With the strained relationship between the U.S. and China hitting its nadir, textile and apparel importers are increasingly testing the waters in other sourcing locales. The nearshoring exploration has persisted for several years, with American denim brands and mills turning to Mexico with hopes that the synergies between the two countries will result in a long-lasting, symbiotic sourcing partnership.
Greensboro, N.C.-headquartered Cone Denim is betting on that future. The 130-year-old institution, which closed its legendary White Oak mill in 2017, has been operating in Parras and Yecapixtla, Mexico since the mid 1990s. As the appetite for Western sourcing grows, the company is “well-positioned to meet demand in this hemisphere,” president Steve Maggard believes.
“We see interest in nearshoring as brands want to leverage being close to the U.S. retail market to lower their working capital,” he told Rivet. “With the cost of cash being higher, there are real benefits in nearshoring for brands as they focus on keeping their inventory down.”
Proximity to the U.S. also gives domestic brands the ability to defer certain design decisions until later in the buying cycle, from choosing washes to size runs. “There are also benefits with lower transportation costs and a reduced carbon footprint,” the executive said.
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Even throughout this period of muted demand, Cone has seen rising interest in “any fabric attributes that can tell a documentable, sustainable story.” Circularity, recyclability, recycled content and more sustainable fibers have become high priorities for clients, Maggard said.
“For example, we’re working with denim brands requesting up to 30 percent recycled content in fabric construction,” he added. “This demand was one reason we established our own supply chain for certified recycled cotton in Mexico.” While Cone’s Mexico mills were already Recycled Claim Standard (RCS) certified, the distinction “allows Cone Denim to provide our customers with third-party verification of recycled content in our denim fabrics.”
The firm continues to invest in new technologies and processes as it aims to hit sustainability targets. Over the past five years, Cone has funneled $13 million into the installation of new equipment that reduces resource use, helping it to shrink the environmental footprint of its denim manufacturing operations.
“Our Zero Liquid Discharge wastewater treatment system in Parras, Mexico, plays a key role in reducing our water footprint by saving up to 100 million gallons of water annually,” Maggard explained. Meanwhile, a customized ultrafiltration and reverse osmosis system recycles the wastewater at the facility and treats 11,000 gallons per hour. “The recovered water is recycled back into the manufacturing process and eliminates wastewater being discharged into the environment,” he said. Currently, 33 percent of the firm’s overall global denim production is made with recycled water filtered through the state-of-the-art system.
The group employs Jeanologia’s Ozone finishing process at its Mexico mills to slash water usage. The eco-efficient alternative to traditional finishing techniques reportedly uses 83 percent less H2O, 39 percent fewer chemical additives, and 14 percent less energy.
“We’ve also installed a blend line at Cone Denim Parras in Mexico,” Maggard said, noting that it allows Cone to combine up to four different types of fibers, from hemp to Tencel, recycled polyester, recycled cotton, organic cotton and other inputs, processing the fiber mix internally. “We can offer more sustainable solutions with lower minimums and shorter lead times to Cone Denim customers because of this technology,” he added.
Between its two Mexico mills, Cone has the capacity to produce 60 million yards of denim each year. Macroeconomics and inflation have “resulted in the industry experiencing some softness,” but Maggard said he believes “things are picking up as brands work through their inventories.”
“While business is not as strong as we want, we are seeing demand return,” he added. “We continue to make strategic investments in this hemisphere and will be ready when the market fully recovers.”
Healthy Outlook
“Our customer base is growing and the health of our business in the region is expanding,” said Alejandro Arias, Star Fades International (SFI) vice president of sourcing for Central America.
Arias, who joined the company last June, opened the company’s first office in Guatemala City as SFI doubles down on Western Hemisphere production. “Customers understand the model better than when we first began exploring production in Mexico,” he said of the nearshoring process. “They understand the benefits of the system and, as a result, the orders are larger.”
SFI has formed partnerships in Mexico and added dedicated staff in the country in recent seasons, and has expanded to Guatemala in order to strengthen its offering in the region. SFI’s original operations in Los Angeles serve as the “hub for our growing nearshoring business,” Arias said.
“Expanding to Mexico and Central America has helped us diversify our portfolio,” SFI executive vice president of global sales and strategy Sergio Turbay added. The company’s operations in Mexico and Guatemala have become a proving ground for innovation. “We can test new ideas in the region that we can later adopt elsewhere,” he said. “That helps our business and it helps our customers’ businesses.”
