A Chinese T-shirt company is setting up shop in Arkansas, lured by U.S. sewbots and lower production costs. It will cost about 33 cents to produce a shirt.
Please consider China Snaps Up America’s Cheap Robot Labor.
“Made in America” will soon grace the labels of T-shirts produced by a Chinese company in Little Rock.
By early 2018, Tianyuan Garments Co., based in the Suzhou Industrial Park in eastern China, will unveil a $20 million factory staffed by about 330 robots from Atlanta-based Softwear Automation Inc. The botmaker and garment company estimate the factory will stitch about 23 million T-shirts a year. The cost per shirt, according to Pete Santora, Softwear’s chief commercial officer: 33¢.
“Around the world, even the cheapest labor market can’t compete with us,” Tang Xinhong, the chairman of Tianyuan, told the China Daily about the factory in July. The company, one of the biggest apparel makers in China, supplies Adidas, Armani, Reebok, and other major brands.
The garment industry has been slower to automate than others, such as automobiles and electronics. Developing a robot that can match the dexterity of a human hand to manipulate and stitch fabric is an expensive proposition, Santora says. Stitching a dress shirt with a breast pocket requires about 78 separate steps. Tricky, but such a bot is coming, says the chief executive officer of Softwear Automation, Palaniswamy Rajan: “We will roll that out within the next five years.”
Still, many garment makers are reluctant to move away from China. Over the past two decades, the industry has built up an extensive supply network for yarns, dyes, fasteners, zippers, and trimmings. China is still the world’s largest exporter of garments, with an annual value of $170 billion, says Xu of the apparel council.
One T-shirt factory isn’t going to change that. But after tariffs, duties, and shipping costs are factored in, the case for shifting production to the U.S. from emerging markets is a compelling one, Santora says. Meanwhile, as robots become smarter and market access becomes more important, poorer nations that counted on manufacturing to climb out of poverty—as Japan, Korea, and China did in the decades after World War II—will have to offer more than cheap labor.
The goal is to produce 23 million t-shirts at 33 cents each, about one shirt every 26 seconds.
It’s rather difficult to compete against 33 cents when shipping and transportation costs are rolled in.
The factory will create 400 human jobs.
Deflationary productivity increases are just around the corner in manufacturing and driverless transportation. The Fed will not like them when they happen.
Mike “Mish” Shedlock
Chinese taking advantage of cheap American (robot) labor? What irony! Will they export to China, Bangladesh, Vietnam? No worry about Trump creating import tariffs. But will the Chinese company pay any US income tax? Probably not, only the workers will.
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Building a factory may end up costing less in the long run since ocean freight is no longer part of the equation.
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They probably have tax incentives that make the cost of building the factory zero.
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Ryan just helped to get Foxconn to build a huge factory in his district. The tax incentives are said to be quite high, but who really knows?
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Just a matter of time before Walmart and Target have “house” brands of T-shirts (and/or Hanes / Fruit Loom) made by robots in Walmart distribution centers…
Custom shirt, made to order for 25 cents, no inventory costs (for shirts), no worry that inventory will go out of style or that they order too many of whichever size — everything is made on demand and shipped to store or UPS direct to consumer.
Lots of mail order companies — either make their own or “outsource” to this Arkansas / Chinese company.
Take Bernie’s $15/hr idea and send both him and it to Venezuela where it belongs
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23 million shirts * $.33/shirt is about $8mill a year…
$8mill/year / 400 human workers = $20,000/worker/year
Assuming NO other costs…………… And recognizing employee costs include all benefits…
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Not really sure why you are dividing $8 mil by the number of employees. The 33¢ per shirt cost is the variable manufacturing cost, not the wholesale cost charged by the manufacturer. Add in the overhead from running the facility, shipping, and per style setup, and I would expect that 33¢ to end up significantly higher. Add in a little profit, and I am thinking the costs to retailers get much closer to existing suppliers.
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If any of this has anything to do with reality, I’m sure you are right.
I was just pointing out the absurdity of reporting “It will cost about 33 cents to produce a shirt,” alongside the other reported numbers. While in reality, as you state,he reported 33 cents are but one of the costs involved in actually producing a shirt.
