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China Falls Out Of Fashion For Some U.S. Brands

NPR's Business Story of the Day

04:05 min | 1 year ago

China Falls Out Of Fashion For Some U.S. Brands

"A lot of american companies that make or buy products from china are starting to rethink doing that as a new round of tariffs takes effect this weekend. Import taxes are making king chinese goods more expensive in the united states but finding alternative suppliers. Isn't that cheap either. N._p._r.'s scott horsely has the story. Many american companies are facing rising costs because the tariffs ba- robert delorean doesn't have to worry the lawrence c._e._o. Of the x._l. Brands company which sells clothing the isaac mizrahi right and halston labels among others he began moving out of china some time ago not because of tariffs but in order to find faster more flexible suppliers who could jump on fashion trends and turnout clothes in just six weeks delores x._l. Now manufacturers in a variety of countries including indonesia india and sri lanka and is exploring production in central and south america. You never want to have all your eggs in one basket in terms of supply china was easy in retrospect. Probably we had ninety percent of your production. In china that wasn't good risk management planning the laura and has gone from making seventy percent of his clothes in china to less than twenty percent sent but it wasn't easy. He spent two years flying around the world trying to line up factories five deliveries to get it right everything that could go on clothes from the new factories didn't fit right but i or the fabric wasn't what he expected. Many companies are now going through a similar process s. of trial and error as they look for alternatives to chinese factories in hopes of avoiding the president's tariffs the truth is that the trade war is a little bit of a wakeup call for many companies jerry matias vice president with bain and company consultants based in singapore. He says rising labor costs in china. Were already causing some companies to look elsewhere for suppliers and the trump tariffs have accelerated that but uh other countries will need a lot of investment match the expert manufacturing base and the robot shipping shipping network that china's built up over the last two decades a survey by the american chamber of commerce in china which represents has business there says most companies that do relocate okay look to southeast asia the at phnom exports. The u._s. jumped thirty three percent in the first six months this year. Mexico is another popular popular destination. Roberto deraza works for company. They're called events that helps manufacturers set up shop in mexico also held three conference calls with potential clients in in a single day this week but for now he says most are keeping their options open. Not many of them are pulling the trigger. My feeling it's that many of them are gathering information nation and if the trail continues for a long time just making the decision of coming into mexico mexico offers the advantage of much shorter delivery livery times to the u._s. but it has risk of its own just three months ago president trump was threatening tariffs on goods made their trump has urged companies worried about tariffs to move production election back to the united states but only about six percent the american companies operating in china are considering that harry moser who runs the reassuring initiative estimates twenty five percent would find manufacturing the u._s. competitive if they took tariffs transportation and all other costs into account. Probably they made the right decision going to china when wages were so low probably should have reevaluated at five years ago but now that they feel they have to bring a lot of work out of china. Now is the perfect time to reevaluate the u._s. As an alternative but some companies are staying put louisiana-based crown crass makes baby blankets and other products in china ceo randall chestnut told investors this summer he looked at moving production to half a dozen different countries but ultimately decided it was cheaper to stay in china and pay the tariffs but we think we're going to have to bite the bullet according to the american chamber sixty percent of the u._s. This companies now operating in china have no plans to relocate scott horsely n._p._r. News washington.

china Mexico united states scott horsely american chamber of commerce Roberto deraza president isaac mizrahi robert delorean south america washington indonesia vice president bain randall chestnut trump lawrence halston sri lanka