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The State of Our Union

Updated: Mar 19

By SPESA


After President Biden finished his State of the Union address, CNN pushed out a news alert calling it the “most political State of the Union in years.” That’s quite a superlative considering it is a speech made by the president to Congress. Political is kind of the whole point. But the headline did serve as an important reminder that this is a major election year in the United States, and its effects will be hard to miss across our industry and others over the next few months.


In a recent article, Rosemary Coates, Executive Director of the Reshoring Institute, shared that in a survey on 2024 supply chain predictions, politics was surprisingly the most often cited factor. “Fifteen or twenty years ago, politics wouldn’t have garnered even a mention, as government and laws provided mere background and context for doing supply chain work. But today, politics are on everyone’s mind and are expected to influence the majority of supply chain decisions this year.”


This extends far beyond the United States as well. The Associated Press points out that more than 50 countries home to half the planet’s population are due to hold national elections in 2024, with significant global impact. “From Russia, Taiwan, and the United Kingdom to India, El Salvador, and South Africa, the presidential and legislative contests have huge implications for human rights, economies, international relations, and prospects for peace in a volatile world.” As an industry, we have already seen geopolitics coming into play as trade disputes, political moves, and conflicts such as those in Ukraine and Gaza have factored into shifting supply chains across the globe.


Moreover, we expect to see a continued increase in policies and regulatory actions in the next few years surrounding supply chains, sustainability, workforce, trade, and technology, both around the world and within the United States — regardless of who wins this November. We will do our best to monitor the moves impacting our membership, provide guidance, and advocate on your behalf. We encourage our members to keep an eye on Behind the Seams for news and to attend SPESA’s industry events to remain up-to-date on the issues at hand.


Some suggested reading in the meantime:


SPESA Leadership


Speaking of presidents and leaders, we thought it was about time to re-introduce you to ours. During last year’s World Fashion Convention, Ed Gribbin passed the SPESA gavel to Mark Hatton, Vice President, Sales at American & Efird, who will serve as SPESA Chairman for the next two years.


In case you missed it:


We are extremely grateful to Ed for his committed leadership to the industry, and for his vision and guidance which have helped us to evolve as an organization. We now look forward to working closely with Mark as we usher in a new era and perspective for SPESA. 


Earlier this year, Mark shared with our Board his impression of the state of the sewn products market and where he would like us to focus as we move forward. We thought it would be valuable to share it with the rest of the membership as well.



Chairman’s Address

By Mark Hatton


Going into 2024, the headline appears to be “uncertainty.” We are experiencing some of the most challenging and confusing business conditions I have ever seen. Overall apparel demand and production is down, while retailers seem scattered on what their strategies are to match changing customer needs, to purge inventories, and to anticipate the market to come.


U.S. textile and apparel imports continue to decline, on both a unit and dollar basis (although, after several months of straight decline, we did see a slight increase in December). And no one is immune; imports were down in 2023 from all of the country’s top suppliers, including the CAFTA region, USMCA countries, China, and Vietnam. 


Some good resources on trade data:


Meanwhile, apparel stocks continue to underperform versus key indices, despite an improvement in the overall market. In its 2024 State of Fashion report, McKinsey & Company projects relatively flat apparel sales for the upcoming year, with the U.S. seeing only 0-2% growth in the non-luxury sector for the U.S., compared to a 1-3% increase for Europe, and 2-4% potential growth worldwide.


Most non-apparel segments are projected to be flat this year as well. The automotive market is flattening back out following the United Auto Workers strike. Cost pressure is filtering down to the supply base as vehicle manufacturers seek to recover the roughly +$900 per vehicle cost incurred through the negotiations. North American light vehicle production is forecasted to increase just slightly from 2023 to 2024 at 0.5% versus the 9% increase from 2022 to 2023. 


On the home front, experts are anticipating that mortgage rates will continue to decline through 2024, dropping from the 7.8% high seen in October (on 30-year fixed mortgages) to mid to low 6s in the back half 2024. This could generate some renewed interest in housing, leading to a potential 2nd half increase in furniture sales and home goods. The International Sleep Products Association is predicting a flat 2024 for mattress sales, following a decline of 12% in unit shipments in 2023.


But we are not without hope and a little encouragement. At the beginning of the year, I would have agreed with most insiders predicting a 2024 outlook that was flat to 2023 — with more of the same for Q1-Q2 and some recovery in the back half of the year. I expected the year’s trajectory to look like an inverse curve to 2023. However, I now believe we may be heading toward recovery earlier than speculated. 