The specific share that goes into the 33 cents, may even be well defined and understood enough to represent a meaningful (and impressive??) number to those intimately familiar with the garment business. But for general readers, headline reporting costs that way, with no added explanation, serves no other purpose than blowing hype.
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Looked up and @ 8oz cotton in a tshirt, 70cents a pound so 35 cents raw cotton, hence 35 cents in a shirt…. another source
https://qph.ec.quoracdn.net/main-qimg-a511c6d2d54602002a32bc159df65968-c
So maybe they are talking workmanship?
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Not sure what they are doing. But employing 400 people on $8mill revenue a year, means it ain’t no 400 American full time people, no matter where the factory is located.
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33cents COST per shirt, not revenue.
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In competitive markets, like bulk t-shirts, the difference isn’t all that great.
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Mish,
I was driving home earlier today and passed a business park when I noticed something moving around on its lawn. A quick double-take revealed a robotic lawn mower like the ones in this article:
https://www.digitaltrends.com/cool-tech/best-robot-lawnmowers/
If illegal aliens only do the jobs Americans don’t want, who needs the aliens once robo-mowers are ubiquitous?
Love your work,
MJV
Elgin, IL
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Can’t wait til they offer a lawnmower attachment for Roomba’s.
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“You can have any color T-shirt as long as it’s black”. Maybe Trump’s jawboning is paying off. There will be ancillary jobs like robot repair, servicing and programming . Is our workforce
trained for such jobs ? A step in the right direction . The old manufacturing paradigm of cheap human labor/ exporting products/centralization is being replaced by decentralized roboticly produced goods . Oh and we also produce cotton in the good old USA and have the amazon supply chain at our disposal . now we need to bring the appliance manufacturing back .
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Your maths off. I don’t know the answer but I can tell by looking it’s more than 1 in 26 seconds. No offense lol.
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Assuming round-the-clock and no outages, it’s one shirt per 1.37 seconds.
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The 1.37 seconds of machine time is impressive, but the 33 cents…unbelievable.
It’s what we needed: MORE T-shirts…so hard to find, you know…
and CHEAPER T-shirts…I mean, who can afford them now?
Is the city of Little Rock supplying the 400 humans?
Do they just stand around and watch the robots work?
At least it will be good for the economy.
Not so much for the workers.
Never is…
See “wages & salaries” in the chart “Percentage of earnings from t-shirt sales in 2010”
https://www.statista.com/statistics/271981/percentage-of-earnings-from-t-shirt-sales/
Hint: it’s that tiny sliver on the far right label 1%.
Q: is BenFranklinWasRight still around with another name or did you guys run him off long ago?
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Will adidas still charge $30 for tshirts?
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Yes and the NFL shop will still charge $60.
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American liberal arts graduates are qualified to clean toilets for the Chinese managers and engineers.
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So the communist uprising will be against our communist overlords?
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We’ve gone from 90% of the working age population working on farms in 1880 to 3% today. We are moving from 40% of people working in manufacturing in 1950 to to less than 20% today, and we are heading towards 3% there as well. Creative destruction. Countries that embrace this will be the winners, while those who fight it will be the losers.
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Nobody making money, who is going to be the consumer?
Touring a new highly-automated factory, Henry Ford II asked the auto workers president “Walter, how are you going to get those robots to pay your union dues?”
Reuther replied: “Henry, how are you going to get them to buy your cars?”
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Half the population will be in the porn industry. It’s not a question of it, but when.
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“Nobody making money, who is going to be the consumer?”
That is what many people have been arguing (wrongly) for over a hundred years, yet here we are, close to full employment, with many high-skilled jobs actually sitting empty. Free market Capitalism actually works pretty well, doesn’t it? Don’t fight it. Embrace it.
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Is the nuclear bomb more technology that advanced “creative destruction”?
Creative destruction should not rely on destroying people to advance other people.
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The military in the US is indeed a destructive force. It wastes a huge share of the US budget on non-productive things (bombs, bullets, etc.) that only cause misery all over the world. That is not creative destruction; its just destruction.
Just like how Americans waste a lot of resources on another non-productive item; guns.
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I just hope china does not use child robot labor. Only adult robots should be used.
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The click farms in India (that account for a huge percentage of the advertising clicks and most of the “likes” on faceplant) are increasingly automated. Advertising fraud is done cheaper by “software agents” that can simulate hundreds of mouse clicks from a single computer — where as human clickers can only click on a single ad (and neither can read English or purchase the products being advertised).
