Leather Goods for theUnited States Market:

Training for West African Manufacturers

Prepared by Margaret Bishop, Deputy Director

West Africa Trade HubAba, NIGERIASeptember 2004

Leather Goods for the US Market

• Footwear• Handbags, belts, wallets,

gloves, luggage, personal accessories

• Clothing• Sports equipment (balls,

baseball mitts,…)• Home & office accessories• Furniture upholstery

Photos by Margaret Bishop, WATH

Regulations

Many leather goods are eligible for duty-free, quota-free entry

into the United States under AGOA, the African Growth and

Opportunities Act

AGOA

The Objectives of AGOA

to promote:- trade and investments

(US and sub – Saharan African)- economic development and reforms

in sub – Saharan Africa

Some regulations still do apply. For example…..Rules of Origin

Rules of Origin have been developed by the WTO for determining the country of production or origin of commodities for the purposes of tariff treatment.

Under AGOA, the article must be the growth, product, or manufacture of the beneficiary sub-Saharan African country (BC). Made entirely from materials originating in a BC or substantially transformed into a new & different article of commerce.- 35% value – content requirement- Double substantial transformation of foreign

materials

What Is Illegal Transshipment?What Is Illegal Transshipment?

Illegal textile transshipment occurs when a false declaration or information is given in order to circumvent existing trade laws for the purpose of avoiding quotas, embargoes or prohibitions or to obtain preferential duty treatment.

Slide from US Customs & Border Patrol presentation

Why Is Illegal Transshipment A Why Is Illegal Transshipment A Problem?Problem?

•• Violates Trade AgreementsViolates Trade Agreements

•• Adversely Impacts the Country through which the Adversely Impacts the Country through which the Transshipment OccursTransshipment Occurs

•• Adversely Impacts the Economy of the Receiving Adversely Impacts the Economy of the Receiving CountryCountry

•• Gives an Unfair Competitive Edge to the ViolatorGives an Unfair Competitive Edge to the Violator

Slide from US Customs & Border Patrol presentation

What constitutes“Imported Directly”

• Direct shipment to the US from sub – Saharan benificiary country(s)

or• Shipment to the US from sub – Saharan beneficiary

country(s) with goods passing through non –beneficiary sub – Saharan country(s) only if the goods do not enter into commerce of any non –beneficiary country.

Your best protection

• Know (and follow) the law• Know your suppliers • Document your raw materials

purchases / keep a paper trail of all raw materials purchases, production schedules, payroll.

Artwork from US Customs and Border PatrolBorder Enforcement presentation

Some regulations still do apply. For example…..endangered species

• Hides or products made from hides of endangered animals are not allowed into the United States. These include crocodiles, alligators, caiman, certain lizards and iguana, most boa, West African ostrich, and other animals. DNA testing may be used by US authorities to verify species.

Clip art from www.etc.usf.edu/clipart

Some regulations still do apply. For example…..hazardous chemicals

Leather must be tanned according to certain industry standards; some

commonly used processing chemicals are banned. Products

will be tested for presence of these chemicals.

Some regulations still do apply. For example…..animal health

• Some leather products may be banned if outbreaks of certain animal diseases such as hoof and mouth disease occur in the region.

Some regulations still do apply. For example…..intellectual property rights

• Intellectual property rights (e.g. trademarks) must be respected. US law prohibits the importation of counterfeit goods such as fake Louis Vuitton luggage or fake Gucci handbags.

Some regulations still do apply. Research the oversight agencies…

• Several different US Government agencies have jurisdiction over leather goods imported into or sold in the United States. They include…..

Quality and the US Market

US Retailers tell their customers……

• “Guaranteed. You Have Our Word™ Our products are guaranteed to give 100% satisfaction in every way. Return anything purchased from us at any time if it proves otherwise. We d not want you to have anything from L.L.Bean that is not completely satisfactory.” L.L.Bean

• “If you’re not completely satisfied with your oldnavy.com purchase, send it back to us. We’ll be happy to make an exchange or issue you a refund for the original price paid when the item is returned to us by the “Return by” date. The “Return by” date is usually 90 days after your order date.” OLD NAVY

• “Our Guarantee. Every item we sell will give complete satisfaction or you may return it for a full refund. Our Creed. To give you such outstanding quality, value, service and guarantee that we may be worthy of your high esteem.”Eddie Bauer

For you, this means…….1. Only manufacturers offering superior quality

will be selected.2. Only suppliers delivering consistent quality

according to agreed-upon standards will be retained.

