According to Textile Exchange's organisers more than 1,300 people attended the 2023 event. It was dominated by young minds and fresh ideas. And when it comes to sustainability, our industry can use all the help it can get. So, it was gratifying to join so many motivated people.

Even a short stint in the global apparel business leaves even the most cynical of observers impressed by the industry's innovation and efficiencies while being discouraged by the industry's failures as an environmentally sustainable business and employer of millions of workers globally. Sure, there are outliers, companies embracing change and positively contributing to the environment and meaningful labour rights. Still, there are so many more that do little beyond paying lip service to the cause of environmental stewardship and fair wages - after all, why do the hard things when a marketing message is just a soundbite away?

Yet change happens, sometimes predictably, sometimes not. More often than not, change is thrust upon the ill-prepared, unsuspecting Luddites. To its credit, Textile Exchange, as witnessed at its 2023 gathering, endeavours to provide the tools and techniques necessary for the unwilling or indifferent to embrace new thinking. Sure, the days were long, with dozens of seminars covering topics from circularity to regenerative agriculture, but they were educational and enlightening.

Textile Exchange 2023 balances victory laps with what must come next

A quibble: the event occasionally suffered from self-congratulatory hero-worship for sustainability leaders, organisers, and well-heeled promoters. A victory lap too many, perhaps. But make no mistake, the event was worthwhile - and for this old warhorse, worth the time and expense to traverse the Atlantic. Indeed, these events become more prominent and thought-provoking every year.

Even so, the sustainability world sometimes operates in a bubble of sorts; hopefully, organisations like the Textile Exchange can help the industry burst that bubble to implement meaningful environmental change and, in time, even labour reforms. For sure, they have created a terrific platform for an exchange of ideas, professional interactions, and innovation. Events such as these work hard to transcend industry marketing and product spin.

Of course, commercial concerns were addressed by the organisers. An active pavilion of trade booths permitted companies and organisations to showcase their latest and greatest technology, transparency programme, or environmental initiative. In turn, the pavilion allowed conference attendees to network effectively.

The market looms large

This leaves us to ponder the interaction between commercialism and environmental sustainability. In this sense, the Textile Exchange event was the intersection of what sells and what could be sold better (without wrecking the planet). A philosophical question of the day: which came first, environmental degradation or industrialisation? Answer: probably the former. Fire was discovered a long time ago; mechanisation used that fire to scale up production at the cost of the environment.

With the current market as an ever-present backdrop, it's not out of line to ask if the industry, in its depressed economic state, can afford environmental sustainability. More pointedly, can the industry afford not to? Then again, this is the same industry that publicly says it wants to embrace sustainability - but only if it's cost-neutral.

Cost-neutrality. Gosh. Sure, we'll help save the planet as long as it doesn't cost anything. Cynicism aside, there will always be the realities of the marketplace. In a low-margin business like apparel, companies will always scrimp, but they'll also cut corners. And they'll be compelled to innovate, but not necessarily in a positive way, but rather in an exploitative way.

The De Minimis conundrum and sustainability

Here's an example. The politicos in Washington have wrung many hands over the de minimis provisions of US trade regulations. Many travellers can attest that products purchased outside the United States brought with them into the country are not subject to import tariffs if the merchandise's declared value is less than $800. The same goes for shipments of many imported goods ordered online by US consumers and shipped directly to a home address.

Millions of shipments are shipped to US consumers monthly under the duty exemption and inspection procedures typically imposed on imported merchandise by US Customs and Border Patrol (CBP). As individual shipments are so small, the current regulation assumes that such entries are burdensome for CBP to inspect. But, as we've seen, companies have exploited this provision to move millions of dollars worth of clothing into the US market.

Some may see this as a clever, innovative way of legally skirting US regulations. However, when viewed from the perspective of environmental sustainability and labour rights, such so-called inventive cleverness is little more than exploitative business practices. Forced labour in the Xinjiang province of China, where many of these direct-to-consumer shipments originate, remains a problem for our industry and society. The exploitation of de minimis only furthers the exploitation of ethnic Uyghurs in Xinjiang.

But with millions of shipments entering the US every month, with discounts and clever marketing of its products on platforms like TikTok, doesn't this promote over-consumption? Of course, with the planet and workers holding the tab by promoting more significant sales of disposal apparel, growing waste, increased environmental degradation, and, according to the US Congress, forced labour and societal abuse. Exploit a loophole while exploiting a people? Is that what our industry has come to? Give me a break.

Labour rights advocates, along with retailers and other companies harmed by de minimis exploitation, have called for buttoning up the de minimis loophole. Where's the environmentalist outrage? There's a sound argument to be made that exploitation of de minimis harms the environment. The last thing the planet needs is fast-fast fashion. The previous iteration of fast fashion did enough harm so it's not time to add steroids to the mix.

Innovation and exploitation beyond Textile Exchange 2023

Hence, we're left with positive and negative innovation - with the difference between positive and negative not clear cut. For some, it's open to interpretation. Exploitation of de minimis? It's simply an innovative business tactic. I hope the environmental sustainability movement sees it as more than a business practice and highlights how those abuses affect the planet and persecuted people.

I look to organisations like Textile Exchange to make a difference. They are trying, and I applaud them for their efforts. Yet there's so much more to consider. Although our industry has a responsibility to its shareholders, it also has a responsibility to its workers and the planet. What's more, it has a duty to call out exploitation in all its forms. Such efforts will come with costs, but the time of cost-neutrality is long gone.

It's difficult not to be in a reflective mood these days. That may be because there's so much spinning around in the world that it is hard to gain one's bearings. The world is under stress. Sweeping changes and anxieties are testing societal cohesion. We're sailing into rough seas with a leaky boat.

First, we had the war in Ukraine. Now, it's Gaza. The horrors of both conflicts are hard to comprehend. The loss of life and wanton destruction is far more than some simple tally. In the case of Ukraine, the West has worked diligently to limit the conflict and avoid escalation. In Gaza, however, the prospect of a widening conflict is a real-world threat. The panic is palpable: death, a hideous interloper.

These conflicts have knock-on effects, not the least of which is the impact on trade and economic activity. With the outbreak of hostilities in Ukraine, price inflation gripped global economies. The oil price, notably, soared with its influence rippling across global economies.

Such price pressures only magnified some of the worst economic ailments from the pandemic. It's like the world jumped from one calamity to another. But today, with Gaza, the world has to suffer more misfortune. And as was the case with the conflict in Ukraine, the price of oil has spiked.

And then there’s the dysfunctional US Congress, along with the Trump indictments and the looming 2024 election. US distraction only adds to global anxiety and uncertainty. To borrow from Haynes Johnson, the US political class is sleepwalking through history. Now is not the time for the US to lose its focus.

Another war means an even tougher global market

Our industry faces uneven demand. Consumers aren't buying stuff like they did previously. Inventories, in turn, are high; new orders are scarce. What's more, interest rates continue to climb as central banks look to reign in price inflation. Mass consumption has given way to consumer indigestion - with our industry forced to ingest antacids by the handful.

Along with the antacids, the industry is forced to postpone many programmes, miss goals and targets, and kick new initiatives to the curb in favour of weathering the economic storm. It's not a pretty picture. Companies are struggling. Sales are dismal, and it affects almost all segments of the textile and apparel business.

Fashion innovation has taken a hit, too. For all of the talk about circularity, sustainability, and environmental stewardship, industry plans have had to take a back seat to the realities of the market. The issues surrounding ecological innovation remain. It's just that companies have had to hunker down to conserve cash for now. Such creative endeavors will be renewed once the market improves. And it will improve.

The fashion innovation hit that acts as a metaphor for the wider industry

I don't often comment on specific company news. Still, a recent development with a darling of the environmental community, Renewcell, deserves some elaboration because it says so much about the broader industry.

The price of Renewcell's stock plummeted by more than 70% earlier this month (October). Why? Weak sales. Even hot technological products like Circulose are subject to overall market conditions. To put Renewcell's situation in context, following the price of cotton for the past few years has been like riding a rollercoaster. Even well-established products are suffering in this market. Renewcell isn't alone. Ask your local cotton farmer about the demand for their lint.

