breaks down to that: opportunities and challenges, pros and cons, highs and lows.
As an association, we have to find balance between all the big ideas and projects we want to tackle and the limitations that sometimes hold us back: being a small team, having too many commitments at once, keeping an eye on our budget. Finding balance as an industry has much bigger stakes. Brands often have to weigh product cost vs. ethical/sustainable production. Manufacturers struggle with decisions like reshuffling supply chains or committing to strengthening existing relationships in regions that may be facing new challenges. Suppliers have to take on all of the difficulties posed to and by their customers on top of the everyday struggles of running a business.
Looking ahead to this year, we thought it was a good time to address a few of these topics.
Toward the end of 2022, SPESA’s VP of Operations, Marie D’Avignon, traveled to Brussels to meet with our sister organization, VDMA, and discuss the current developments in the U.S. sewing and apparel industry. After listening to our European colleagues discuss the issues they were facing at the time, Marie basically said: “same.” The main challenges faced by the U.S. industry are largely the same as those you see anywhere in the world.
During the height of Covid, in 2020 and 2021, the biggest problems for the U.S. industry were all related to supply chains — delays and congestion caused by factory and port shutdowns, a lack of labor, canceled orders, health-related issues, etc. Thankfully, the supply chains are moving again now. In fact, nearly all of the major U.S. container ports for retail goods set new cargo records in 2022. But that fear of supply chain disruption is still a concern for U.S. companies. At the end of 2022, we saw increased shipping prices and potential labor strikes from both port and rail workers that perpetuated a sense of uncertainty for everyone involved.
And, of course, like the rest of the world, the U.S. is also experiencing worrisome inflation. The average rate of inflation in the U.S. was 8% at the end of 2022, the highest we’ve seen since the 1980s. While it thankfully has been going down for the past few months (a sign that the Fed’s aggressive interest rate-raising approach is working, according to Forbes), we are still seeing increased prices on goods across the country.
On the manufacturing side, companies are dealing with increased costs of materials, including yarns and fabrics. For the past nine years, the U.S. Fashion Industry Association has conducted a survey asking apparel and fashion companies about their business outlook for the year. In 2022, the association said it was the first time that every single survey respondent expected material and manufacturing costs to increase. That survey noted the five greatest challenges for the fashion industry in 2022 to be:
Increasing production and sourcing costs;
Inflation and the economic outlook in the U.S.;
HR issues related to recruiting talent and retaining them;
Shipping delays and supply chain disruptions; and
Managing the risk of forced labor within the supply chain.
While the companies involved in this survey were exclusively related to the fashion industry, the results feel accurate for the larger sewn products industry as well.
We know workforce issues are certainly at top of mind for SPESA members right now. That same Forbes article puts it so eloquently: “Something weird is happening in the U.S. labor market.” The U.S. unemployment rate is now at its lowest level in 53 years. Half a million new jobs were added to the U.S. economy last month — double the rate analysts expected — bringing the unemployment rate to 3.4%. In his State of the Union address last week, President Biden lauded his administration for creating 800,000 good-paying manufacturing jobs, the fastest growth in 40 years. On paper, this sounds great for the U.S. manufacturing industry, but, at the same time, it means that finding workers is becoming increasingly difficult for many of our members.
Even so, with all of the current (and hopefully short-term) challenges listed above, we are increasingly optimistic for the industry’s ability to meet them.
As you all know, one of the biggest takeaways from the pandemic was increased interest in regionalized supply chains and buzzwords like reshoring and nearshoring (our favorite term is “friend-shoring,” American Apparel & Footwear Association President Steve Lamar’s is “new-shoring,” noting that many of the new textile and apparel businesses launched in the U.S. in recent years are very different from legacy companies that dominated the domestic industry in years past). While China will likely always be a major player in the global sewn products industry, it is losing market share, and we are seeing increased activity and investment in other Asian countries and in the Western Hemisphere.
The head of the National Council of Textile Organizations recently stated that policies such as the 301 tariffs and the Uyghur Forced Labor Act have caused a real shift by many brands and retailers to try to de-risk out of China and look at opportunities to nearshore. The organization noted its members have committed over $1 billion in investments in yarn, fabric, and apparel production capacity in Central America. Much of this investment comes as part of an initiative led by Vice President Harris that has promoted private sector commitments for Central America in abundance of $4 billion since May 2021, with the latest announcement of more than $950 million just last week.
