James Moore: All dressed up but nowhere to go – fashion’s search for cheap labour

Outlook Is the fashion industry’s race to the bottom of the wage scale about to come to an end?

An uncomfortable fact about our comfortable clothes is that they’re made by people earning pennies. Worse still, every time it looks as if those pennies might start to become pounds, the garment industry ups sticks in favour of cheaper climes, and sweatier sweatshops.

Currently Ethiopia and Burma are “on trend” as fashion houses move on from higher labour costs in China and other parts of South-east Asia. Ain’t globalisation grand?

But here’s some good news. According to the Boston Consulting Group, the industry is going to have to change.

For a start, there are capacity constraints in the new territories, which may lack the requisite number of workers with the requisite skills. And shaky internet connections and difficulties with getting goods transported can also rapidly eat into any savings made.

Consumer habits are changing as people are increasingly using the internet to seek out garments which take their fancy.

This requires a very quick turnaround, something the fashion industry’s new manufacturing territories struggle with. This could push savvy fashion houses (they do exist) closer to home, to places such as Turkey or Portugal, with margins kept up by the development of new production methods and improvements in efficiency.

What the Boston report doesn’t pay too much attention to are PR and branding benefits. The privately owned sport shoe maker New Balance opened a UK factory in 1982, when its rivals were seeking out the lowest wage territories they could find. It also has several in the US.

Its cheaper shoes are made in the sort of places you might find Nike and Adidas (China, Vietnam) and some critics have quibbled about what “made in USA” on a New Balance sneaker actually means. But it’s still a powerful branding tool that the company makes much of in its marketing.

Ultimately, the hardy perennials (basic T-shirts, jeans) are still likely to be made in ultra-low wage centres. What might finally bring an end to the industry’s ugly record of exploitation is not so much the consumer’s desire for faster fashion, but the fact that it is simply running out of new low wage territories to open up. When Burma and Ethiopia join the ranks of middle-income countries, where do you go?