1. Casey Huth
Profile of U.S. marketplace for CATEGORY 638 // Men & boys cotton
knit shirts
Cotton Knit T-shirt Market
Cotton knit t-shirts hit retail markets with the "casualization" of U.S.
clothing tastes, expressed in the trend toward corporate dressing-down, T-shirt
sales gained from this trend as well as from the synergy between corporate
merchandising campaigns and the desire of millions of Americans to wear
clothing expressing their loyalties to sports teams, rock groups, and other popular
icons.
Fiber & Mill Production
COTTON – Soft white vegetable fiber from ½ to 2 inches long, which
comes from the fluffy boll of the cotton plant, grown in Egypt, India, China, and
southern U.S. Cotton is one of the strongest and most washable fabrics and makes
removing stains easier.
Cotton fabrics can withstand hot temperatures for washing and ironing.
Fabric shrinks due to relaxation of yarn tension; however there is a maximum
shrinkage. Highly resilient to degradation, however chlorine and oxygen bleaches
over prolonged use will cause degradation.
At the textile mill, the bales are opened by machines, and the lint is mixed and cleaned further by
blowing and beating. The short lint that comes out usually is separated and sold for use in other
industries.
The mixed and fluffed-up cotton goes into a carding machine which cleans the fibers some more
and makes them lie side by side.
The combing action of the carding machine finishes the job of cleaning and straightening the
fibers, and makes them into a soft, untwisted rope called a sliver (pronounced sly-ver).
On modern spinning frames, yarn is mare directly from the sliver. The spinning devices take
fibers from the sliver and rotate it up to 2,500 revolutions in a second twist that makes fibers into
a yarn for weaving or knitting into fabrics.
Machines called looms weave cotton yarns into fabrics the same way the first hand weaving
frames did.

2. Trading Partners and Imports in U.S.
Table1: U.S. General Imports in U.S. Dollars (Source: OTEXA)
Table2: U.S. General Imports in U.S. Dollars Top Countries (Source: OTEXA)

3. U.S. Consumption
Although these trends had markedly different impacts on the various
branches of the U.S. men's and boys' shirt industry felt the effect of competition
from overseas manufacturers, who were producing cheap goods with cheap labor.
Additional long-term uncertainties were thrown into the mix by the
passage of the 1993 North American Free Trade Agreement (NAFTA).
Shirt manufacturers had to respond to the challenges posed by foreign
competition. One strategy involved a combination of downsizing U.S. operations
by closing plants and laying off production workers, as well as outsourcing an
increasingly large amount of work to company-owned plants or contractors in
Mexico or the Caribbean Basin.
Many U.S. companies manufacture shirts with cheap foreign labor by
sending cut fabric to these foreign plants, where they are sewn and finished. The
finished items are then shipped back to the United States at preferential duties
Offshore production gave U.S. companies a chance to produce their goods
with cheap labor, but domestic production had its own advantages, especially
proximity to the huge U.S. consumer market and the ability of rapid response to
shifting consumer demands.
Leading U.S. shirt manufacturers also capitalized on domestic production
advantages by pursuing a consumer-driven "quick response" strategy. This
strategy integrates numerous dimensions of the production cycle with the goal of
shortening a cycle's duration, implementing productivity improvements, and
shrinking inventory levels through the immediate transmission of consumer taste
to manufacturers.

4. Figure 1 Pie chart for Imports in U.S. Dollars for year 2011
Honduras & CAFTA
With a GDP of $33 billion, Honduras’ total annual trade with the
rest of the world averages $16 billion. The United States is Honduras’
largest trading partner, purchasing more than two thirds of its total exports.
Over the past decade, imports have increased in terms of absolute dollar
value, with the United States getting an increasing share.
With a population of 8 million, Honduras is now the third largest
exporter of apparel and textile products to the U.S. market, behind only
Mexico and China, while ranking first among the Central American
countries.
With the implementation of CAFTA, the best opportunities for U.S.
exports of goods and services to Honduras are in the areas of apparel,
cotton, food processing, auto parts and service equipment, safety and
security equipment, computers and peripherals, computer services,
telecommunications, textiles and textile equipment, and electric power
generation equipment.

