Godecke Wessel, founder and CEO of sourcing network Foursource Group, explains the Los Angeles denim exodus in a few ways. “I see two general fields that impacted the LA denim market moving to Mexico and they are trade tariffs and labor costs,” he says. “In 2013, there were significant trade threats especially for internationally oriented denim brands, like increases on tariffs to the EU. There are still about 10% of EU import tariffs for garments from the US, while with Mexico, the EU exercised a free trade agreement with much lower barriers. US denim brands must also consider a potential escalation of the trade war between the US and other countries/regions that might not affect Mexican goods. In addition, denim is a labor intense product and California wage increases started in 2016. Production began to transfer to lower wage countries at that time. This trend usually starts with large companies moving ahead and others following over a couple of years. With the denim sector move to Mexico, we see the same, typical patterns. Even new technology, like laser treatments, are more likely to be implemented at the places of current production (Mexico), rather than returning production back to US.”
In addition, Neil Saunders, managing director and retail analyst with Globaldata Retail, sees a certain convenience to the move, rather than producing in Asia. “The market in Mexico is also very close to the US which reduces lead times and makes supply chains simpler especially as Asia has become less attractive for denim with its rising costs and instability in parts of the region.” Seeing as consumer prices are under pressure for denim brands in the US, it’s a move that’s primarily cost effective but also a bit less complicated. “The labor market in the US is very tight,” continues Saunders, “and it can be hard to get and keep employees, which is not a problem in Mexico.”
It’s certainly not a problem for a few Mexico-based manufacturers that work back and forth flawlessly between Los Angeles and Mexico. They do this with what feels like a genuine love for the art of denim manufacturing and a desire to learn and perfect along the way.
Case in point, two years ago, Global Denim opened an outpost office in the LA Arts District, right next to the headquarters of Boyish Jeans, Lucky Brand and 7 for All Mankind. Global, however, is not new to denim manufacturing. In fact, it has been making denim in Mexico for over 25 years, with a power client list to prove it, including Wrangler, Lee, Joe’s Jeans, 7 for All Mankind, Lucky Brand, Ann Taylor, Loft, Eddie Bauer and Frame.
It’s the little guys that Global Denim would like to persuade to bring their business down south. “The premium business likes a direct point of contact,” says Global’s creative director Anatt Finkler. “So our LA office is a great place to chat and touch a pair of pants. We are in LA because we see LA as the home of premium denim and we want to expand into the premium market. Our fiber, our technology is really up to speed. And if there’s a problem, we are right here in LA to solve it.” To this end, Finkler says that Global Denim runs its LA office as a separate team. The LA team is close to the action, can even do a fabric test, small run or wash right in the city where most burgeoning, cool denim brands are based, with the main volume happening down in Mexico.
And sustainability? Technology? Working conditions? Many in the US might be surprised. “We have a new 14,000-sq. meter recycling wing using pre- and post consumer denim and scraps which we turn into fiber,” says Finkler. State-of-the-art initiatives such as laser and ozone are in use including waterless dyeing systems. Their company in Mexico employs more than 1,500 people, providing health insurance and certifications. Not to mention “lower carbon emissions,” Finkler reminds. “Everything is made in one area and shipped to the US once, so the carbon footprint is lower than dealing with Asia or Turkey.”
Agustin Ramirez is the founder and CEO of Hera Denim Manufacturing, based in his hometown of Puebla, Mexico. There he manufactures for LA denim darlings Ética and more. “Our people take pride in craftsmanship and strive for improvement,” he says. “I have traveled the world to learn and share best practices in technology and efficiency. All of this expertise results in a better product each season.”
Clients such as Ética demand social responsibility and sustainability, which has become a source of pride for Ramirez. “The Mexican culture naturally lends itself to sustainability. There are generations of people working in our factories who live locally,” he says. “This is our home, our community so we have to keep our water and soil clean, saving water and energy with our machinery, using only clean chemicals, natural and mineral dyes. We then use our water filtration system to water the local farmland and old wash stones to make low-income housing. We are even working on a 360 eco-garden that will eventually grow food and naturally fertilize our soil.”
Editor's note: This article runs in our current "Denim Sourcing Issue", #292. Please also check out the e-paper version for more information.