To dump Renewcell stock is short-sighted and ignores the wider industry and factors affecting the entire textile supply chain, not just Renewcell.

It's hard not to think about impatient early investors in Microsoft or Apple. Double-digit price declines were the norm in the early days. Companies like those were at the forefront of the burgeoning technology industries. Look at them today. Once the overall market developed and demand improved, stock prices attained now-accustomed lofty highs. Patience and vision won out over short-term thinking.

Imagine what would have happened if the shorts won out in the early days of the personal computer. We'd be left with punch cards and time-sharing computer networks instead of the power of today's personal computers and tech devices. We'd be left with 10-pound walkie-talkies, not smartphones. Gosh.

The same goes for textiles and apparel. Sure, things are lousy in the market now, but to just cut and run is to ignore the long-term developments in the industry. The market will regain its vitality. Textile waste, on the other hand, is going nowhere. Landfills will continue to be stuffed with unwanted garments or burnt in the atmosphere. Technologies like Circulose represent the future for an industry desperate for a solution for its waste.

Renewcell and its fashion innovation taking a hit is a metaphor. Markets are fickle. Finance is often dictated by emotion - or fear. As such, I remain bullish on technologies represented by Renewcell. The future is bright. It's more than a stock play. Industry demand for solving its waste problem will remain. Circularity is here to stay. Properly managing sustainable production is essential for the industry of today and tomorrow.

Here's another thing to consider: Electric vehicle sales are soft. Why? The market is still adjusting. Like with clothing sales, broader factors are at play. Is it time to dump electronic vehicles and buy the next gas-guzzler? Of course not. Change is hard. It takes time.

Looking ahead to the fashion innovation of tomorrow

I'm attending the Textile Exchange annual meeting in London next week and I'm optimistic about the future, confident about our industry's prospects, and excited to see innovations like Circulose capture the imagination of hundreds of brands and retailers attending the event.

The event's timing is fortuitous, as many companies will be looking to learn about new technologies and ways of conducting business. This is all the more important for brands and retailers as they seek new products to attract consumer interest and excitement. For environmentalists, the meeting will be a chance to showcase the latest technology and practices.

Our world is faced with many challenges. That’s nothing new. But how we meet those challenges demands new thinking, ideas, and innovations. How our industry meets its challenges will define its success or failure in the future.

Sure, times may be tough. But that will change - along with how our industry operates. The time to grab the initiative? It’s now. The time for innovation? It’s now. The time for defining our industry’s future? It’s now.

The drumbeat of fashion environmentalists remains loud, but the cacophony of voices comprising the green crowd has increasingly had to share the stage with the reality of the marketplace.

As we all know, the fashion market is terrible - with everyone struggling to find a way out of the abyss.

Like a bad hangover, the effects of the pandemic continue to plague the industry. Companies struggled with collapsing sales at the outbreak of the pandemic, only to be replaced with soaring demand as the world struggled to regain its footing - to find that so much inventory would remain unsold for months, if not years, after the fact. And, then, to run into the economic buzzsaw of inflation, changing consumer attitudes, and frightful global tensions.

The pandemic wrecked the industry's traditional business model in many ways while simultaneously fueling a global flight to safety - or more precisely stated, certainty. In this sense, the pandemic underscored that decades of simply phoning in orders with little concern about fulfilment disintegrated bit by bit with each new Covid variant. For sourcing companies worldwide, the search was on to secure new sources of supply - in many cases, supply far closer to consuming markets looking for a hedge in an uncertain market.

This leaves us to sift through the remnants of the old industry model and assess what's salvageable and what's not. It's a task that may take a while to sort out, and it's only just begun. In the interim, however, the industry faces an economically depressed market. The weight of unsold goods and lacklustre consumer demand has rippled back to suppliers worldwide. Yeah, it's a mess.

Fashion nearshoring and a return to normal?

But before we throw in the towel on the fashion industry’s prospects, let’s talk imports. Everyone bemoans declining imports. Indeed, because imports dominate the US and EU textile and apparel markets, monthly trade reports provide a good snapshot of current economic activity, so it’s natural to view declining imports as a sign of a weak market. But there’s more to the story.

Let’s take a look at the US market as an example. Aggregate textile and apparel imports into the US have plummeted in 2023 compared to the previous two years. However, compared to pre-2022 levels, current imports are returning to the historical average (2015-2019). So, when seen in a historical context, it's not so dire after all, and 2021/22 represented an aberration, not a new benchmark. The supply chain's pandemic-induced boom and bust cycle left the industry overbought out of fear of being caught short, as was the case earlier in the pandemic.

Check out this chart:

Annualised 2023 imports (calculated from year-to-date August) are returning to the five-year average of imports before the pandemic (2015-2019). It's an encouraging development.

Simply put, this year’s declines indicate that imports are returning to historical trends, not a collapse, as many fear. It’s also a sign that the market may be bottoming out. A light at the end of a dark tunnel?

Fashion market dynamics - a balancing act

So, is equilibrium returning to the fashion market? Maybe, but problems remain. Although supply imbalances may be showing signs of mending, demand remains anaemic. As the Federal Reserve battles to control inflation, rising interest rates have helped to dampen demand for products like clothing.

Weak demand. Yikes. It's hard for an industry built on ever-greater consumption to grapple with weak demand. However, if nothing else, the industry is innovative; sourcing patterns have shifted as companies search for greater certainty in an uncertain market, embracing new strategies and supplier relationships. Imports are down, but companies have revisited their sourcing strategies and made changes.

One such strategy embraces fashion nearshoring. Sure, there's been a lot of buzz about sourcing closer to consuming markets, but it’s more than buzz. It's real. The supply chain disruptions caused by the pandemic - whether realised in draconian lockdowns in China, port delays in Long Beach, or boom-bust consumer demand - the old model of business needed an overhaul. For instance, sole sourcing in China made the industry vulnerable to disruptions. Once stung, the industry geared up: shifts in sourcing occurred, and new tactics were adopted. The hedges were in. Sourcing from one or two countries gave way to sourcing from a broader range of countries and regions.

Fashion nearshoring and the CAFTA hedge

As companies diversify their sourcing away from China in favour of countries throughout Asia, Mexico, and the CAFTA countries, these regions have gained their share of new business. But the shift occurred with unforeseen consequences. As new business was written in the case of CAFTA, non-regional textiles have piled in. The CAFTA-DR trade agreement, or USMCA for that matter, was written not to prohibit non-regional inputs per se but to discourage using non-qualifying yarns and fabrics in apparel production. For sure, the yarn-forward rule of origin helped to encourage the use of regionally-made inputs, but now there’s a surge of textile imports originating from outside the region. What gives?

Look at the CAFTA region's yarn imports from the US and the rest of the world from 2018-2022:

The value of yarn imported into the region rose sharply going into 2022, with imports from countries other than the US gaining market share.

Interestingly, this growth occurred without the benefit of 2022 data from Costa Rica and Honduras, which would have pushed the curve even higher if reported. When measured by weight, the US has lost market share to the rest of the world. The US has historically been the largest supplier of yarns to the region.

A similar story is the case with CAFTA imports of fabrics from 2018-2022:

When measured by US dollars, the value of fabric imports soared from 2020 to 2022 - with most growth coming from countries other than the United States. And when measured by weight, non-US sources of supply dominate the import market. As with yarn, this data does not include 2022 imports for Costa Rica and Honduras.

Fashion nearshoring with old suppliers

Two-way trade prospered under CAFTA-DR before the pandemic, but things have shifted since. Some CAFTA countries have successfully nurtured regional supply chains utilising non-regional textiles to augment domestic/regional supplies to the detriment of some US exporters of yarns and fabrics. US investment in CAFTA factories has contributed to declining regional imports from the US, particularly in yarn. Intra-CAFTA trade is also significant. Taken together, these factors have helped the region to develop even during a time of overall falling imports of finished apparel by the United States.