Not sure if they are child software agents or adult 🙂 Just know that the CEOs paying for the ads are gonna be p!ssed when they finally connect the dots.
P&G (one of the largest advertisers in the USA) connected the dots earlier this year. They are usually on the leading edge of advertising trends:
https://www.wsj.com/articles/p-g-cuts-more-than-100-million-in-largely-ineffective-digital-ads-1501191104
As the other companies catch up…. down go the FAANG stocks (the three that depend on advertising anyway)
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The unions are going to have a tough time “organizing” the robot work force, and an even tougher time trying to get the robots to pay dues.
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I hoped the robotic revolution would start from the top. Can the political class be replaced by robots? For example, every budget or financial decision should be verified by a computer program, and should be published. The political class should be required to provide a deep justification whenever they overrule the computer.
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“Stitching a dress shirt with a breast pocket requires about 78 separate steps.”
I can ruin about one per week spilling coffee as I try to drive in rush hour traffic. Thank goodness they will only fetch about $2.00. With my savings I can invest in a SDV and finally enjoy my commute (and coffee) for a change.
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I bet this blog is also highly automated: No clerks shuffling papers, no editors, no fact checkers, no mail delivery people employed, etc. Instead everything is highly automated and done robotically via software, routers, microprocessors, etc.
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I bet this blog is also highly automated: No clerks shuffling papers, no editors, no fact checkers, no mail delivery people employed, etc. Instead, everything is highly automated and done robotically via software, routers, microprocessors, etc.
Yes it is
Mish does not even exist
He is a robot
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Just passed the Turing test!
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I don’t know. What concerns me are all those tons and tons of cheap clothes thrown away in landfills. I fear this throw-away society we live in is going to harm our kids and grandkids’ futures. All the water used in the production of cotton is another thing. Really, how much cheap stuff/clothing do we need anyway?
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Is that what happens to all the stuff my wife gives away to Am vets, Purple heart, etc… ? I always suspected it.
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There should be a burgeoning field of entrepreneurs using the technology to not only undercut the big players, but also designing and creating new clothing and purchasing models. “On demand” custom clothing, cut to your exact size. Not 33¢ mass produced one-size-fits-none, but $5.00 all-size-fits-one clothing stores in every town. Your local tailor should have one. You should have a local tailor. Today it’s not worth it to him to sell you a t-shirt, but if he could feed your measurements into a machine that can crank one out in a few minutes “come back after lunch and I’ll have 10 ready for you,” why not make the investment in the equipment. And then he has your measurements on file, so he can upsell you on better clothing or fabric down the road.
But then again, who’s going to take on that risk? Much safer to just buy government debt or Apple stock. And the “wise leaders” in Jackson Hole are wondering why small business are dying.
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Welcome to “free trade”. Subsidies are everywhere and can be very destructive of a nation’s markets if they end up on the wrong side of one. Even Germany subsidises its auto industry. The US subsidises corn exports and they destroy the target nation’s agricultural economy. So Venezuela and Mexico have zero to be thankful for. They should have seen the USA coming
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When can we automate CEO’s and save all that cost for stockholders?
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It is great to that some manufacturing can be performed competitively in the US. It should also be noted that the economic benefits of a factory go well beyond the employees directly involved in production, for example utilities (power, water, etc.), input materials, packaging, support services, etc. will be required and much more likely to be provided by local/US sources when the factory is in the US.
It is a little disappointing that it is a company from China doing it. Seems a little strange that US companies cannot seem to do it but Chinese companies can?
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Perfect example of the seen versus the unseen
http://www.maddogslair.com/blog/a-perfect-example-of-the-seen-versus-the-unseen
We can see the total number of jobs this automation will replace, and the total number of employees the plant will retain, which is much lower than a non-automated facility. What we cannot see is how this cost savings and release of labor will result in other unseen jobs. Many of these jobs may not even exist today. Just as factory jobs did not initially exist as tractors, combines and other mechanical devices released farmers from labor on the land so today’s automation will eliminate jobs but we will not be able to see the jobs which will come in replacement.
The pessimists believe no jobs will replace these lost jobs. Why this would happen for the first time in human history not one of them can explain, but they believe this fervently.
Mark Sherman
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