Southern California transition takes hold

Bobbin, Sept, 1998 by Judi Kessler

Despite the advantages, many firms have been burned at one time or another when relocating production to Mexico because they did not do their homework. As a result, a growing number of successful manufacturers in the region now are "thinking smart" in terms of what can and cannot be sourced offshore. So says Bruce Berton, business consultant and specialist in production sourcing evaluation for Stonefield Josephson, a Santa Monica, CA-based CPA firm with more than 200 apparel industry clients on both sides of the border. He emphasizes that not every manufacturer in Southern California should be sourcing in Mexico. However, with the facts and a plan in hand, accompanied by proper execution and supervision, Mexico is offering increasingly attractive opportunities for manufacturers.

The bottom line is that Southern California's apparel firms are not sourcing product in Mexico for any reasons other than economic survival, competition and/or profit maximization. The establishment of dynamic bi-national production networks is an offshoot - a positive, long-term benefit for apparel firms and industrial districts on both sides of the border.

Why not Mexico?

When sourcing in Mexico, the biggest complaint from manufacturers in Southern California is unacceptable turnaround time from their contractors. The time lag, however, is shortening and most likely this trend will continue. In fact, some industry experts argue that Mexican contractors ultimately will be able to turn around a production order bound for Southern California in two weeks.

Others are more skeptical, such as the CFA's Metchek, who says that even if Mexico can someday turn an order in two weeks, "Then locally, [we'll] be able to cut it down to a week." The difference between one and two weeks, however, may not be enough to keep production north of the border, with the exception of certain non-commodity items.

As the GCA's Rodriguez points out, the California look often translates into quick-turn, small-volume runs. Add to that the small manufacturers without the necessary capital to set up offshore production arrangements, and it's reasonable to assume that a relatively fixed percentage of production will remain captive to Southern California. But as Mexico hones its apparel production operations, it is likely to continue to chip away at California's contractor base. In fact, callbacks to several manufacturers interviewed for the study - as recently as six months ago - indicate that this may already be the case.

Undeniably, the future of the Southern California apparel industry is inextricably tied to NAFTA and Mexico: Apparel workers, entrepreneurs and firms from both sides of the border are embedded in a "borderless" transnational production chain, forged a decade ago and growing stronger by the day.

Southern California's strength is in its flexibility, innovation, image and design. Mexico's production capabilities are improving, allowing it to move from maquiladora assembly toward full-package operations.' The Los Angeles garment center and its hinterlands need to move quickly and strategically to exploit Mexico's competitive advantages. The industry also must let go of what it can't keep.