5. Trade Balance
The U.S. goods trade surplus with Honduras was $1.6 billion in
2011, a 144% increase ($969 million) over 2010.
Exports
Table3: Imports from Honduras to United States 2006-2011 (Source: OTEXA
 Honduras was the United States 40th largest goods export market in 2011.
 U.S. goods exports to Honduras in 2011were $6.1 billion, up 33.4% ($1.5
billion) from 2010, and up 139% from 2000. U.S. exports to Honduras are
up 88.8% from 2005 (Pre-FTA).
 Five countries have recorded positive growth in exports into USA during
the first 3Q of 2012 out of the top 10 countries; Vietnam, Mexico, Italy, Sri
Lanka and Honduras.
 The top export categories in 2011

6. o Mineral Fuel (oil) - $1.5 billion
o Cotton, Yarn and Fabric - $1.0 billion
o Electrical Machinery -$414 million
o Manmade Staple Fibers - $371 million
Table4: U.S. Apparel Imports in U.S. Dollars (Source: OTEXA
Research and Technology
A key variable factoring into the production cycle of a shirt batch—
generally 1,500 shirts—has been the length of time it takes to move from
one operation to the next.
Manufacturers have also been exploring the unit production system
(UPS) as an alternative to existing assembly operations. Under the UPS
garments are manufactured one unit at a time rather than as parts of a series
or bundle. An overhead conveyor whisks garment pieces to sewing
operators, who quickly stitch a collar, button, or pocket before the machine
shoots the clothing to another worker. Some manufacturers that have
experimented with the UPS report increases in productivity, but no
statistics are available for the industry as a whole.

7. The most notable drawbacks associated with the UPS are its relatively high start-up costs
and, according to traditional investment criteria, its tendency to generate a marginal return on
investment. Only bigger companies will use this method.
Exports & Consumption in U.S.
U.S. shirt production is heavily concentrated in the southeastern states,
especially North Carolina, Alabama, Kentucky, South Carolina, and Georgia,
which together account for about 55 percent of total shipments.
 North Carolina and Georgia account for one-quarter of the almost 2
million U.S. jobs in textile production, apparel manufacture, and
production of synthetic fibers and cotton. California also commands a
huge percentage of the jobs, about 181,000 in various textile-related
industries, three times more than all of New England.
 The two most important supplies for men's and boys' shirt establishments
are knit fabrics and broad woven cloths. For most of the twentieth century,
knit and woven shirts were assembled from cut pieces of fabric according
to the "bundle system."
 Sewing a dress shirt requires anywhere from 20 to 40 operations under this
system. Each operation is the specialty of a certain sewing-machine
operator, who performs his or her single task on a large bundle of cut
pieces, reties the pieces in the bundle, and then sends them along to the
next operator.
 The industry's largest manufacturers report that department stores and
mass merchandisers are the biggest consumers of their products. In
addition, a number of firms are expanding sales through their own retail
divisions, especially factory stores at outlet malls.

8. Table 5 : U.S. Top States of Import
NAICS Codes
315211 (Men's and Boys' Cut and Sew Apparel Contractors)
315223 (Men's and Boys' Cut and Sew Shirt (except Work Shirt)
Manufacturing)
Industry Leaders
Discount stores, national chains, and department stores dominated
sales of men's and boy's shirts. Discount stores owned an 18.9 percent share
of the market with earnings of approximately $9.6 billion. Major chains
owned about an 18.7 share of the market with earnings of approximately
$9.5 billion.
Department stores owned a 17.7 percent share of the market, with
earnings of approximately $9.0 billion, but specialty chains such as Gap are
rapidly gaining ground. In 1997 specialty chains had a 10.6 market share,
with earnings of $5.4 billion, an increase of more than 17 percent.

