A shrinking Asian labor pool and fabric supply issues meant orders of winter apparel arrived up to two months late for many manufacturers this year, forcing companies to retool their planning, put orders in earlier, and solidify even longstanding relationships with factories in China.
Manufacturers say the delays didn’t come as a surprise because certain factories disclosed the labor shortfall. Still, the supply issues sent waves of stress throughout the industry this fall as 2010/11 winter product arrived late or in low quantities that were quick to sell out.
The issues arose last spring when skilled laborers in China reportedly walked out of factory jobs without notice, leaving for higher-paid work and creating a labor shortfall that forced factory owners to prioritize production runs. Companies that fell to the bottom of the hierarchy dealt with late shipments or had to pay extra to ship their product by air instead of sea.
At the same time, the American economy began to rebound, and companies that had previously placed conservative orders became more aggressive, increasing production and purchases. The result of increased demand from the upturn in business and the decreased capacity in factories translates into supply issues that are likely here to stay, says Matt Gowar, owner and president of Rab.
“It’s completely changing business, and there is nothing you can do,” Gowar told SNEWS at the SIA Snow Show. “This is the new reality. This is how it is going to be. We are going to have push our customers for earlier and earlier orders.”
In addition, companies that put in split orders are front-loading the earlier ones, relying on trend data and customer feedback to anticipate what stores will want on their shelves in a year, says Clark Campbell, Vice President of Operations for Outdoor Research.
“We’re doing more on the buying end to front load so we can level the load our whole season, and so we can help the factories anticipate their workload, which makes us more important to them,” says Campbell.
Executives at Obermeyer reached out to a factory the company has a 20-year relationship with and helped establish a new factory north of Shanghai, closer to the rural homes of the skilled workers who no longer wanted to work in the city factories, says Robert Yturri, Senior Vice President of Product and Brand Management.
In addition to consolidating the factories the brand works with, Obermeyer has given its vendors earlier deadlines, put in ‘place holder’ orders to meet the factories? capacity, ordered 80 percent of its product early and done more spec buying. As Gowar indicates, these actions are likely to become the norm as companies continue to produce technical gear in Chinese factories and the Chinese domestic market increases demand on the factories. As a consequence, supply delays are likely to become more common, and getting products to the U.S. will be more costly.
“Our competitors have the same problem,” says Gowar.
—Rachel Odell Walker
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