Who are some of the non-regional suppliers? China, Vietnam, Korea, India, and Pakistan, to name a few, are major exporters to the region. However, imports from countries outside the region would not receive the duty benefits of the CAFTA-DR agreement. On the surface, without duty benefits, it’s hard to understand why such non-regional trade would occur in the first place. It’s strange.

On second thought, maybe it’s not so strange. It’s no secret that Chinese textiles are exported worldwide. Many of these fabrics find their way into apparel exported to the US, the EU, or other importing markets made in countries outside of China. In this sense, the fact that CAFTA imports a lot of Chinese yarn and fabric shouldn’t be so shocking – but that’s before we consider duties.

Non-qualifying yarns would add duties upon duties for landed apparel made in the CAFTA of these yarns. Total costs could exceed 20%. Even so, when we consider that Chinese exports of textiles and apparel to the US are faced with the regular duty rate plus 7.5% or 25% Section 301 tariffs, non-qualifying tariffs under CAFTA-DR seem mild. It’s an interesting theory worthy of more research, but so is the possibility of transhipments, paperwork fraud, or dumping. Beyond that, there’s the possibility that Xinjiang cotton is finding its way into the US market from sources close to home. Gosh.

So, sourcing companies may have embraced fashion nearshoring - with some help from old supplier friends.

The debate over climate change may have taken a turn this year as the North Hemisphere suffered through a brutally hot July. In fact, according to the United Nations, “July has already seen the hottest three-week period ever recorded; the three hottest days on record; and the highest-ever ocean temperatures for this time of year. The era of global warming has ended; the era of global boiling has arrived. Climate change is here. It is terrifying. And it is just the beginning,” reported the Washington Post.

As the North Hemisphere swelters in August, we're left knowing that our industry has the dubious honour of contributing to the planet's climate crisis. Over the past 40 years, our industry built an intricate global system of suppliers, contractors, and shippers, supported by a complex infrastructure of storage and logistical services - all to maximise just-in-time retail replenishment and consumer purchasing, the essence of fast fashion.

But over those same 40 years, climate change became harder and harder to ignore or explain away. Politically, governments and members of the polis have had an increasingly difficult time ignoring this changing world. Indeed, scientific evidence documents that warming waters, droughts, intense weather events, runaway wildfires, and melting ice caps are not a figment of the imagination of overzealous environmentalists - but are real.

The fashion industry has dirty climate change hands

And our industry has contributed to our warming world. The rush to globalise resulted in more energy consumption, greenhouse gas emissions, and pollution of our water resources. Our industry's logistical efficiency in managing a global network of suppliers and logistical systems is something to behold. Please make no mistake: it's an outstanding achievement but costly considering our industry's impact on the planet's climate. In this sense, efficiency went hand in hand with environmental indifference.

A small consolation is that our industry isn't solely to blame for climate change. But as a significant contributor, our hands are dirty. We have a responsibility. Yet, our industry has increasingly come to grips with its environmental responsibilities. There are genuine efforts to change business practices, find ways to repair the damage if possible, and work towards a more plant-friendly future.

Even so, as an industry dominated by marketers, new environmentally-friendly initiatives are often tainted with marketing spin (think sustainability, circularity, or even transparency). In some ways, it's unavoidable as change takes time; innovation is not a straight-line endeavor but rather a process typified by fits and starts, failures and successes. As it took years for globalised supply chains to emerge, it will take time for many aspirational environmental goals to be realised.

The rub is if future goals of achieving sustainable objectives are put off until 2030, 2040, or beyond. It sounds great as a message for today - only who will be around to remember it in 15 years? A marketer's delight to sell for today with a story for tomorrow; whether it's true or not is irrelevant as long as the next quarter's sales goals are hit.

The world's great broiling

The summer is often a time to read books on the beach or at the pool and take a break from the grind. Only this year, it's too hot to sit by the pool. After all, as the UN's metrological chief said recently: "The era of great broiling has arrived."

So what should our industry do confronting a changing global environment? There are many suggestions, for sure. But a rallying cry of some environmentalists is for consumers to buy less (and recycle more). The assumption is that by consuming less, there will be less post-industrial waste and less post-consumer waste in landfills or burned. If demand eases, the demand for environmentally harsh raw materials will also reduce, or so the thinking goes.

Of course, this flies in the face of the realities of an industry built upon the foundation of cheap stuff made possible by vast scales of production. If consumers buy less stuff, then what? And if they buy less, do low prices lose their appeal? After all, if people don't want to buy, then isn't the allure of low prices somehow muted?

Is this the end of cheap fashion to combat climate change?

That could be the case but for various reasons, including changes in sourcing, consumer attitudes, and demographics. Claims from the Wall Street Journal: "The twilight of ultracheap Asian factory labour is emerging as the latest test of the globalised manufacturing model, which over the past three decades has delivered a vast array of inexpensively produced goods to consumers around the world. Americans accustomed to bargain-rate fashion and flat-screen TVs might soon be reckoning with higher prices."

Why? There are several reasons, but most pointedly, there is a shortage of young workers, particularly in China. Demographic changes have played a role as many families have fewer children than was the case with previous generations. Expectations also affect employment: many young people want to work in service or technology jobs rather than manufacturing.

Further, China has graduated record numbers of young people from universities only to find relatively few jobs for well-educated individuals. Manufacturing jobs, in turn, don't even register for many of these recent graduates despite recent calls by Beijing for schools to lower the expectations of new entries into the workforce. How will our industry adapt without China in the mix to make lots of stuff with good quality and low prices? China's costs began to rise even before the pandemic.

Globalised economics is predicated on continued growth. That's why so many international organisations fret over global growth forecasts. But what happens if people say they have enough stuff? Does price really matter, then? And could that be more than just a temporary occurrence? In the West, the population is getting older - so do they really need so much stuff?

What's the bottom line for clothing companies? The age of inexpensive goods may be coming to an end. For consumers long accustomed to dirt-cheap clothing, a day of reckoning may be around the corner. For fast fashion companies, you may have to get faster - or learn how to sell less but accept a mark-up.

Is less demand a good thing for fashion and climate change?

There is a curious thing to consider, though. If prices go up due to changes in Asian supply chains, consumption will presumably go down. In turn, will over-consumption by consumers moderate? It's not a great development for brands and retailers - but some environmentalists would welcome it!

Our industry was built for a different time. High growth and over-consumption were the pillars of the industry. Today, it's a new ballgame. But, as we've seen with so many environmental programmes, the party got out of hand. We're in a hangover. Less consumption is the order of the day, either because of consumer conviction or economics.

Nevertheless, there's also so much fashion supply out there - and this is where we see the intersection of free markets and climate change. Too much of a good thing has left us to pay the bill, with the planet stuck with the tab.

When looking at nearshoring, onshoring and Made in USA fashion products it makes sense to start with imports.

Otexa's May 2023 US import statistics are out. When measured by square metre equivalents, imports of textiles and apparel from the world are down more than 20% for the first five months of 2023 compared to the same period in 2022. Interestingly, imports from China, India, Vietnam, and Bangladesh have declined by about 30%. Imports from Turkey are down more than 40%. Imports from the Western Hemisphere are up 5% – huh? How can that be?

For sure, the US market is in the dumps. Imports are down virtually everywhere, mostly because there's weak demand. This isn't new; the industry has dealt with this reality for quite a while. But what is new is that nearshoring is showing signs of life. In particular, imports from Mexico are up 85%; USMCA (NAFTA v 2.0) is up 67% percent. Yes, imports from CAFTA-DR are down 19%, but that compares to far steeper declines from other major suppliers and is in line with the aggregate global trend. Curiously, imports from Canada are even with last year.

Made in USA and what's happening closer to 'home'

All of this leaves me wondering about the state of nearshoring and the Made in USA movement. Has there been a realignment of sourcing closer to home? Does where a fabric or garment is made matter? Answering that question depends upon whom you ask. Talk to an environmentalist, and the answer will be an enthusiastic "Yes!" And they'll also ask how it is made and with what materials. In turn, ask a sourcing person, and the question may be answered with: "It depends - what's the cost?"