9. Honduras Cotton T-shirt Knit Manufacturing Companies
Distribuciones, Distribuidora de Equipos, Tabush manufacture 100%
cotton knit t-shirts for men’s and boy’s to the following United States suppliers:
Wal-Mart, H&M, JC Penny, Target, Levi's, Lee, Target, K- Mart. They
specialize in brands that are imported into U.S. stores: Hanes, Fruit of the Loom,
Jockey, & BVD.
U.S. Manufacturing
American Apparel is a vertically integrated manufacturer, distributor
and retailer of non-branded basic fashion apparel based in Los Angeles,
California, USA.
By the end of 2009 it was operating 281 retail stores in 20 countries.
The company continues to run its wholesale business, and also operates an
online retail e-commerce website.
In contrast to most other US clothing manufacturers and retailers—
which tend to outsource production to countries with low labor costs—all
of American Apparel’s manufacturing operations are in the Los Angeles
metropolitan area. The company promotes the fact that its merchandise is
“made in the USA” and “sweatshop free”.
Wages are therefore much higher than the global average and, indeed, the
company claims to employ the highest paid apparel workers in the world.
Why Honduras?
Lack of brands and less value added production in China are
severe problems that the industry has to tackle with internally. Although the
industry is big in its size of exports, its growth could be mainly attributed to
quantitative growth of low-end products, the price of which is a major
means of competition.

10. Rising costs in labor, raw materials and energy are adding extra
burden on exporters. For example, China is now 20-30% higher than
Vietnam, Sri Lanka and Cambodia in labor costs, which undoubtedly
makes it less competitive.
Since the United States has been Latin America’s biggest partner
throughout much of the region’s history, and this trend continues today.
This includes Chile, Colombia, Guatemala, Venezuela, Honduras, and
Mexico.
In 2011 trade between the United States and Latin America topped
$800 billion, more than three times the region’s exchanges with China. It is
also growing faster than U.S. trade with nearly any other region in the
world—over 80 percent in the last decade.

12. COST TO EXPORT IN HONDURAS
The Cost to export (US dollar per container) in Honduras was last
reported at 1242 in 2011, according to a World Bank report published in
2012. Cost measures the fees levied on a 20-foot container in U.S. dollars.
All the fees associated with completing the procedures to export or
import the goods are included. These include costs for documents,
administrative fees for customs clearance and technical control, customs
broker fees, terminal handling charges and inland transport. The cost
measure does not include tariffs or trade taxes. Only official costs are
recorded.

13. Workforce
Occupational categories in the men's and boys' shirt industry fell
within four production-related classifications: cutting, sewing, finishing,
and miscellaneous departments.
Prices

14. Design & Printing

15. The cotton knit t-shirts that are imported from Honduras will be sent to HNOFG
Clothing located in the United States (Idaho) to avoid the labor costs and
production tax over seas.

16. Sources
Honduras Trade. OTEXA. N.p., n.d. Web.
International Market News, “Guatemala offers “fast-fashion” options for Asian investors”,
June 17, 2004
http://www.tdctrade.com/imn/04061703/clothing136.htm
International Trade Administration (2007). Data accessed via http://trade.gov/index.asp
International Trade Administration - US Department of Commerce, “Guide to the Caribbean
Basin Initiative: 2000 Edition”
http://www.trade.gov/media/publications/pdf/cbi2000.pdf
Enterprise Surveys, 2003
http://www.enterprisesurveys.org/ExploreEconomies/Default.aspx?economyid=86&year
Gereffi, Gary and Olga Memedovic (2003). “The Global Apparel Value Chain: What
Prospects for Upgrading by Developing Countries?,” via
www.inti.gov.ar/cadenasdevalor/
UNESCO, “Honduras General Profile,” Statistics in Brief
http://www.uis.unesco.org/profiles/EN/GEN/countryProfile_en.aspx?code=3400
United States Customs Service, What Every Member of the Trade Community Should Know
About: The U.S.-Caribbean Basin Trade Partnership Act
United States Department of Agriculture (2007). Data accessed via
http://www.ers.usda.gov/data/fibertextiletrade/
United States International Trade Commission (1998). “Textiles and Apparel: Assessment of
the Competitiveness of Certain Foreign Suppliers to the U.S. Market,” via
http://63.173.254.11/pub3671/main.html
"Cost to Export (US Dollar per Container) in Honduras." Cost to Export (US Dollar per
Container) in Honduras. N.p., n.d. Web. 11 Dec. 2012.