3. Merchandise not meeting agreed-upon standards will be returned at the supplier’s expense.

4. If some merchandise does not comply, allmerchandise may be returned, at the supplier’s expense.

How do buyers define quality?

Conformity or adherence to established specifications or standards

How do buyers describe quality?

Product conforms to specifications

Yes

No

“Off quality”

“First quality”

“Seconds”

“Defective”

How do buyers evaluate quality?

1. Testing

2. Inspection

3. Comparison to product specification

What is a product specification?

A product specification is a detailed description of the product.

A product “spec sheet”is the document that

details all aspects of an individual product

Product specifications describe:Materials (upper, shell, lining, supplemental materials)

Thread (type, color)Stitch/es (type, length)

Seams (allowance, finish)Findings (buttons, buckles, zippers, trim)

Decorative finishes (embroidery, top-stitching, etc.) Line drawing of the article

A detailed product specification sheet helps a manufacturer to:

1. Accurately determine the manufacturing cost of a particular product so it can be priced profitably

2. Easily communicate the construction steps for making each product

3. Replicate exactly each product according to the order

4. Determine the quality status of each unit before a product leaves the manufacturer’s facility

Quality Assurance / Quality Control• What is QA/QC?

– QA stands for quality assurance– QC stands for quality control

• What’s the difference?– QA is a proactive system of building first quality into a product

through careful selection of raw materials, incorporation of systems designed to prevent mistakes, controls to catch errors immediately, and procedures to correct problems when and where they arise.

– QC is a system of inspection and testing designed to find mistakes after they occur.

• Why are they important?– US consumers and therefore commercial buyers expects first quality

(and only first quality). They will return anything found to be defective or unsatisfactory, at the seller’s expense. This goes all the way back to the producer!

Commonly required tests include:

• Shade• Colorfastness• Presence of banned or hazardous chemicals• Composition / materials content (type & relative

percentage)• Durability• Performance (e.g. do steel toes withstand

force?….)

Testing

Accurate, reliable testing requires:

1. Uniform test conditions (temperature & humidity)

2. Uniform sample preparation

3. Good lighting4. Careful adherence to

standard test methodsPhotos from www.jcpenney.com

Color AnalysisColor problems are among the most common for apparel manufacturers. Fabrics and trim used for each component of a single garment must match or coordinate within carefully specified shade variation limits. Additionally, each garment within an order or series of repeat orders must match exactly or within carefully defined shade variation limits.Color can be analyzed (in most cases) by machine or by visual examination under controlled lighting conditions by properly tested and trained individuals.

Photos from www.jcpenney.com

Abrasion Resistance

Abrasion resistance is determined by applying an abrasive force to a fabric surface in a uniform manner, and measuring the effect.

Abrasion testing is particularly important for denim clothing, work clothes, and children’s play clothes.

Photos by Margaret Bishop, WATH

Colorfastness• Colorfastness is the retention of color by a dyed or

printed fabric or leather under adverse conditions. It is the opposite of fading.

• Colorfastness may be tested under exposure to:– Light– Dry cleaning– Perspiration.

• Test methods vary for each of the type of exposure under evaluation.

CrockingCrocking is the undesirable transference

of color from a dyed fabric to another surface, such as a piece of clothing, car seat, upholstered chair, etc.

Crocking is tested by rubbing plain white cotton fabric several times against the fabric being tested.

A mechanical testing device allows for standard testing by regulating the pressure applied during the rubbing motion.

The color transferred to the cotton swatch is compared to a standard chart and assigned a numerical value.

Photos by Margaret Bishop, WATH

Chemical testing may be conducted to check for presence of banned processing chemicals or dyes. DNA testing may be conducted to check for components made from endangered species.

Chemical Analysis

Photo from www.jcpenney.com

Composition

• US Customs agents and many buyers may take shoes apart to determine each material used in the shoe, and the relative percentages of each.

Photos by Margaret Bishop, WATH

Product Performance - examples

• Shoes may be subjected to a flexing test to see if they come apart with normal wear.

• Luggage may be subjected to drop tests to determine if they stand up to rough handling.

Photos by Margaret Bishop, WATH

A strategy for implementing quality testing

1. Require routine testing of fabrics and findings by your suppliers. Write this into your contracts, including test methods to be used and minimum acceptable standards.

2. Establish limited appropriate testing facilities and procedures in – house.

3. Submit samples to an outside testing lab for complex testing or to meet supplier requirements for verifiable testing.

Workplace Conditions / Environmental Concerns

Why are Workplace Conditions Important?

