Printing:Sub-Saharan Africa’s Competitiveness in the U.S. Apparel MarketRuth Dede Adikorley

Advisors: Kristin Thoney-Barletta, Ph.DJeff Joines, Ph.D

Lori Rothenberg, Ph.D

College: Textiles

What is the Problem?

Are SSA Countries Cost Competitive?

This research question was answered quantitatively through a landed cost

analysis for T-shirts and denim jeans for 18 cut and sew countries in Asia, the

Americas and Sub-Saharan Africa.

Research Method

Results

Analyzing Different SSA Supply Chains

Transportation Costs

Conclusion

• From the initial landed cost analysis, 6 (Ethiopia, Ghana, Swaziland,

Lesotho, Kenya, and Madagascar) of the 7 SSA countries were found to be

cost competitive in producing both T-shirts and denim jeans for the U.S.

market using U.S. fabric. While transportation cost did pose a challenge to

their competitiveness, the relatively low labor cost and duty free access to

the U.S. market negated that challenge.

• From the supply chain analysis for SSA countries, it was observed that using

Indonesian fabric made all SSA countries analyzed more competitive

compared to using fabric from the other fabric producing countries.

• Factors such as fabric origin, labor wage and transportation costs affect the

competitiveness of countries.

• In a future study for this research, executives involved in apparel sourcing

and trade representatives will be interviewed to obtain their views on apparel

sourcing from SSA for the U.S. market.

Works Cited

• Change the chain (n.d.) Retrieved from http://www.thesupplychange.org/alps/

• Jaymalin, M. (2014). Dubai needs skilled Pinay workers. Retrieved from

http://www.philstar.com/headlines/2014/03/03/1296489/dubai-needs-skilled-pinay-workers

• OTEXA. (2015). U.S imports of textile and apparel. Retrieved from

otexa.trade.gov/scripts/tqads2.exe/ctrypage

• Staritz, C. & Frederick, S. (2014). Sector Case Study: Apparel. In Farole T. & Winkler, D.

(Eds.), Making Foreign Direct Investment work for Sub-Saharan Africa: Local spillovers

and competitiveness in global value chains. (pp. 209-244). Washington, DC: World Bank

Group.Details of the Supply Chain Studied in this Analysis

AMERICAS ASIA SUB-SAHARAN AFRICA

El Salvador Bangladesh Ghana

Guatemala China Kenya

Honduras India Lesotho

Mexico Indonesia Madagascar

Nicaragua Vietnam Mauritius

U.S. Swaziland

0.00

0.50

1.00

1.50

2.00

2.50

3.00

Initial Landed Cost per T-shirt in U.S. $

Fabric Cost/T-shirt Trim Cost Total Labor Cost Energy Cost Off-Quality Duty Charge Garment Transportation

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

Initial Landed Cost per Pair of Denim Jeans in U.S. $

Fabric Cost/T-shirt Trim Cost Total Labor Cost Energy Cost Garment Finishing Off-Quality Duty Charge Garment Transportation