However, US consumer attitudes are more nuanced. Socioeconomic factors influence consumer purchasing decisions, while anxiety about the future, global conflicts (like Ukraine), and pervasive uncertainty weigh on consumer willingness to buy stuff. It's complicated. And when guessing what our industry's prospects will be in a month, six months, a year, or five years, assessing consumer attitudes become critical. After all, consumers are the ultimate customer.

Is there demand for Made in USA products?

Nevertheless, according to one research firm, consumers have clarified their intentions. "US consumers' demand for 'Made in America' products is robust," says Morning Consult, a nonpartisan polling and research firm based in Washington, DC, in its newly published 'Made in America' survey.

In fact, a recent article in the New York Times cited the survey in the context of a fast-selling $60 Made in USA tshirt from American Giant, the San Francisco-based clothing company. American Giant's success may not be a one-off thing but rather part of a broader pattern of consumer behaviour. "65% of US adults said they intentionally bought 'Made in America' products over the past year. That's about the same rate of US adults who said they had those intentions last year," said the New York Times referring to the Morning Consult survey.

Morning Consult's survey offers insight into macro-forces affecting consumer preferences and sheds light on demographic trends and political characteristics. Many such consumer studies focus on economic factors - such as inflation, job security, etc. But with this survey, preferences by political party (Republican, Democrat, Independent) are also considered. Indeed, such assessments are not without pitfalls; for instance, it will be interesting to see if a survey such as this makes its way into the mudslinging of the 2024 election. Political concerns notwithstanding, the survey identifies gender and generational attitudes toward "Made in America" and price sensitivity.

How US consumers react to Made in USA

Some of Morning Consult's findings are consistent with other research surveys, but some are new – and are quite pointed. Let's look at some of the highlights from the executive summary of the "Made in America" survey:

1.           US consumers look for Made in USA

About three-quarters of US consumers say they intentionally looked for "Made in America" products, with republicans and baby boomers more inclined to search for domestically-made products than democrats and younger generations.

2.           Recent economic troubles have not affected consumer attitudes toward Made in America

Although domestically-made products may cost more, surveyed consumers said they continue to search for them over foreign-made merchandise. In fact, consumer interest in Made in America products has remained steady from 2022 to now despite higher inflation and rising interest rates squeezing consumer wallets.

3.           Willing to pay more – but only up to a point

Consumers said they are willing to pay more for domestically-made products, but only to a certain degree. Explained Morning Consult, "Nearly half of US adults say they would pay more for 'Made in USA' goods. But price hesitancy will constrain companies' ability to upcharge: Among US consumers who said they would pay more, a majority are unwilling to pay above 10% extra for 'Made in America' goods relative to foreign-made equivalents."

4.           Nationalism plays a role for some consumers

For some consumers, purchasing decisions favouring "Made in America" reflect patriotic sentiments. Morning Consult says: "Marketing campaigns that prime nationalist sentiment — specifically by emphasising how "Made in America" supply chains can create and protect US jobs — will most help win over consumers." The survey indicated that nationalism plays a greater role with republicans and baby boomers than democrats and gen z adults.

5.           Reshoring out of China will yield large reputational gains for US multinationals

Surveyed consumers favourably view US multinational companies that reshore production that replaces Chinese labour and/or parts in their supply chains with domestic inputs. "Seven in 10 US adults said they hold favourable views of US companies that incorporate domestic labour and parts into their supply chains, compared with just 29% who said they hold favourable views of those using only Chinese inputs," reports Morning Consult.

6.           US companies that reshore have a competitive edge relative to foreign ones that onshore

According to the survey, "larger shares of US consumers are willing to pay more for reshored goods produced by US companies compared with onshored goods produced by foreign ones."

7.           Foreign multinationals hailing from US allies and 'friendly' countries have a leg up compared with others

Morning Consult explains: "Among foreign multinationals, those hailing from US allies and 'friendly' nations have a better chance of seizing market share. Russian and Chinese companies are highly disadvantaged by these geopolitical dynamics and will struggle to gain traction."

Sentiments versus reality?

"Men, baby boomers, republicans and consumers who are proud to live in the United States offer ready-made markets," concludes Morning Consult. This is not to say that other market segments are not interested in "Made in USA." After all, patriotic sentiments transcend political affiliation, gender, and demography only that certain market segments will be innately more receptive to that message than others. Moreover, job creation remains front of mind for most consumers, young or old, Republican or Democrat. "Made in America" taps into consumer sentiment supporting greater domestic employment.

Even so, this needs to be qualified. Let's get real here: price sensitivity has to be considered. There is a limit to what consumers are willing to pay regardless of where a product is made. Many surveys have accurately reported consumer interest in buying domestically-made products, only to discover that such intentions dissipate once consumers enter a store and focus solely on price. It's a conundrum for advocates of "Made in America."

This leaves us where we began: US apparel imports slumped again in May, a clear sign that the market remains soft. But for one company with an appealing message, selling tshirts with an "American Made" logo, knitted with American-made textiles, and sewn in the US, seems to be bucking the trend. Of course, the big question is if the "Made in America" phenomenon is temporary or the beginning of something more permanent.

A friend of mine walked 23,000 steps during the first day of ITMA 2023 in Milan. That's the equivalent of more than 10 miles (16 km)! During the week, I'm sure ITMA became part of his daily workout - I need to ask him how much weight he lost.

And long days of walking are not surprising considering the sheer scale of the Fiera Milano Rho Exhibition Centre. Exhibitors comprised more than 200,000m2 (or more than 2.1 million sqft). The main walkway connecting the exhibition halls sometimes took 20 minutes to traverse from end to end.

So, the event's scale was the order of the day. For long-time attendees of ITMA (the next show, which is in 2027, will take place in Hannover, Germany), the enormity was nothing new. The number of attendees this time, however, was off the chart. Organisers told me the attendance was well over 100,000 visitors. For me, it was like attending a World Cup match.

ITMA is, of course, first and foremost, a machinery show. Sure, there are non-machinery exhibitors - fibre companies, software developers, recyclers, schools, trade organisations, etc. But the show's primary focus is on the nuts and bolts of textile production, such as spinning, knitting, weaving, dyeing, printing, and finishing.

And each hall had its unique sound, visual queue, and messaging. For example, when the floor trembled, you knew you were in a weaving hall. When spinning frames were showcased for all to see, they were done so from large, dramatic booths, often replete with multi-levels, including offices. All in all, it was quite a sight.

Key ITMA 2023 takeaways without the sustainable talk

I met with dozens of old and new friends at the show, and our discussions inevitably turned to the market. During each meeting, I asked what was most important to their companies in 2023. Not surprisingly, all answered "sales." And, after sharing a mutual chuckle, I asked the question differently: "When you look at your business, what keeps you up at night?" To a person, the response was: "No demand." Then there were shrugs, shaking of heads, and a question often asked of me: "Where has the market gone?"

Check out the chart below. US apparel imports plummeted during the first four months of 2023. In fact, imports worldwide are down 31%, or more than 3.4 billion equivalent metres. Crazy. What's more, imports are down from just about everywhere - China, ASEAN, South Asia, CAFTA, you name it.

Of course, the big question is: why? The answer is more nuanced than claiming it's simply an effect of inflation. Of course, inflation is a factor, but that's nothing new. The market has been dealing with that since last year. Moreover, the US dollar is weaker this year than in 2022, so imports will be more expensive when priced in dollars.

But topline US inflation (excluding food and energy) eased to 4%. In April, it had climbed 4.9%. "While that remains about twice the rate that was normal before the onset of the pandemic in 2020, it is down sharply from a peak of about 9% last summer," reported the New York Times. So an overall positive trend for inflation may be emerging.