1. Moral imperative2. Good business practice

3. The law requires it 4. The market demands it

Moral Imperative

• All workers have the right to a safe and clean working environment and to timely payment of fair wages.

Photo from www.fairlabor.org

Good workplace conditions make good business sense

• Fewer injuries, reduced absenteeism or productivity losses

• Less loss or destruction of property• Lower insurance rates

• Higher morale • Higher productivity

• Easier recruitment, higher worker retention• Gain, retention of desirable buyers

• Greater profitability

The law requires it

• Most countries have labor laws and / or laws governing minimum working age, wages and working conditions

• US Customs regulations prohibit import of goods made by forced labor

Good workplace conditions include:

• A clean, dry, well-ventilated workplace free of fire and other safety hazards

• Clearly marked, easily accessed emergency exits at opposing ends of each work floor and that remain unlocked at all times

• Multiple fire extinguishers easily accesssable in an emergency• Drive belt guards, chain guards, electrical cords in good, undamaged

condition. No loose wires or overloaded circuit boxes or extension cords• No child, forced, or indentured workers• Provision of appropriate equipment and materials for safe work

performance• Regularly scheduled on-time payment of fair wages, including any over-

time or supplemental wages and benefits mandated by labor law• Clean toilets, hygienic break areas• Freedom of association, including allowing workers to join labor unions

at/of their choice• Environmentally sound disposal of all wastes (industrial and human)

Selling to the US Market

Global Competition

• Competition for the US market in leather goods comes from Turkey, Mexico, China, and many other countries.

Communication

• Must generally be in English• E – mail is the preferred method

by US buyers today• Confirm receipt of messages• Maintain contact• Business cards – invest in the best

quality and a large quantity

For a Competitive Price….

• Manage your costs– Assembly lines

– Well – designed workplace– time and motion studies

– Automation

• Target niche markets

• Produce unique products

Sales• Large buyers require vendor qualification (0 to 18 months to be

qualified)– Production capacity– Financial stability– Codes of Conduct

• Communicate the price – In US dollars, F.O.B.(state the location)– Period of validity (at least 6 months) – give specific expiration date– Payment conditions (due date, applicable discounts, forms of

payment accepted, deposits required

• State delivery terms clearly (mode of transport, dates)

Delivery

• Deliver the products on timeexactly as ordered!

• If you cannot meet your promised deliverynotify the client, in advance, & propose an

alternative

• Follow - up

• Maintain contact

Trade Shows: a plan for success

1. Develop your strategy2. Determine your budget3. Establish your objectives4. Research the options5. Visit your selected show first6. Plan and prepare7. Participate8. Follow-up

Trade Shows: a selection• Fashion Coterie (www.enkshows.com)• Accessorie Circuit (enkshows)• AccessoriesTheShow

(www.accessoriestheshow.com)• Los Angeles Spring Market, Los Angeles

Summer Market (www.californiamarketcenter.com)

• MAGIC (www.magiconline.com)• Action Girl (www.actiongirl.com)• Action Sports Retailer ASR (www.asrbiz.com)• Western Apparel & Tack Show

(www.dallasmarket.com)

Additional Information

Sources of additional informationCategory Contact Website

US customs regulations US Customs and Border Patrol www.cbp.gov US Dept. of Agriculture Animal & Plant Health

Inspection Service (APHIS) for animal products including hides

www.aphis.usda.gov

Endangered species Convention on International Trade in Endangered Species (CITES)

www.international.fws.gov, www.cites.org

American Society of Testing and Materials (ASTM)

www.astm.org

American Leather Chemists Association www.leatherchemists.org Intertek Testing Service www.intertek-labtest.com SGS www.sgs.com

Quality control test methods, equipment, supplies, third party testing

US Customs and Border Patrol www.cbp.gov American Apparel and Footwear Assoc. www.apparelandfootwear.org Boot & Shoe Travelers www.bwsr.com Fashion Footwear Association of America www.ffany.org International Council of Hides, Skins, and Leather Traders Association

www.ichslta.org

Leather Apparel Association info@leatherassociation.com Leather Industries of America www.leatherusa.com Shoe Retailers League 275 Madison Avenue, New York,

NY 10016 USA telephone: 1.212.889.7920

Trade Associations

Travel Goods Association www.travel-goods.org Training Leather Research Laboratory (Univ. of Cincinnati) www.leatherusa.org