Power Shortages in China Cause Delays for Calif. Apparel Makers

China’s energy shortages this summer are adding up to big delays for California garment manufacturers waiting impatiently for Holiday and late Fall orders.

The energy problems are causing orders to arrive one to two weeks late on this side of the ocean. The hang-ups come at a particularly difficult time for California apparel manufacturers, who are grappling with a four- to five-day backlog of goods at the ports of Los Angeles and Long Beach, Calif.

The port congestion problem is not likely to go away soon, even though the Pacific Maritime Association, which represents the shipping lines, and the International Longshore and Warehouse Union said they will start hiring 3,000 casual workers to help the 5,400 full-time longshore workers and 3,800 casual workers currently at the ports. With 150 to 200 workers being trained a week, it will take at least four months before they are completely ready to jump into the fray, said Dave Arian, president of ILWU Local 13, whose members work at the ports.

Early birds

This year, the peak shipping season started in late June rather than in August. Apparel and textile importers, panicked about import quotas running out before the end of the year, started bringing in goods earlier.

“There is nothing here that makes my life easy,” said Lonnie Kane, president of Karen Kane Inc., a decades-old better womenswear line based in Vernon, Calif., whose sales top $100 million a year. The company currently produces 30 percent of its goods overseas.

“We are losing up to a couple of days a week on production [in China],” Kane said, noting that translates into a one- to twoweek delay in receiving goods.

Sprinkle in the five extra days to get goods through the ports, and you have a recipe for cancelled orders by retailers. “A day late is a big deal to department stores. A week is an eternity,” said Kane, who sells to Nordstrom, Macy’s and various specialty stores.

Garment manufacturers are learning that when China sneezes, it may be California’s apparel industry that catches a cold. Electricity shortages in China this summer have forced many clothing factories there to shut down for days at a time.

Electricity-draining air conditioners and booming economic growth have prompted the power drain in China, which has the world’s fastest-growing economy. Last year, China’s gross domestic product expanded 9.1 percent, compared with 4.3 percent in the United States. Power shortages in China have forced 24 provincial-level jurisdictions to impose brownouts.

One of the hardest-hit areas is the burgeoning area of Shanghai, which is quickly becoming the commercial center of China. In late July, Volkswagen in Shanghai was forced to shut down production for several days because of a power shortage. More than 5,000 companies have been ordered to shift production to nights and weekends.

Hangzhou, an apparel-producing area, was also hard hit by the power squeeze. At one point, manufacturers were ordered to halt work during the day for four days a week.

And the Pearl River Delta, where hundreds of apparel factories are located just north of Hong Kong, is feeling the pinch, too.

That has left people such as Ron Perilman, another veteran Los Angeles apparel manufacturer, biting his fingernails and watching his orders after seeing shipments delayed by more than one week.

“This all started about one month ago,” said Perilman, president and chief executive of City Girl Inc., a $35 million company that makes three womenswear lines carried at department stores including Nordstrom and Dillard’s. “There was some power lost in factories for as long as a week and a half. Some of our vendors called up to ask for production extensions.”

This has prompted some U.S. apparel manufacturers to realize they cannot depend on China for all their goods.

About 90 percent of Perilman’s production is done in China. But now he is considering diversifying to South Korea, India and Taiwan to produce his three labels: Nancy Bolen, Ruby Cho and Marie St. Monet.

Port pileup

No matter where the goods are made—be it China, Vietnam or Pakistan—they still have to be freighted over the ocean on container ships that dock at either the Port of Long Beach or the Port of Los Angeles, the largest port complex in the United States.

Container traffic at the ports is breaking records this year. In June, the number of 20-foot equivalent unit (TEU) containers unloaded at the Port of Long Beach increased 16.2 percent over the previous year, said port spokesman Keith Higginbotham. At the Port of Los Angeles, container traffic in June was up 8.5 percent over the previous year.

Part of this is because retailers and manufacturers started bringing in Back-to-School goods earlier this year. Many found that once school starts, not that many children or their parents return to buy more clothes.

With quotas being eliminated on Jan. 1, 2005, among World Trade Organization members, there is no quota to borrow against to import goods this year.

The result is that container ships began stacking up beyond the ports’ breakwaters in June because there were not enough longshore workers to move goods fast enough.

As of Aug. 12, there were about 63 ships docked at both ports and 16 ships at anchor waiting to move into berths. Normally, there are three or four ships at anchor, said Capt. Manny Aschemeyer, executive director of the Marine Exchange of Southern California, which keeps track of the comings and goings of vessels at both ports.

Larger ocean vessels are beginning to call on Southern California’s ports. Traditionally, most container ships transport about 4,000 to 5,000 20-foot containers. But the megaships carry 8,500 to 8,600 containers.

“We are certainly seeing the megaships come in,” Aschemeyer said. “They make up about 20 percent of arrivals.”

In addition, independent truck drivers hauling containers out of the ports are tired of waiting long hours for their cargo loads.

“It’s a disaster right now, it’s so congested. Truckers are sitting at the gates three and four hours,” said Stephanie Williams, senior vice president of the California Trucking Association. “I would say the ports have lost about 10 percent of the trucking workforce. They are going back to private fleets.”

With all these problems, no one is expecting things to get better soon.

“It’s a real mess,” Aschemeyer said. “And the real peak season has yet to come.”