As I sit here now in mid-March, I am beginning to see green shoots of recovery across the market — most notably positive movement in Latin America — indicating a shift in a favorable direction.


Let’s break it down into the obstacles and opportunities ahead of us.


Headwinds:

  • Pressure on household incomes related to continued inflation, higher interest rates, and dwindling consumer savings.

  • Consumer confidence challenges related to financial, geopolitical, and a variety of other factors.

  • The ongoing consumer shift to experiential and travel related purchases (rather than goods). Further shifts in how consumers shop and where.

  • Climate and sustainability challenges, legislation, recycled availability, and related costs.

  • The election!


Tailwinds:

  • Interest rates are falling and there is still pent up demand.

  • There are still a lot of housing needs. An increase in housing demand is expected in 2024.

  • Labor availability is improving and becoming more stable.

  • A return to the office (in some places) is driving new wardrobe purchases. 

  • Anticipated increases in the tailored goods space. We are actually seeing the return of the suit.

  • Nearshoring is real and is happening. Anti-China sentiment, cost of capital, inventory, and sales volatility equate to no long term view for supply chains and a desire to turn goods faster. This strategy brings higher costs but also better agility. 

  • There are projections for lower gas prices in 2024.

  • With the exception of current events in the Suez Canal, there remains a positive outlook for improved logistics and material availability. 


When looking at all the factors, I am happy to note that the tailwinds seem to win out. And, while the headline for 2024 is “uncertainty,” it appears as if there is some certainty that we have seen the worst for the sewn products business in North America and that we will see improvement this year. 



Three Pillars


In addition to his impression of the industry, Mark shared his objectives for SPESA and the pillars on which he wants to focus as Board Chairman: membership, community, and finance. 


On membership, he would like to focus on:

  • Targeted membership growth on a stable base through value development and outreach;

  • Active engagement resulting in increased member participation and feedback;

  • Defining the needs, wants, and desires of our membership a decade from now.

 

On community, he would like to focus on:

  • Creating opportunities for strategic developments and cooperations with the market, academia, and other associations; 

  • Reinforcing and building on our organization’s role as “The Experts” in the sewn products industry;

  • Developing our vision for the evolving market and ensuring our relevance into the future.

 

On finance, he would like to focus on:

  • Protecting SPESA’s core through responsible fiscal management and spending effectively to affect our mission; 

  • Defending our existing income sources, and developing others;

  • Defining the financial profile of the organization a decade from now.

 

We want to thank Mark for putting so much thought into his role as Chairman. We are positive that Mark, along with our other SPESA Officers — Daniella Ambrogi, SPESA Vice Chairwoman, and Michael Rabin, SPESA Secretary & Treasurer — and the entire SPESA Board of Directors, will lead the SPESA membership in the right direction and set us on course for a successful 2024. 



Upcoming Events


In closing, we want to remind the membership to mark your calendars for a few important SPESA events coming up soon.


On April 11th, we will head to the West Coast for the SPESA Advancements in Manufacturing Technologies Conference. This conference will highlight the latest innovations from SPESA members and address the technology needs for U.S. fashion production. We already have a good number of L.A.-based manufacturers planning to attend and we are looking forward to a great event! Learn more!


In October, we are heading to Montréal for a spectacular, international 2024 SPESA Executive Conference. If you would like to be part of a new committee to help us plan this event, please reach out to Maggie or Marie. Save the date!


And, of course, we are already looking forward to 2025 and the next edition of Texprocess Americas! We tried a few new things at the last show to increase visitor engagement on the show floor, including hands-on and virtual reality machine training. In 2025, we will build on what worked and add additional new features to make the event more fun, more valuable, and more attractive to visitors from the Western Hemisphere. If you have any ideas on how we can make the show experience better for your company, please feel free to reach out to our team. Learn more!

 

 

Thank You


As always, we want to close by thanking the SPESA membership for your continued support of our team, and our association, and your dedication to the betterment of the sewn products industry. Please know, we are always happy to hear from you if you have suggestions on how we can better serve your needs, or ideas for increasing SPESA’s value to members or to the industry as a whole.


We hope to see you in L.A., Montreal, and Atlanta. And we wish you all the best in 2024.


Sincerely, 


Your SPESA Team

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