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Competition in an International Market

(April 2002) posted on Mon May 13, 2002

Find out who the competition is and what domestic printers can do to keep their customers from looking off shore.


By Rick Davis

Once upon a time, the world of high-volume garment printing in this country was dominated by a collection of large shops, each of which served a particular market and competed only with a small number of other large US print shops. A second tier of smaller contract-printing operations made their living from the steady overflow work they received from the high-volume shops, and the domestic garment-printing industry chugged merrily along. Today, however, many large garment-printing shops in the US have gone the way of the dinosaur, and the domestic printing operations that remain have had to develop new approaches to their way of doing business. Some have changed their focus to specialty and niche applications in which the competition level is still low, while others have expanded their capabilities to become full-fledged garment-manufacturing operations that support package programs for large retail chains and other demanding customers. Those who have survived this apparent purging of our industry find themselves in a completely new marketplace, one in which they are not only competing with other domestic shops, but with foreign printing operations as well. In many cases, these offshore competitors came into being when domestic garment suppliers began to outsource their manufacturing to offshore operations, where labor was much less expensive. To support the demands of retail and package-program customers, garment manufacturers found that they also had to expand their services to include screen printing and other decorating capabilities. The offshore manufacturing operations were the ones to benefit from these added capabilities. Suddenly, domestic screen printers have found themselves struggling, often unsuccessfully, to compete against foreign shops and the pricing advantages that come with low labor costs. For the large domestic garment-printing company, the question has become, "How do we compete with offshore printing facilities and remain profitable?" What caused the situation? Thanks to recent trade initiatives like the North American Free Trade Agreement (NAFTA) and the Caribbean Basin Initiative (CBI), garment manufacturers and other large companies have been able to save large sums of money in reduced or eliminated duties and fees that previously made it less attractive to outsource work to Mexico, Central and South America, and the Caribbean. With these trade-restrictions lifted and a lower labor rate to boot, it's easy to get garments for much less just by looking off shore. In a few cases, domestic printers have tried to take advantage of the same factors that attracted garment producers to foreign manufacturing. Some printing companies have either expanded by adding production facilities in these offshore locations or completely closed their doors in the US and moved the entire operation south of the border. At the same time, many of the remaining large garment-printing facilities in the US have lost customers to offshore producers and find themselves with two choices: work at a loss or drive themselves into extinction by maintaining the prices they need to survive. Understanding the competition The factors that lead to a successful printing operation are the same regardless of where the facility is located. These factors include the right equipment, the right training, the right procedures, and the right attitude towards quality. What many domestic printers don't realize is how far garment-printing operations in Latin American and Caribbean nations have come in terms of technology. While acquiring high-end printing equipment is more challenging, many of the largest screen-printing operations in these foreign locations are state-of-the-art facilities. Only one thing has prevented an even greater exodus of work to these offshore printers: For most of these foreign operations, the proper attitude toward quality and the training to back it up usually don't become priorities until they already have the technology. But this is beginning to change, and a few offshore printers have already put the pieces together and are out-producing domestic printers. You need to understand who your competition is, regardless of whether he is located in the US or in another country. Prior to NAFTA and CIB, printers knew who their competitors were, and more importantly, that they were constricted by the same market forces and cost limitations. It was an easy task to shave off a few cents from prices in the name of competition, because you knew none of your competitors could afford to do more than that themselves. But foreign competition has forced a more drastic round of price slashing, and there are no longer any cents left to shave off for domestic printers. So there is only one factor around which domestic companies can hope to remain successful--performance. The key to winning this international game is to deliver a quality product and to deliver it on time. Considering language barriers, distance, and shipping challenges faced by foreign companies, plus the fact that many haven't mastered all four of the screen-printing success factors discussed earlier, domestic shops presently have the upper hand in performance. Here are a few suggestions that domestic printers might consider to keep their competitive edge: Control variables As I have always stated, the key to achieving a quality product consistently lies in standardizing and controlling the variables inherent in screen printing. The primary variable to control is the screen. Ideally, screens should feature retensionable frames and undergo a standardized tensioning and stencilmaking process. Standardized press setup and good documentation are also essential. Your primary objective here is repeatability. Diversify product offerings Support as many specialty applications as possible. More and more high-volume customers are looking for unique and inexpensive decorating options for the garments they purchase, such as high-density prints, foil applications, and specialty ink options. Make quality the mission of every employee Because of greater access to training and supplier support and more overall experience, US screen-printing operations are better positioned to deliver the quality level that customers demand. Maintaining high-quality standards is more difficult in countries with vastly lower pay scales, where employees have little incentive to improve. Consider sourcing your own goods offshore Although I'm all for keeping our industry stateside, it's impossible to ignore the fact that retailers and other large customers of imprinted garments are pushing the business offshore due to cost concerns. It started with garment manufacturing itself, and today, the vast majority of blank garments are produced in countries with lower labor costs, including Latin American and Caribbean nations, as well as countries in Asia, the Middle East, and Africa. You may not be prepared to relocate you printing operation to foreign shores, but there's no reason why you can't explore more cost-effective sourcing arrangements through foreign suppliers. In the end, customer demand may force you to do so anyway. Conclusion Domestic printers are facing some challenges as the world continues to shrink under the pressure of globalization. To remain competitive in servicing large-volume buyers, the focus for US shops must be on control, consistency, and repeatability in the printing process. Only by achieving these goals can printers provide the product quality and on-time delivery that customers want and ensure a steady stream of business into the future.


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