But inflation remains stubbornly high for apparel at an annualised 3.5%. Although inflation remains persistent in the clothing business, it is certainly not as severe as the last year or two when supply chain snafus and excessive consumer demand pushed prices ever skyward. Yet consumer demand for clothing has ebbed somewhat since, along with overall retail sales of apparel moderating.

Changing consumer attitudes play a role - services seem more attractive to consumers than buying stuff, as we saw during the pandemic. And it's evident in clothing store sales which have flatlined in recent months. In turn, restaurants are busy, and airports are bustling again.

The ongoing excess fashion inventory problem

Likewise, many clothing brands and retailers are still offloading inventory from the pandemic years, contributing to weaker demand for new goods. So yeah, the supply chain suffers as a result. It's an imbalance that continues to work through the textile system. No wonder so many of my friends asked where the market had gone. It's in hibernation for the moment.

Another possibility is that we may be entering a new normal. After the ups and downs of the pandemic years, with port closures and lockdowns juxtaposed with soaring consumer demand for clothing, the situation may be easing back to more sustainable levels. Even so, I'm left fretting that this year will be challenging for many clothing and textile manufacturers, a shared pain from retail buyers that originates with changing attitudes of consumers.

ITMA 2023's exhibitors: Sustainable warriors or clever marketers?

When conversing with friends and colleagues while visiting exhibition booths, I noted that many companies leaned on sustainability, recycling, or circularity as essential marketing messages. In fact, wherever I went, no matter the booth, sustainability was front and centre, leaving me simultaneously encouraged and sceptical.

So, the entire industry has found ways of becoming more sustainable? I am happy to see that so many companies have embraced environmental messaging, but how these companies define sustainability, recycling, or circularity varies from market segment to market segment, country to country, and product to product. Yikes. The more I saw "sustainability" plastered everywhere, the more concerned I became about the plausibility of it all.

Despite the best intentions or cynical marketers' overreach, there's no way the entire industry has stumbled upon universal sustainability. If there's any universality, it can only reside in marketing. Sure, call me a crackpot or cynic, but the use of sustainability in exhibition marketing is overused and abused. I can't help but think about greenwashing.

Is nearshoring real or not?

Interestingly, many people I spoke with voiced concern about sourcing from China because of fears over Xinjiang cotton. The import statistics confirm that people have shifted much of their business out of China. Imports from China are falling faster than the world total and from other countries and regions.

Rising costs have played a role, too, in the shift out of China, but the movement is also part of a hedge by sourcing companies. The ongoing friction between China and the US has only injected uncertainty into the equation. No one wants to be caught short should the relationship take a sudden turn for the worse.

Yet, these fears have translated into renewed interest in nearshoring products to supply the US and EU markets. Throughout ITMA, I was frequently asked about investment in Mexico and Central America, along with inquiries about regional manufacturers. Such was the case with the EU and how to best use trade enhancement programmes like GSP+. In the case of the US market, I found it curious how many people were rediscovering the benefits of the NAFTA and CAFTA-DR agreements.

An old show facilitating new practices

ITMA has been around for decades. The Milan show was my fourth ITMA. Many of my friends have attended even more. But, in my case, I always compare the most recent edition of the show to what I saw previously.

Sure, the Milan show was the biggest I've attended. Still, it also showcased an even greater variety of exhibitors than I remember from the past. The non-machinery-focused halls were packed with new fibre innovations, software products, and unique services. When considering previous shows, such initiatives were buried somewhere- if evident anywhere. In Milan, it was different. There was so much innovation afoot.

However, as with the use (or over-use) of sustainability in corporate messaging at the show, I hope the industry is positioned to use new innovations for its collective benefit - and not be diluted as empty marketing.

Earlier this week, Brenda Dionisi reported that this year’s ITMA suggests the European textile industry is well positioned to lead the global sector towards a more sustainable future.

Is the US economy in trouble and how will it impact the global apparel industry? That's the big question. There are many indications that we're about to tumble into a recession. However, not all signs indicate a fall. Many suggest a holding pattern or moderated growth - a pattern we've seen since at least last year.

When discussing the economy and apparel industry with various sourcing and planning executives, there's a consistent refrain about high inventories at retail, stubborn inflation, and weakening consumer demand. In turn, we owe many of these problems to the prolonged effects of the pandemic. Toss in the economic impact of the war in Ukraine, and we have a volatile mix of forces that have distorted supply chains, scrambled business plans, and built excessive inventories while discouraging consumers from purchasing.

It's always tempting to look at our industry in a vacuum and rely solely on anecdotal market observations. And, of course, there has to be such on-the-ground feedback about what folks see now and what they think lies around the corner. But these anecdotal tidbits should be considered in the context of observations made in the broader economy.

Macro forces, whether in the form of money supply, inflation rates, politics, or armed conflict, directly impact our business, particularly because the apparel industry is spread across the globe. Indeed, the wider our industry spreads, the more susceptible it is to economic forces beyond its control.

The global apparel industry versus the economy

Industry feedback suggests the market is depressed, orders are harder to come by, and, other than some product niches and demand from the luxury segment of the business, the apparel industry and its textile supply chain are struggling. This shouldn't be surprising. After all, US apparel imports, for instance, are down by almost a third so far this year. If there was ever an indicator worth following, it's the import statistics. In addition, high inflation has impacted consumer demand for clothing, while higher interest rates have dampened consumer attitudes about excessive spending on products like clothes. As a result, the prospects for our industry for the moment appear to be uncertain.

Confusion. That's the word of the day. It takes time to discern a clear direction. Many economic measures contradict each other (like weaker GDP growth occurring while employment remains strong), suggesting that it's more important than ever to attempt to synthesise the macroeconomic measures with anecdotal evidence from the industry to try to make sense of it all. More pointedly for our industry, however, is finding a way to answer the question: when will the market improve?

US economic factors

As a starting point, let's summarise 15 macroeconomic factors affecting the apparel business. Of course, this is a partial list of possible macro factors affecting the apparel business. Still, it's a helpful list designed to reveal significant trends and suggest a possible future. So let's take a look.

First, let's begin with some positives. There are some encouraging developments:

1. Inflation - Shows signs of moderating

2. Interest rates - Central banks may be entering the final stage of interest rate increases

3. Consumer prices/inflation - All signs indicate inflation has moderated, with price spikes easing. However, inflation remains elevated from pre-pandemic levels.

Next, however, are some worrisome developments:

1. Weakness in the banking sector - US Fed tightening of the money supply to dampen inflation has had the undesirable effect of forcing some US regional banks into insolvency. The US isn't alone with pressures witnessed elsewhere (such as in the Swiss banking sector).

2. Retail sales - Apparel sales are down in the US and recently stumbled in the EU, suggesting that consumers are spending their money on other things (such as travel and entertainment).

3. Inventory troubles - This hangs over the business and will negatively impact demand for the entire textile/apparel supply chain for some time. Until inventories are drawn down, expect weaker sales.

4. Consumer angst - Major US consumer sentiment surveys say consumers are not confident about the future. Such anxiety typically equates to lower retail activity; weak consumer sentiment equates to weak retail sales.

And here are some other macro-factors to consider:

1. The war in Ukraine - It's not over, and talk of cessation of hostilities remains elusive.

2. Trade tensions - Relations between the US and China are strained. Although some recent interactions between both governments are encouraging, sabre-rattling in the Taiwan Strait remains an ever-present worry.

3. GDP growth in the US and EU has weakened - although an outright recession has been avoided until now, weakening aggregate economic growth.

4. A US default on its debt - Sure, it's in the headlines. Still, a deal could be struck later this month that averts economic catastrophe. If an agreement on the debt cannot be negotiated, it will be like shouting fire in a crowded theatre, only worse. It'll be like setting the fire in the first place and beating everyone out a side door.

5. China's economy remains anaemic - Despite all of the hype that China's economy would boom once the Covid-lockdown was lifted, the Chinese economy has struggled. Domestically, demand is uneven, while the export business struggles with tepid demand.

Here are some mixed measures:

1. A weaker US Dollar - This is good news for countries with debts priced in US dollar currencies. For clothing brands importing into the US, prices will be higher, which could add to apparel company woes.