0.00

0.50

1.00

1.50

2.00

2.50

3.00

Indonesia U.S India Turkey China Egypt

Total Knit Fabric Cost in $/Meter

Greige Dyeing Finishing

Introduction

Landed Cost Equation

$

𝒈𝒂𝒓𝒎𝒆𝒏𝒕=$𝒆𝒙𝒊𝒕−𝒇𝒂𝒄𝒕𝒐𝒓𝒚

𝒈𝒂𝒓𝒎𝒆𝒏𝒕+$𝒈𝒂𝒓𝒎𝒆𝒏𝒕 𝒕𝒓𝒂𝒏𝒔𝒑𝒐𝒓𝒕𝒂𝒕𝒊𝒐𝒏

𝒈𝒂𝒓𝒎𝒆𝒏𝒕+

$𝒅𝒖𝒕𝒚

𝒈𝒂𝒓𝒎𝒆𝒏𝒕

Exit-Factory Cost Equation

$𝒆𝒙𝒊𝒕−𝒇𝒂𝒄𝒕𝒐𝒓𝒚

𝒈𝒂𝒓𝒎𝒆𝒏𝒕=

$𝒇𝒂𝒃𝒓𝒊𝒄

𝒈𝒂𝒓𝒎𝒆𝒏𝒕+

$𝒕𝒓𝒊𝒎𝒈𝒂𝒓𝒎𝒆𝒏𝒕

+$𝒂𝒑𝒑𝒂𝒓𝒆𝒍 𝒍𝒂𝒃𝒐𝒓

𝒈𝒂𝒓𝒎𝒆𝒏𝒕+$𝒂𝒑𝒑𝒂𝒓𝒆𝒍 𝒆𝒏𝒆𝒓𝒈𝒚

𝒈𝒂𝒓𝒎𝒆𝒏𝒕+$𝒈𝒂𝒓𝒎𝒆𝒏𝒕 𝒇𝒊𝒏𝒊𝒔𝒉𝒊𝒏𝒈

𝒈𝒂𝒓𝒎𝒆𝒏𝒕+$𝒐𝒇𝒇−𝒒𝒖𝒂𝒍𝒊𝒕𝒚

𝒈𝒂𝒓𝒎𝒆𝒏𝒕

Apparel production is a labor-intensive process with relatively low startup costs.

Therefore, it is an attractive industry for many developing countries because

their wages are often relatively low and they usually have an ample labor force.

Currently, over 80% of the world’s apparel imports are sourced from developing

countries(Staritz & Fredrick, 2014).

In 2015 the U.S. imported $85.2 billion worth of apparel, however SSA’s

share was only 1.2%($1 billion) which is very low compared to other

developing regions.

Transportation Cost from Cut and Sew Countries to the U.S. Using Least Expensive Route

YARN AND FABRIC

COUNTRY

CUT AND SEW

COUNTRY

GARMENT

DESTINATION

India Bangladesh U.S.

China China U.S.

U.S. El Salvador U.S.

U.S. Ghana U.S.

U.S. Guatemala U.S.

U.S. Honduras U.S.

India India U.S.

Indonesia Indonesia U.S.

U.S. Kenya U.S.

U.S. Lesotho U.S.

U.S. Madagascar U.S.

U.S. Mauritius U.S.

U.S. Mexico U.S.

U.S. Nicaragua U.S.

U.S. Swaziland U.S.

U.S. U.S. U.S.

China Vietnam U.S.

Cut and Sew Countries

Supply Chains

Source: OTEXA

0.00

0.50

1.00

1.50

2.00

2.50

Landed Cost per T-Shirt by Supply Chain in U.S. $ for Ethiopia

Indonesian Fabric Indian Fabric U.S Fabric

Turkish Fabric Chinese Fabric Egyptian Fabric

Indonesian fabric was the

least expensive for both knit

and denim fabrics.

Using Indonesian fabric

provided the most

competitive landed cost for

both T-shirts and denim

jeans for all SSA countries.

0.00

0.50

1.00

1.50

2.00

2.50

3.00

Landed Cost per T-Shirt Using Indonesian Fabric for SSA Countries

Fabric Cost/T-shirt Trim Cost Total Labor Cost Energy Cost Off-Quality Duty Charge Garment Transportation

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

Landed Cost per Pair of Denim Jeans Using Indonesian Fabric for SSA Countries

Fabric Cost/T-shirt Trim Cost Total Labor Cost Energy Cost Garment Finishing Off-Quality Duty Charge Garment Transportation

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

$1.80

$2.00

Bil

lio

ns

Apparel Imports from Sub-Saharan Africa

$-

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

$90.00

Bil

lio

ns

Apparel Imports from the World Compared to Sub-Saharan Africa

World Sub-Saharan Africa