California Apparel News

With China and India expected to gobble up a bigger piece of the world’s apparel pie, scrappy Sri Lanka is launching its own battle to protect its apparel industry.

Sri Lanka’s garment business is one of the largest moneymakers for the tiny island nation, which sits just southeast of India. Its 859 apparel exporters account for 53 percent of the country’s total export earnings and provide jobs for 350,000 workers, who earn between $50 and $100 a month.

But Sri Lanka’s apparel honchos are worried. Now that apparel and textile quotas for World Trade Organization countries have been dropped, China and India loom large as major competitors threatening to take away a good chunk of Sri Lanka’s $2.5 billion apparel business.

“The first half of the year is okay. But the second half of the year is unknown territory,” said Devinda Subasinghe, Sri Lanka’s ambassador to the United States. “The bottom third of the apparel factories are vulnerable, and the middle third are under threat. It is the top third of the factories with a niche market we hope will see us through.”

Heated competition with China and India has pushed Sri Lanka to take several steps to save its apparel manufacturing market.

Apparel manufacturers there want to set up a trade office in Los Angeles where they could deal directly with California and U.S. manufacturers that source overseas.

At the end of March, Bruce Berton, director of international business consulting for accounting firm Stonefield Josephson Inc. in Santa Monica, Calif., is going to Sri Lanka to advise apparel manufacturers on how to capture more business in the United States, particularly in California. He will also help them set up a trade office in Los Angeles.

“Sri Lanka makes a lot of knitwear, which is good for the junior apparel business here,” Berton said. “And they are doing a lot of dresses, which would be good for companies like Rampage.”

On the same trip, Ilse Metchek, executive director of the California Fashion Association in Los Angeles, will be talking to Sri Lankan businesses about working with California companies as licensees or as makers of private-label clothing.

In the past, much of Sri Lanka’s apparel business had been done through Mast Industries Inc., a sourcing agent that is a division of Limited Brands Inc.

Sri Lanka is the 19th-largest apparel supplier to the United States, sending $1.6 billion in clothing to the United States last year. It is one of the top five suppliers of cotton and manmade fiber coats to the United States. It is also strong in such categories as cotton pants, cotton woven shirts and bras. It is one of the largest suppliers to Victoria’s Secret, part of Limited Brands in Columbus, Ohio.

But Sri Lanka’s apparel industry is trying to hold its own in the U.S. market. To do that, Sri Lankan government officials and apparel execs are trying to get the U.S. Congress to lower tariffs on apparel and textiles coming from their country. Tariffs range from 9 percent to 29 percent, depending on the item, amounting to about $240 million a year.

Last month, Sen. Gordon H. Smith (R-Oregon) introduced the Tariff Relief Assistance for Developing Economies Act to lower tariffs for 15 countries, including the tsunami-devastated countries of Sri Lanka and Maldives. Other countries that could benefit include Nepal, Bangladesh and Cambodia.

The bill originally was touted last year as a way to help the world’s poorest countries compete with China in the apparel market. At that time, Sri Lanka was not part of the bill, but the country was added after the tsunami killed more than 31,000 people there on Dec. 26.

Most of Sri Lanka’s apparel factories are centered near the capital of Colombo and were not affected by the disaster. But transportation problems in the south, where the tsunami hit, have hindered some factory workers from getting to their jobs. “It is a great bill for a number of reasons, but it is meant to get struggling countries healthy and back on their feet,” said Tucker Bounds, a spokesman for Smith.

While lowering tariff barriers is an initial step, Sri Lankan officials are pushing for a bigger piece of legislation. They want a free-trade agreement with the United States, which buys 64 percent of Sri Lanka’s apparel exports.

A. Sukumaran, the new chair of the Sri Lanka Apparel Exporters Association, said the future of the country’s apparel factories depends on a free-trade agreement with the United States. But elections last year in Sri Lanka and the United States delayed talks.

Sri Lanka has been approaching a free-trade agreement in the most diplomatic of ways. Last September, Sri Lankan officials visited a number of North Carolina textile mills with an eye on using U.S. fabric, yarn and thread in their production.

In addition, Sri Lankan apparel manufacturers might be getting technical support and advice from experts at North Carolina State University’s College of Textiles. “We do recognize that trade has to be a two-way street,” said the Sri Lankan ambassador to the United States.

Diplomacy aside, a Sri Lanka–U.S. free-trade agreement probably will not be done this year because it is a relatively lengthy process that involves various rounds of talks. “Even if a free-trade agreement is fast tracked, it takes a long time to negotiate, at least one year,” said Julia Hughes, president of International Development Systems Inc. in Washington, D.C., which tracks trade and quota statistics.

Nonetheless, even without a free-trade agreement, some companies are taking a second look at Sri Lanka. Last year, Levi Strauss & Co. tapped Brandix Apparel, a division of Brandix Lanka Ltd., to manufacture as many as 3 million pairs of blue jeans a year.

Brandix, one of Sri Lanka’s largest apparel producers, broke ground last December on a denim plant that is expected to be running by May and producing 50,000 pants a week.

It is joint ventures like this that keep Sri Lankans hopeful that their apparel industry will survive.