2. Employment and wages - Hiring remains robust, while the unemployment rate has dropped and wages have grown. Yet a tight labour market is inflationary, which dampens demand.

3. Trade performance - US imports of textiles and apparel is down, whereas import growth is a measure of economic activity. Declining imports are consistent with moderating GDP growth.

The global apparel industry crib sheet

How do we combine all of these observations into a composite forecast? One way of doing so is to create a visual for a market "crib sheet":

A picture may say a thousand words, but in this case, it shows that out of 15 factors, nine are weakening, while three more are mixed. Moreover, with only three factors demonstrating improvement, it's hard to be optimistic about the immediate future. More work needs to be done. Supply chains are still knotted with high inventories; consumer demand remains inconsistent, and monetary policy remains restrictive.

The economic outlook for the global apparel industry

So, factors remain bearish for the immediate future (next two to three quarters). Consumers who are not confident about their economic prospects in the short term – and with so many negatives in the economy now, can we blame them? The key to deciphering this market is how to best weigh likely short-term prospects with long term probabilities.

All of this will sort out eventually. It is doubtful that we have entered a permanent environment of anaemic sales. Still, we are in a rut for now and likely for the next few quarters.

Barring some conflict over Taiwan, it's more likely than not the market will rebound after this current lull, and forces reinforcing that lull will dissipate.

Okay, so you have it: my anecdotal assessment. What's the bottomline: things will improve, but we must wait until next year.

Last month Antoshak and MeiLin Wan, vice president at Applied DNA Sciences argued transparency, sustainability, nearshoring, and onshoring were the biggest sector challenges demanding attention.

The question of balloons and US-China diplomacy has preoccupied Washington in recent weeks and the apparel sector should be concerned but for reasons that have more to do with terrestrial matters than alien spaceships.

US reactions to a Chinese high-altitude balloon the size of a bus traversing US airspace, deliberately or not, underscores the growing tensions between the governments of the world's largest economies. Moreover, the shooting down of UFOs in Alaska and Canada has less to do with little green men and more to do with a demonstration of US military capabilities to detect even small objects drifting into North American territory.

According to Beijing, the air balloon incident was an accident. Indeed, Chinese authorities went out of their way to downplay the matter, insisting the balloon was a research vessel that drifted off course. So far, public statements from Washington throw shade on that description. Still, details remain scant, suggesting that any intel the military has gained from the balloon will stay classified – at least for now.

Tensions between the countries remain high. Worries about Taiwan remain keen, while the war in Ukraine only complicates the situation. Pieces are moving around the proverbial geopolitical chess board. The US ups its military presence in the Pacific by expanding cooperation with the Philippines, Australia, and Japan. Chinese jets fly dangerously close to US planes. Biden tightens controls on technology transfers to China. Xi Jinping signals continued support of Russia in the conflict with Ukraine. So on and so forth. Tit-for-tat, action-reaction – the kind of behaviour that ratchets up the tension and increases the likelihood of a mistake being made by one side or the other. And there's all the stuff we don't even know about yet.

It reads like some Cold War thriller. But haven't we learned anything from the past?

Relations between both countries took a nosedive during Donald Trump's time in the White House, but there were signs of stress even before he took office. The pandemic only elevated tensions, while Trump, always the eager populist, capitalised on deteriorating relations. Now we have Section 301 tariffs, but, interestingly, those tariffs have yet to evaporate with Joe Biden in office. If anything, Biden has only doubled down on poor relations with China despite public claims from both countries that everyone needs to chill out. The balloon situation, however, has made that more difficult.

The conflict in Ukraine has also complicated relations between both countries. Whether China supplies Russia with military assistance is a symptom of Xi Jinping's desire to build a new geopolitical alliance to counter American hegemony, NATO, and allied democracies. Geopolitically, this is the central question of our times. And that's before considering any perceived threat of Chinese aggression against Taiwan and possible US reaction. The clock is ticking, and relations may only worsen as time spins.

Apparel remains stuck between US and China squabbles

Stuck in all of this are the textile and apparel industries. As our industry embraced globalisation decades ago, the fate of the business is intertwined with relations between these great powers. Sorry gang, we can't avoid that. What goes on between China and the United States will largely determine the future of our industry – how it functions, its ability to innovate, source products, and meet the requirements of consumers worldwide.

A SWOT analysis for the industry today favours weaknesses and threats more than opportunities or strengths. The prospects for our industry will only become more problematic should relations between China and the US deteriorate. And make no mistake, the US ban on Xinjiang cotton is yet another piece on the geopolitical chessboard.

High costs continue to plague supply chains, affecting retailers' ability to slash consumer prices. Moreover, shifts in sourcing have occurred. According to the Office of Textiles and Apparel OTEXA), US imports of textiles and apparel (measured in square metre equivalents) rose by more than 12% in 2022 from 2021. Although still the largest supplier to the US, imports from China fell nearly 10%, imports from ASEAN nations increased by 40%, and imports from the Western Hemisphere jumped by more than 27%. Even imports from Sub-Sahara Africa rose more than 16% in 2022.

Indeed, the business is changing. Extrapolate these growth rates, and Chinese exports will play a sharply reduced role in US markets in the future. Moreover, many of these rising exports will result from Chinese companies that have relocated to other countries, particularly in Southeast Asia.

Still, exports from China proper will become less of a force over time should these trends continue. And then there's the knock-on effect of China's Zero Covid policy which locked down supply chains at a time when overseas markets awakened from the worst of the pandemic. As a result, demand surged as supply chains struggled, contributing to higher price inflation. In turn, higher prices threaten to choke off consumer demand. Not a pretty picture.

China is facing a slew of problems today. The one-child policy set up China for its demographic problems; its economic success has set it up only to accelerate that trend as rising costs outstrip the ability of young couples to afford children. There are also similarities to what happened in Japan in the 1980s — trade strife with the US, asset bubbles, changing demographics, and eventual easing.

The US has its problems, too, most notably with its polarised politics. The infamous Washington gridlock compounds decision-making and the ability of the government to enact effective policies. What's more, when it comes to financial matters like the debate over the debt ceiling, political stalemate in Congress threatens the nation's ability to pay its bills. Is a default in the offing? Should a default occur, it'll be more than a domestic matter as the global economy will be affected. The point is that domestic concerns only feed geopolitical tensions.

Will apparel sourcing companies exit China?

There's lots of talk about sourcing companies moving out of China. It's not surprising after the pandemic-induced supply chain disruptions of recent years. Yet, for every person saying they're bailing on China, at least two say they're staying. That is, until they must. And there's the rub: many folks will only bail once circumstances compel change. For some, it's today; for others, it's tomorrow.

Even so, some US companies continue to expand operations in China despite poor relations between China and the US, confident in their ability to manage their supply chains no matter what. However, many of these investments are in consumer-facing industries such as clothing. More so, these investments come when demography has left China with a smaller population and a likely continued decline over the following decades. Short-term thinking? Perhaps. Or a calculated risk that pent-up demand post-pandemic is still viable for the near term.

It's hard to ignore, but our business is changing. But during times of change, there's always talk about what's happening and why. However, so much of that talk is based on superficial analysis. Hyperbole sneaks in too. Drums are banged, fires set, smoke billows, and the truth - all that anyone is trying to see - is obscured.

Companies must manage change and find ways of capitalising in an ever-evolving market; they are forced to dig deep, think more creatively, and contemplate goals and objectives. At its worst, companies struggle to survive. At the same time, for an exclusive few, success comes from understanding what's happening now and implementing plans to succeed in the future, embracing change.

China's days as the top global supplier of textiles and apparel are numbered, right? Well, maybe. We've seen recent sourcing shifts in the import data, but nearshoring has risen. It helps to explain gains posted by Western Hemisphere. Some of the trade has moved back to this part of the world. At the same time, there are sharp gains posted by Africa. The business is bifurcating. It continues to search for the lowest cost possible. Still, at the same time, it is hedging its bets with proximity to consuming markets.

