Southern California transition takes hold

Bobbin, Sept, 1998 by Judi Kessler

Little Export Development. Despite the uniqueness of the California look, few firms export. Metchek attributes this problem to lack of attention and funds from local, state and federal institutions. She claims that the California Trade and Commerce Agency (CTC), has a mission to facilitate trade between the state and international markets. However, although it has 17 offices throughout the world, not one has an apparel industry expert.

"They [the CTC] have done no research about what apparel and textiles mean to their country," believes Metchek, nor are they able to "define for us [what] our market is [internationally]." She also laments what she perceives as bureaucratic red tape and politicking, which results in roadblocks to industry appropriations of funds from the NADBank and other sources of money earmarked for industrial sectors affected negatively by the North American Free Trade Agreement (NAFTA).

The NAFTA Factor. Finally, and perhaps most importantly, the passage of NAFTA, which by the year 2001 will create a borderless transnational production network, has had an enormous impact on Southern California garment production at all points along the production chain.

In the January 1998 edition of World Trade, Geoff House proclaimed: "The Mexico-U.S. rag trade rips." That statement couldn't be truer. Consider that in just four years, Mexico soared from the seventh to the single largest supplier of apparel exports to the United States, according to 1997 U.S. Department of Commerce figures. In line with this trend, between 1992 and 1998 a healthy majority of the larger Southern California manufacturers (collectively representing more than three-fourths of the region's industry in dollar value) have shifted at least some production to Mexico - and the numbers continue to grow. While a small portion of the shift represents expansion, for the most part it is a "zero-sum" game: In terms of production, what Los Angeles loses, Mexico gains.

To a great degree, the future dimensions of the Los Angeles apparel center will be influenced by the manner in which California/Mexico cross-border production networks develop. In turn, this development depends on the actions of industry players and government entities from both sides of the contiguous sovereign borders.

And the Survey Says ...

Until 1997, the dimensions of the Mexican production shuffle were little more than anecdotal information and speculative guesses. However, from July 1997 through March 1998 - armed with the results of a 1992 large manufacturer survey conducted by Appelbaum and Bonacich - this author conducted extensive re-surveys with 67 of the largest apparel makers in Los Angeles, along with 13 additional new surveys. The results of those interviews shed light on the future face of the Southern California/Mexico network.

In 1992, only a small number of Los Angeles manufacturers, mainly producers of commodity lines, sourced in Mexico under 807 (9802). However, this scenario has changed significantly over the past five to six years. Today, approximately 75 percent of the larger Los Angeles manufacturers re-surveyed send at least some of their production orders to Mexico, an almost four-fold increase from 1992. Moreover, the majority of these firms expect to increase production levels in Mexico in the near future.