From design to sourcing, denim manufacturers are adapting their operations in reaction to the U.S.-China trade war as well as brands and consumers’ razor-sharp focus on sustainability.
As they plan 2020 production and collections, mills are developing strategies to incorporate environmentally-friendly materials and methods such as recycled content, safer dyes and finishes, and energy-saving initiatives. Denim manufacturers and importers are also reconfiguring their production plans to avoid excess tariffs from China, while also waiting on pins and needles for passage of the U.S.-Mexico-Canada Agreement (USMCA).
“The shift I’m seeing in sourcing is that a lot of brands we’re working with are not sourcing for the technical aspect of the fabrics, but for the sustainability aspect,” Susan Lee, designer and fabric merchandiser at Twin Dragon Denim Mills, said. “So I’ve changed the way I merchandised the line to not do it by stretch or non-stretch or things like that, but people want me to bring in Repreve polyester fabric and Sorbtek (moisture-wicking) fabric.”
Lee noted that she’s also incorporating eco finishes, and by the end of the year, Twin Dragon will be fully transitioning to Indigo Zero, a dye that uses no water. She’s also working on biodegradable fabrics.
Blue River, Twin Dragon’s Los Angeles wash house, is switching to laser finishing because it’s more eco-friendly, she noted.
“Brands want to tell a sustainable story because consumers are demanding it,” Lee said, adding that they want marketing tools like hang tags to inform the consumer about what is going into the garment.
Twin Dragon’s strategy for manufacturing also takes into account the U.S.-China trade war and resultant tariffs that have caused brands and retailers to rethink where they make and import their denim apparel.
“We do what I call ‘glocal’ sourcing, which is we design globally and deliver locally,” she said. “We have mills in China, Taiwan, Vietnam and Mexico, so we are able to design all of our fabrics in all of those mills. There’s been a lot of shifts in where people are producing with the tariffs and other factors, so we’re able to make fabrics at one facility and develop it at another facility.”
Several mills among the Kingpins New York exhibitors this week echoed these developments as driving their businesses.
Monica Betancur, South American commercial director at Kaltex America, agreed that sustainability has changed the way denim mills produce their product, from environmental efforts in raw materials and manufacturing to the way factories interact with the communities where they operate.
Twin Dragon’s eco-finish machine at its Mexican mill.
Style wise, there’s a “back to basics” approach at Kaltex focused on vintage looks that incorporate modern techniques and materials. These include recycled fibers such as Repreve and laser finishes that reduce chemical and water usage.
Overall, though, “Business is tough right now,” Betancur said. “Companies are being cautious, especially about China,” which has brought fresh interest in Kaltex’s Mexican manufacturing.
Data on denim imports to the U.S. reflects the global uncertainty and turmoil. Year-to-date jeans imports from China dropped 17.02 percent to a value of $564 million in the first nine months of the year. For the 12 months through September, China’s U.S. import market share declined 11.67 percent to 21.22 percent.
On the other hand, denim apparel imports from Mexico rose 5.56 percent in the period to $625.84 million worth of goods. For the year, Mexico held a 21.98 percent market share, up 6.73 percent from the same period in 2018.
Kaltex, for its part, strives to be a “partner with the brands,” according to Betancur. “We provide product support and customer service,” she said. “For us, it’s a collaborative relationship.”
Pakistani mill Artistic Milliners has seen a strong pickup in business during the U.S.-China trade dispute, as companies seek a tariff-free sourcing alternative that also has experience and a lower learning curve, said Ebru Ozaydin, senior vice president of sales and marketing. U.S. jeans imports from Pakistan increased 8.97 percent to $194.95 million in the year through September.
Ozaydin and Maria Georgiana Ciubotaru, vice president of research and development at Artistic Milliners, said in addition to higher interest from U.S. brands, the company has also seen more business from Canadian and European firms.
Artistic’s vertical production structure, where it can develop fabrics with brands and carry them through to finished goods–it has a capacity of 2.5 million units per month–is important, Ozaydin said. But there’s also been new business coming from higher-end boutique brands attracted by Artistic’s ability to customize fabrics and jeans with a range of finishes and styling.
Ciubotaru said the company has invested in re-engineering its production in areas such as washing and dyeing to improve its ecological footprint.
At Mexican mill Global Denim, sales director Jacobo Troice said there has been some new business from companies that source in China to avoid tariff costs, although the quality and prices of denim at Global and other Mexican mills are generally higher than they are from China.
Troice noted that Mexican companies rely on the duty-free benefits of the North American Free Trade Agreement and that they are counting on that continued status under the pending USMCA. Some executives and observers have said there’s hope of it being passed in Congress before year’s end, which House Speaker Nancy Pelosi (D-Calif.) has also indicated she would like to do.
One source said he heard that the Democrats want to bring USMCA up at the same time as a vote on impeachment of President Trump to show that they can pass important bipartisan legislation at the same time as the controversial move to impeach Trump.
Overall, times are tough for denim but that’s not expected to last forever. “There’s definitely a slowdown overall in denim, which is cyclical,” Tricia Carey, director of global business development for apparel at Lenzing Fibers, said. “There’s also clear shifts going on in the supply chain due to the U.S.-China dispute.”
U.S. imports from the world were up just 0.43 percent to $2.83 billion for the first nine months of the year. For the 12 months through September, denim apparel imports grew 2.81 percent to $3.87 billion in value.
Commenting on the potential for Made in America denim production in light of the opening of Vidalia Mills in Louisiana, Carey said, “There’s a place for better denim to be made in the U.S., just as there has been increased production in Mexico.”
In addition, Carey said the focus on sustainability in denim has nurtured Lenzing’s Tencel fiber as an eco alternative to polyester. That’s because it’s a natural fiber derived from wood pulp and produced in a closed loop manufacturing structure.
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