Riding the wave of change

But change takes time to happen. Companies only make sudden shifts if some crisis compels them. So instead, decisions are made to diversify sourcing while maintaining traditional supply chains. After all, money has already been invested and relationships long established; dumping all that overnight is foolhardy.

Even so, companies are facing pressures to diversify nonetheless. It's more of a slow drip that can become a geyser once new relationships are established elsewhere and capabilities are assessed. In short, it takes time. Such decisions can only be expected to be made after some time. But that's the deal: the ground is shifting.

Many years ago, brands fled traditional domestic supply chains when the MFA system of quotas was dismantled. On the surface, it seemed like the floodgates opened, but it took time for people to find suppliers in Asia and elsewhere. Companies kept their initiatives secret; no one wanted to talk because it was hard to find suppliers.

The Asian industry had a long way to go to develop, too. It was like working in the Wild West for sourcing executives searching for low-cost suppliers. After failing to find qualified suppliers, it got so bad that many companies gave up and hired sourcing companies that handled full-packaged production for them.

Global jitters and apparel

We're living through a populist moment - a reaction to years of globalisation. An overlooked aspect of globalisation is that countries trade more than just products; they import each other's problems. In many ways, the world is only now coming to grips with what's changed and what could come next. Unfortunately, politics has lined up to weaken many of the assumptions of globalisation. Friction between the US and China has only become more acute. Ukraine could turn out to be a flashpoint - and that's before considering Taiwan's fate. Although frightening, the US and China may be on a collision course. Let's hope not.

There's a lot of talk in the media these days about de-globalisation. So, not surprisingly, when politicians, economists, business leaders, or academics talk about how the world went into reverse after the pandemic. For those on the front lines of sourcing, the industry's hand was, in fact, already on the reverse gearshift before the pandemic. It took the pandemic for the shift to occur. Now we're faced with a change of direction.

Globalisation has ebbed and flowed for generations. Technology plays a role, as do economics and politics. Yet what we're seeing today is nothing new. Ironically, the US embraced open markets and globalisation typified by a rules-based order. Both were adopted to correct errors made during the Great Depression. However, the US has had second thoughts about its prospects in a globalised world.

It is nervous, as are its leaders. Shooting at UFOs? There was a time when such a thing would only be fodder for jokes on late-night talk shows. It still is, only now there's more to the story. Tensions, nerves, poor relations, stilted politics, wars, pandemics, accusations, and rebuttals – in short, the jitters.

It's not a laughing matter. So, when will the apparel sector not have to worry about balloons?

An article published on Just Style last month about artificial intelligence (AI) got me thinking about how the technology could affect our industry.

The study, which was published in the journal Thinking Skills and Creativity, aimed to investigate the practical applicability of AI models to implement creative fashion designs and work with human designers. My takeaway: the possibilities of AI within the apparel industry are immense, but there could be costs.

What are the costs of using AI in the apparel industry?

Let me explain. The apparel industry is no stranger to change. For decades, it has coped with social strife, labour unrest, economic calamities, wars, and technological advancement. Today is no different. So much is changing so rapidly  — particularly when it comes to technology. And I'm not just referring to some new manufacturing innovation.

Nothing seems to embody change more than artificial intelligence. Yeah, AI codgers up all sorts of feelings  — from fear to awe. For many, AI signals the dawn of a new age where autonomous, conscious machines think on their own, solve problems on their own, and steadily improve beyond human abilities  — that's the Hollywood version.

In reality, however, AI is a high-powered tool capable of compiling complex data into actionable information. It's more than a Google search but not something approaching consciousness. We're far from having self-aware machines; that's best left to science fiction.

Technological disruption: yesterday, today, and tomorrow

Indeed, as we've seen with all technological innovations over time, some people successfully embrace those innovations  —  and some don't. Or can't, as their livelihoods are disrupted. More simply stated: with every technological innovation comes good and bad, costs and benefits.

For instance, with the widespread use of steam-powered weaving looms in the 19^th century, many handloom operators lost their jobs as mechanised production required far fewer workers than before. The innovations were worth the cost of new equipment for mill owners, with higher productivity translating into greater profits. But for workers, technological innovation translated into fewer jobs and, as history showed, poorer working conditions.

In contemporary times, we have globalisation, where design, procurement, production, distribution, and replenishment all work in a tightly choreographed system called the apparel industry. The system has its problems, but it also has its strengths. But through the churn of the industry, one thing stands out above all others: costs are constantly reduced, while improved efficiency remains the modus operandi.

In the 1980s, clothing companies shed manufacturing, focusing instead on brand building and value-added marketing, and outsourced stuff-making to developing nations. It was a good strategy. Costs were slashed. More products at lower prices could be offered to consumers around the globe. But such efficiencies came at the expense of manufacturing workers in developed countries.

Well, today, we may be at the cusp of a similar pattern of disruption — only this time, the losers won't be blue-collar workers but the creative class of designers that have been so necessary to our industry. Up until now, that is, as there's an alternative: AI.

AI speaks for the apparel industry's fashion designers

Company start-up, OpenAI, has created a beta AI (or chatbot) named ChatGPT. It has garnered extensive media coverage and cautious reactions from academia, government, and the tech world. ChatGPT challenges users by competently writing blurbs, essays, and other expositions. However, it does make mistakes occasionally. More on this later.

Let's ask ChatGPT what it thinks:

How could AI affect fashion designers?

ChatGPT: "AI can affect fashion designers in a variety of ways. For example, AI algorithms can be used to analyse consumer data and predict future trends, which can help designers create more popular and successful collections. AI can also be used to generate new designs and patterns, which can save designers time and increase their creativity. Additionally, AI can be used to optimise the manufacturing process, which can lead to cost savings and increased efficiency. However, there is also concern that AI could lead to job loss in the fashion industry, as automation could lead to fewer jobs for designers and other fashion industry professionals."

Some of this is insightful, but much of this is also rote. However, AI is programmed to learn as it is exposed to more inputs. It gets better. On the ChatGPT portal, developers explain that usage is through the roof as more people explore the technology's potential. Yet, by doing so, these interactions are providing a rich learning environment for the AI to help overcome mistakes and holes in its knowledge base.

For now, though, the tech remains heavy on data it has gleaned off the internet, while it is still a work in progress regarding insight. Nonetheless, AI is a disruptive tool as the tech can rapidly compile and synthesise data. For instance, we've all read how chatbots like ChatGPT are already being used by researchers (and students) to write polished essays, tricking unsuspecting professors. So in this sense, it's already good.

For white-collar workers, however, AI represents possible disruptive change. Moreover, in the case of the apparel industry, how would decision-makers respond to this? Well, if there's a way to save a buck, they'll look at it.

That may be a leap until we remember how technology can fundamentally change human activity. Or disrupt it. Indeed, were it not for the humble shipping container, would globalisation as we know it been scalable? Probably not.

The same may be the case with AI and designers. But, of course, it's not just designers. Such technology could affect the industry overall (if not outright disrupted). Even globalisation itself may change due to the widespread adoption of AI.

According to ChatGPT, "AI has the potential to both drive and hinder globalisation. On one hand, AI can automate and streamline many processes, making it easier for companies to operate on a global scale and for individuals to communicate and collaborate across borders. On the other hand, AI can also lead to job displacement and increased economic inequality, which could exacerbate social and political tensions and slow the pace of globalisation. It can also change the way countries interact with one another and could lead to new forms of competition or even conflict. Overall, the impact of AI on globalisation will depend on how it is implemented and regulated."

So, we have change staring us in the face, disruption to make us uneasy, and potentially more significant stress in the world. We work in an industry preoccupied with costs. Ultimately, it's a low-margin, commoditised business. After walking a trade show, a friend recently commented that all displayed products were identical. It didn't matter where they were made, or which company made them. Nothing was unique, nothing innovative. It was stall after stall of the same stuff. Nothing more than commodities on hangers.

Which begs the question: Maybe the industry can't afford true innovation? Perhaps creative design isn't all that important in a world of mass-produced clothing. Gosh, that's something to think about.

