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 Tianyuan story shows that the labor cost for each T-shirt in the Arkansas plant is unbeatable,” says Jae-Hee Chang, a researcher in advanced manufacturing at the International Labour Organization (ILO) in Geneva. The machines are part of a new generation of industrial robots that Chinese manufacturers like Tianyuan are using to overcome the constraints of higher wages and aging workers. As China’s labor force has shrunk over the past five years, employers have hiked wages more than 10 percent a year to lure better-educated, younger workers.
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.”
It took seven years for Softwear Automation, founded in 2007 by a group of engineers from Georgia Tech, to introduce its first sewbot, which is capable of making bathmats and towels. A $1.8 million grant from the Pentagon’s Defense Advanced Research Projects Agency funded the work. The T-shirt bots will produce one piece about every 26 seconds, Santora says.
Tianyuan’s Arkansas plant will be the first apparel production line for Softwear Automation. Setting up shop closer to a product’s intended market will help Tianyuan meet demand more quickly. “Fast fashion is transforming the traditional garment supply system,” says Xu Yingxin, vice president of the China National Textile & Apparel Council in Beijing. “The change on the consumption side has led to the need to be close to consumers.”
Arkansas officials spent about a year negotiating the deal with Tianyuan, according to Mike Preston, executive director of the Arkansas Economic Development Commission. He says the company, which declined to comment for this story, liked the centrality of the location. “About one-third of U.S. residents are within a day’s drive of Arkansas,” Preston says.
Another big draw: state and county incentives worth at least $3.2 million, according to the development commission. They include infrastructure assistance and money for training. Tianyuan also will receive as much as a 65 percent reduction on property taxes. The company will create 400 jobs in Little Rock, mostly for machine operators, Preston says.
Tianyuan isn’t the only Chinese company to operate in Arkansas. In May, Shandong Ruyi Technology Group Co., the owner of apparel brands Sandro and Maje, among others, announced plans to invest $410 million in an automated factory in Forrest City, where it will spin locally grown cotton into yarn. With America’s supply chain, infrastructure, consumer market, and skilled workforce, “the U.S. is undeniably an attractive production base if labor cost is taken out of the equation,” says the ILO’s Chang.
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. Bangladesh, Cambodia, Myanmar, and other countries will need to invest in technology, education, training, and infrastructure, says David Loevinger, an analyst at TCW Group Inc. in Los Angeles and a former China specialist at the U.S. Department of the Treasury. “Some of Asia’s economic laggards will have to find a different path to prosperity,” he says. —With Yinan Zhao