The combination of proximity to the U.S. and other growing Western Hemisphere markets along with the benefits afforded under the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) make the region especially attractive for companies looking to move, diversify, or increase production there. Apparel imports largely containing U.S. textile inputs from the CAFTA-DR region were up 24% according to the latest government trade data.
On numerous occasions, SPESA President Michael McDonald has shared his belief that “the path back to the Western Hemisphere flows through Central America.” With this in mind, a major focus for SPESA in 2023 will be strengthening our connections and relationships in and support of the region’s sewn products industry. In September, Michael and Texprocess Americas showrunner Kristy Meade traveled to Guatemala, Honduras, and El Salvador to meet with local manufacturers and industry associations, demonstrating our support and setting the groundwork for future collaboration.
In terms of reshoring manufacturing to the U.S., the opportunities are interesting as well, especially for companies with a little creativity. We might not see it come back in a large capacity any time soon, but there is a growing environment for doing smaller, more customized, more sustainable manufacturing in the U.S. for the U.S. market. This will require the use of technology and automation. Fortunately, that’s exactly where SPESA members excel. One of the best parts of working at SPESA is getting to see innovation develop. Solutions like on-demand, waterless thread dying; 3D garment visualization software; AI trend and sales forecasting; and so many more are making the production of sewn products more sustainable, efficient, and achievable around the world.
We were going to hold off talking about events until the end, but it is just too good of an opportunity to pass up mentioning that innovative technology is at the heart of Texprocess Americas, and many of the solutions above will be on display at the next show in Atlanta May 10-12. The 2023 show will include a new Tech Zone and Start-Up Pavilion showcasing technologies, collaborations, and ideas that are revolutionary to the sewn products industry.
Of course, for U.S. sewn product production to work we still need skilled workers as well. As mentioned above, the lack of a U.S. workforce for the sewn products industry is a problem. But we are seeing several initiatives around the country to develop workforce training programs — both in person and with assisted or virtual reality — and SPESA is excited to help facilitate these efforts in the future. We are currently working on a plan to include mechanic training on the show floor in Atlanta as part of a career resource center valuable to both visitors and exhibitors.
Now that we are officially on the topic, we are very much looking forward to a successful Texprocess Americas show in 2023! Last year’s show was good. It was also strange. As the first major show in a Covid-colored world, there was understandable hesitation surrounding the show. But, while smaller, the participation exceeded expectations. And this year will be even better. This is the year our industry is getting back in its groove; this is the show you don’t want to miss. Registration is now open and there are a few spaces still remaining for anyone looking to exhibit.
Besides Texprocess Americas, SPESA will host two other major events in 2023. Next month, we fly south to San Juan for the 2023 SPESA Executive Conference. The agenda will basically focus on everything we’ve discussed so far in this address: nearshoring, Central America manufacturing capacity, workforce, and sustainability. The conference will also feature local factory tours and some of our best networking events so far. San Juan is a fantastic location for this conference and we encourage attendees to bring their families along if you can.
If you have read this far, you may have noticed we have given credit to several other associations related to our industry. This is intentional. We strongly believe that associations, and really everyone in the industry, benefit by sharing resources and working together whenever possible. That is one of the main reasons we are so excited to be teaming up with the International Apparel Federation to bring the 38th World Fashion Convention to Philadelphia in October 2023. It will mark the first time this event has been in the U.S. in more than 20 years. SPESA members will continue to be front of mind as we plan this event, but it will also be open to a much larger audience across the global apparel industry. We will share more details about this event with members soon.
When we talk to our members, we often like to say that everything we do, we do for you and for the betterment of the sewn products industry. But perhaps we should amend the original statement to everything we do, we do with you. We would not be able to accomplish anything without the support of our members, our industry colleagues, our Board of Directors, and especially our Board Chairman, Ed Gribbin.
Please join us in thanking Ed for his outstanding leadership over the past year and his continued guidance as we strive to surpass expectations in the year ahead.
We hope to see you all in San Juan!
Your SPESA Team