What's more, will the industry take the opportunity to call in AI to squeeze that much more out of the business for an extra few cents of margin? It's hard to rule out. The race to the bottom has stripped innovation out of the industry. Will the next step be to cannibalise its creatives? As it's often said: no one is indispensable.

Sacrificing apparel industry creatives for AI innovation

A few decades ago, production workers in the developed world were sacrificed as a cost of innovation as the industry globalised. Tomorrow, it could be the industry's creatives — offered up in the name of technological innovation. And cost-cutting.

But widespread use of AI will pose challenges for other occupations, too. Take hacks like me.

ChatGPT says: "AI has the potential to affect writers in several ways. On one hand, AI-powered automation can lead to faster writing cycles and more efficient use of resources for certain types of writing, such as content generation, news writing, and even book writing. On the other hand, AI-powered automation may lead to job displacement of some writers. Additionally, AI can be used to generate personalised content based on the reader's preferences, which could change the way writing is produced and consumed. AI can also be used to analyse data on reader preferences and engagement to help writers make more informed decisions about their writing and marketing strategies. However, AI may also raise questions about creativity, authorship, and the nature of writing itself."

Whoa. Another example of creativity under assault? Not yet. But if the technology can already fool college professors, then maybe I should be wary. After all, who needs a professional writer if a technological solution can offer a viable replacement?

But there is one small consolation: technologies like ChatGPT are still in their infancy. It will take time for AI to mature enough to make a difference — let alone disrupt an industry. So, for now, I'll stick to the typewriter, and fashion designers should keep creating. Yet, we should acknowledge that a technological revolution is headed our way.

As we begin another year, it's hard not to worry about our industry's prospects and opportunities for growth. For sure, the industry has been knocked around over the past few years and 2022 was no exception.

We're still recovering from the effects of the pandemic, struggling with uneven demand and crippled supply chains while working to offload enormous inventories. No small task.

If that wasn't bad enough, there are other things to be concerned about as the new year begins. For instance, China has political and economic problems (some Covid-induced, some not). Supply chains are shifting as nearshoring, and greater sourcing diversification has taken hold. Inflation remains a concern (it's down, but not done). 

There's more. The war continues to rage in Ukraine, with both sides seemingly locked in for a long slog. A polarised US political system won't help trade policy, and, of course, sharply higher interest rates and a cloudy economic outlook make the prospects for the industry harder to discern.

From a macroeconomic perspective, supply and demand continued to be out of whack directly affecting the price of raw materials and finished products. Indeed, inflation spiked last year as the economic effects of the war in Ukraine, supply and demand imbalances, increased government spending, higher interest rates, and tight labour markets (particularly in the US) all conspired to muddy economic waters.

The questions that remain hard to answer

With all of this as a backdrop, will consumer demand hold up? What about all of the Covid inventory? Will that be sold off? Many questions, but what about answers?

Yeah, it's a dreary time. And there are a lot of unknowns. But for our industry, we're left wondering how we will break out of this economic misery? More pointedly, though, we're left to contemplate the essential question of our times: when will demand return to predictable levels? After all, we're still contending with the effects of Covid on consumer purchasing.

For sure, the industry has had its fill of bad news. Moreover, planning and risk management has become more complex over the past few years. Enough already! When will things turn around? Unfortunately, we may have to wait a while longer for an answer.

The dismal science

The sad news keeps coming, folks. International Monetary Fund managing director Kristalina Georgieva recently warned the global economy faces "a tough year, tougher than the year we leave behind," according to Bloomberg.

"We expect one-third of the world economy to be in recession," Georgieva said on CBS's 'Face the Nation' in an interview aired 1 January. "Why? Because the three big economies — US, EU, China — are all slowing down simultaneously." Yeah, Happy New Year.

The gloomy assessment is in line with previous IMF warnings. "The IMF already warned in October that more than a third of the global economy will contract and that there is a 25% chance of global GDP growing by less than 2% in 2023, which it defines as a global recession," noted Bloomberg.

Georgieva explained the three largest economies - the US, China, and EU - have mixed prospects ahead. According to the IMF leader, "the US may avoid recession," while the European Union has been "very severely hit by the war in Ukraine — half of the EU will be in recession next year." At the same time, she said China faces a "tough year."

The IMF believes central banks should continue to raise interest rates. Still, the organisation also believes that higher rates risk pushing many economies into recession to lessen demand. In fact, a recession may be necessary to rebuild the global economy over the long run.

However, should developed-world economies tank, for instance, global growth will wither on the vine. The same goes for international trade. But with inflation running hot in the developed world, central banks have little choice but to raise interest rates to dampen economic growth and lessen inflationary pressures. Indeed, some moderation will be necessary to cool inflation. Only how far economies will have to fall remains a guessing game.

The impact of a bad economy on apparel growth in 2023

For our industry, however, slower economic growth will translate to weaker retail sales and, by extension, diminishing demand for everything from fibres to textiles - the dreaded ripple effect. This brings us back to our earlier question: when will this straighten out? To help answer this, there may be some clues worth exploring.

Although the US toyed with recession early last year, its economy has remained resilient, with annualised GDP growth of 3.2% in the third quarter of 2022. This compares to -0.6% during the second quarter. In turn, the labour market remains tight. As a result, wages are high, but along with that, so is inflation due to consumer demand. However, consumer demand has shifted away from discretionary purchases, like clothing, in favour of services such as restaurants and travel.

It's funny how for so long, the critical measure of anything economic - at least from an analyst's point of view - centred on the growth of international trade. It was super important. Today, however, that's changed. Instead, national or regional gross domestic product (GDP) appears more important as globalised business realigns around regional pockets of production and consumption. International trade doesn’t dominate economies like it once did.

Back to basics

So, why the shift? It's a case of rediscovering the fundamental underpinning of all economic activity, the GDP. Trade is an outgrowth or extension of GDP, a percentage of economic activity. During the ascendancy of globalisation, global trade garnered all the headlines - and why not? That's where all the growth was!

But it's important to remember that there is no trade without GDP. Trade and GDP are like dance partners - with some countries showing moves favouring trade over other forms of economic activity. Others, in turn, prefer domestic production over international trade.

See what I mean. In the case of the United States, according to the World Bank, trade makes up a relatively modest 20% of economic activity. For the world, international trade equates to more than half of the global GDP. But for developing countries, international trade makes up an even more substantial segment of GDP. In China, for example, international trade made up 66% of the country's GDP as recently as 2006. However, it plummeted to less than half its share in 2020.

Interestingly, 2006 was the high-water mark for trade's share of global GDP. Since then, trade's share of global economic activity has fallen. Then, we had the pandemic, temporarily disrupting traditional trade activities. But, even before the pandemic, globalised trade was losing some appeal. But this trend has only been exacerbated by Covid.

Will slow and steady growth be the answer for apparel in 2023?

For the last 30 years or so, international trade has been king. And investors around the world fed the king. In fact, trade provided the engine of economic development in countries still proving their mettle in the global economy. Such rapid growth also provided investors with fast returns. Money was made.

But, in turn, slow and steady growth may win in the end; it's not as sexy, but it's real. And that's something for the industry to consider as the world wakes up from its New Year hangover. Slow and steady may prove more attractive than flashy and unsustainable. Long money versus short money. Let's see.

The era of cheap money and low interest rates is over - at least for now. Pointedly, the search for returns has pulled back in favour of a return of certainty. But, unfortunately, the same goes for the supply chain. "Just in time" turned into a train wreck. It worked great until it jumped the tracks - with people becoming more risk-averse. 

The global economy has entered a period of extended uncertainty. Change is everywhere, but the effects of change have yet to be fully revealed. We know regionalisation has become more significant. Yet traditional globalised sourcing remains the norm.

So, as we enter 2023, we need to recognise that the sands are shifting under our feet. What we once thought was solid has proven to be different. Even so, the uncertainty of today will give way to more certainty as the year unfolds. But we will have to be patient. And take the long view.