Reply #6: Good Question

[togiak]

I used to work down in the DR overseeing the manufacture of apparel for the US market. So hopefully I can help with a good answer.

First, the sewing itself is usually a relatively small component of overall cost. The piece goods themselves have a much greater % of the cost of a garment than the sewing. Cost of fabric doesn't vary from country to country like the cost of labor does.

Second, most of the large apparel firms outsource product to independent contractors. While these contractors may only pay their employees $1 per hour (including benefits), they bill their work out at a much higher rate. For example, we were based in the Dominican Republic and we paid our employees around $1.5 per hour (including benefits). We billed out, on the other hand, $6.00 per hour for our work.

Third, transportation costs and tariff costs (when they apply) will also raise the costs of outsourcing overseas.

So when it is all said and done, the cost difference of doing it locally vs overseas isn't a great as it would seem at first glance.

That difference, however, does usually end up as profit for the company.