With greater speed-to-market, SFI is also able to explore different sales channels and business models. “With production centers in the Western Hemisphere, customers can delay decisions until the moment of production to be able to react to sales data,” Turbay said.
Those capabilities have attracted a “larger breadth” of potential clients spanning premium brands and mass retail. “It gives us a global presence as now we have multiple models, like the chase model, and multiple countries of origin,” he added. “It gives us an edge.”
Arias said brands have shown a greater degree of interest in fashion products, including “more-complex silhouettes like jackets and dresses,” which can be “a challenge in the region,” which is well-versed in cotton staples. In response to the burgeoning demand, SFI is working to identify factories with the capabilities to produce such products and explore non-denim categories like knits. “We’re also looking into products our customers are missing, such as women’s ready-to-wear and women’s fashion knits,” he added. “Those are opportunities.”
The denim manufacturer is also working to develop a regional supply chain in the Americas, complementing its Mexico production with its L.A. laundry. “We’re looking to leverage our expertise in L.A. to offer garment-dyed knits or graphics,” Arias said.
Addressing Challenges
Despite feeling bullish about the possibilities, Turbay maintains that “Mexico is a challenging environment” due to limited capacity for quality production. “Trying to do it yourself is not easy without a powerful vendor-sourcing model like ours,” he said, noting that the firm has worked hard to make inroads with trustworthy partners.
According to Turbay, microeconomic factors can affect the quality and diversity of the product made in Mexico. “Of course, there are factories that are quite capable of producing very innovative products,” he said. “But you need a combination of the right factory, the right capacity, the right turn time and an understanding of the right requirements to be a value proposition for all partners,” including the supplier, the brand clients and SFI.
What’s more, not all factories in Mexico and Guatemala are able to produce at the standards of non-local brands, “and not all can meet the sustainability requirements our customers expect,” Turbay said. SFI is apprised of its customers’ environmental goals and is invested in helping its partners in Mexico get up to speed. “We make sure to elevate those factories,” he added. “We help transform those factories into factories of the future and we help them grow.”
It’s an effort the company plans to move forward with over the coming years, Arias said. “We continue to invest in the business—both in personnel and knowledge.” Manpower has been SFI’s largest investment as it works to expand its offices in Mexico and Guatemala with local hires. “We are very committed to the region and will continue to expand our footprint on ground,” he said. “We see so much potential in the region.”
Brands, too, are cottoning onto the benefits of sourcing from Mexico. Four-year-old L.A. women’s denim label Etica has been doing business in the country since its inception, launching with a mission to reduce environmental impact and promote greater supply chain ethics. The brand uses Better Cotton Initiative (BCI) cotton and has earned certifications that include Oeko-Tex Standard 100, WRAP (Worldwide Responsible Accredited Production) and Cradle to Cradle.
“Mexico is where our brand story began,” creative director Michelle Marsh told Rivet. Etica’s co-founder, Agustin Ramirez, was born and raised in Puebla, a bustling city south of Mexico City that boasts “a European flare and rich culture.” The Puebla area produces products like Talavera pottery, agricultural goods and textiles, specializing in denim. Ramirez opened his first factory, Hera Apparel in the city 25 years ago.
Generally, “Mexico has a rich heritage of craftsmanship, with generations of manufacturing expertise,” Marsh said. Etica continues to produce at Hera, which uses a small-batch production system and advanced eco-tech. Jeanologia’s E-Flow washing technology converts air into nanobubble vapor, saving more than 1,000 gallons of water and cutting energy use with each load. The vertical manufacturer also employs Jeanologia’s laser technology to create authentic distressing effects, eschewing standard chemicals, and its G2 Atmos Ozone to save water during washing.
The factory’s wash house exclusively employs Bluesign-certified low-impact alternatives to commonly used agents like potassium permaganate, caustic soda and bleach, as well as plant-based softeners, neutral waterless enzymes, natural dyes, and faux stones that are recycled for industrial use.
According to Marsh, Mexican culture is “grounded in a reverence for nature, and a love for the planet”—values reflected by its producers. “The manufacturing community is passionate about sustainability, about taking care of their home, and building a better world for future generations,” she said. “Our mills are constantly innovating, finding ways to create newness without waste, and without pollution.”
While in its relative infancy, Etica is already getting the industry’s attention for its clean denim production and ethical labor standards—a boon considering the wealth of environmentally-focused denim labels that call L.A. home. Its secret sauce may be its commitment to Mexico sourcing—a differentiator that Marsh said represents “the heart of the Etica brand.”