Sourcing at Magic: Experts Speak to the Evolution of Nearshoring

The concept of nearshoring has graduated from a possibility to a trend to a bonafide sourcing strategy in the matter of a few short years.

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But when it comes to Western hemisphere sourcing, have brands and their supply chains discovered the secret sauce to streamlining production, reducing costs and boosting sustainable progress?

These were questions panelists at the Sourcing at Magic trade show in Las Vegas attempted to answer on Tuesday. Experts from Canada, Mexico and Colombia took the stage to speak to their respective countries’ triumphs and pain points in the fight to capture sourcing market share from overseas competitors.

Mathieu St-Arnaud , senior director for Montreal, Canada-based non-profit MTLSTYLE, said there’s one key issue keeping the country from making meaningful advancements on the world stage when it comes to apparel sourcing: a shortage of labor.

“If you look at garment production in last 10 years, there have been many punctual elements—it could be elections, it could be politics, it could be legislation, pandemic, inflation, economy. Those are short term priorities,” he said. But long-term, the most pressing issue is one that hasn’t moved much—and that’s a lack of workers to expand the industry.

Now, MTLSTYLE, which works with designers, manufacturers, wholesalers and retailers to promote Quebec and Montreal as destinations for fashion production, is working to attract a new generation of talent to grow a rapidly evolving sector. “How can we become more seductive as an industry?” is a question the group is currently trying to answer. Factories, stores and distribution centers are all seeking to grow their workforces.

According to St-Arnaud, “If you want to compete with other sectors and other industries to get the same labor, the price of wages goes up. So that’s the situation we’re facing right now in Montreal.” That reality means that Canada is not as price competitive as some of its nearshore neighbors—though there are other benefits to doing business in the country. “If you’re looking for price, we might not be your right solution—but if you’re looking for quality, for quick turnaround, to business in English, for quality control, for sustainability, for social responsibility, then yes, we are.”

Sebastian Echavarria, senior textiles and apparel representative for ProColombia , a government agency that promotes Colombia’s exports and services, said the South American nation faces similar issues when it comes to workforce growth.

“We have some shortages of labor too, especially because the new generations don’t want to go and work in a factory sewing clothing. That’s a reality,” he said.

However, the government has implemented an alliance with Colombian apparel factories to promote the revitalization of the industry through education and upskilling. “Training programs in our industry are becoming something very relevant, so that gives us a little bit of competitiveness in terms of labor and jobs,” he added.

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Colombia, like Canada, isn’t a destination for cheap apparel sourcing, Echavarria said. Instead, producers are making a name for themselves through specialty categories like high-end swimwear and brands like Agua Bendita and Maaji.

The country’s trade agreement with the U.S. market is yarn-forward, meaning that raw materials must originate in a Colombian or American mill in order to enjoy duty-free benefits. “You can export and import as much as you want between both countries, but you have to be able to certify the origin for those materials and components for at least 90 percent of the garment,” Echavarria said.

The benefits of free trade have driven government interest in vertical integration. “Because of that restriction in terms of our agreement, we promote sourcing that goes vertical,” from end-to-end producers who mill fabrics and cut and sew, as well as manufacturers that work in synergy with local mills. “We have a good amount of mills in terms of cotton, nylon and polyesters, mostly poly-blends,” he added.

According to Patricia Medina, director of Mexico -based denim manufacturer Aztex Trading , the firm has benefited from brands’ burgeoning focus on traceability and transparency, along with proximity and speed-to-market.

Brands are living in “a new world, with the new consumers that really care,” she said. Companies that operate with a mentality that traceability is a baseline requirement for their products will see benefits to their bottom lines, she believes. “The consumer does want to know how the product was made,” she said—and that works in Mexico’s favor as the U.S.’ most viable and closest nearshoring destination.

“I think the most important thing is not about the brand, but the partnerships,” Medina  said. “There have been brands who have never left us, like Guess or Levi’s. We are now developing for Target.”

Mexico also boasts benefits beyond its closeness to the U.S. market—one being low MOQs and a flexibility not always seen with offshore manufacturers. Medina told the story of Fabletics, which launched in 2013. The company’s subscription-based model was new to the market—and a gamble. It came to Mexico for partners to experiment with on several categories, looking for small runs at first. If the country’s suppliers had turned down the opportunity to produce 100-piece runs during those early days, they might not have been a part of the company’s “tremendous” success after just a few years.

“They found a partner to grow, a partner that believed in them and wanted to produce for them,” she said. “I can tell a lot of other stories of people that came to us, to the point that we have even created an app to help new brands and designers to make from one to 20 pieces so they can start, and they can show.”

“Yes, we will always have the Levi’s, but what we want is to add value, to create new companies in partnership with new brands that have new ideas,” she added.

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