Stan Burton wandered the Guatemalan factory like a prospector probing for buried treasure.
His company, Columbia Sportswear, had long relied on plants in Asia to make its clothing, but that appeared increasingly precarious. A trade war undermined the benefits of using Chinese factories to keep Americans stocked with windbreakers and fleece pullovers. The disruptions of the pandemic had exposed the pitfalls of depending on container ships to move products across the Pacific.
As Columbia’s head of apparel manufacturing, Mr. Burton, 52, was responsible for diminishing the risks. So he was scouting factories in Central America to narrow the distance between the brand’s manufacturing operations and customers in the United States.
He visited Zuntex Apparel, a factory in Guatemala City that was already making modest quantities of Columbia’s hooded sweatshirts and button-down fishing shirts. Could it handle a significantly larger order?
When Mr. Burton reached the back of the cavernous plant, he gawked at an array of Italian-made machines capable of printing elaborate designs that could be pressed onto clothing.
“That’s a big boy setup,” Mr. Burton exclaimed. “There’s nothing we could ask for that they couldn’t do.”
Columbia’s reconnaissance trip to Central America reflects a refashioning of international trade as geopolitical forces spur multinational companies to reduce their dependence on faraway factories. It also attests to the lessons of the pandemic: After extraordinary product shortages, major brands are eager to make it easier to replenish their stocks.
The U.S. tariffs on a vast range of imports from China — imposed by President Donald J. Trump and continued by President Biden — have induced major American companies to shift production from Chinese factories. Startling increases in shipping prices during the pandemic prompted retail brands to explore moving more of their manufacturing closer to their largest markets.
Mexico has been a primary beneficiary, drawing investment from companies eager to manufacture in proximity to American customers. This year, Mexico overtook China as the largest American trading partner.
Central America appears well positioned to attract apparel makers. Under the terms of a trade deal, clothing made at factories in the region can be exported to the United States free of duty if the yarn is produced at American mills or within Central America.
Based in Portland, Ore., Columbia has in recent years leaned on factories in Vietnam and Bangladesh to supply American customers. Central America today makes up only 7 percent of its global production, a share that could double over the next three to five years.
The previous day, Mr. Burton and another Columbia executive, Jeff Tooze — a specialist in the minutiae of international trade deals — had visited a factory in El Salvador.
“We’re making a significant shift into this region,” Mr. Burton said. “We’re really repositioning from Asia.”
Some within the industry were doubtful that American brands’ interest in Central America would outlive memories of the traffic jams off container ports.
Over decades, the enterprise of making clothes had shifted to Asia — and especially to China — because of an unbeatable combination: industrial parks built with government money and hundreds of millions of workers eager for jobs even at rock-bottom wages. The executives running clothing brands might take a momentary interest in “supply chain resilience,” the thinking went, but their focus would inevitably return to cost.
“People tend to gravitate toward lower prices in Asia,” said Juan A. Sanchez, the chief executive of Zuntex, the factory courting Columbia. “Nobody gets fired for going to lower prices.”
How the model broke.
At 6-foot-5, with a raffish grin, Mr. Burton is a hulking and jovial presence. The arc of his career traces the pursuit of lower-priced additions to the American wardrobe.
Over three decades in manufacturing, he has supervised Nike factory operations in Thailand and Indonesia, and Under Armour production in China. Two years ago, he moved to Portland to join Columbia.
The brand was early to shift production from China to Vietnam. When Mr. Trump took office, unleashing his trade war against China, the company accelerated that move to avoid the new tariffs. But as hundreds of other businesses did the same, Vietnam’s ports and industrial zones grew congested.
“Everybody rushed in,” said Columbia’s general counsel, Peter Bragdon. “Capacity and costs became more challenging much more quickly.”
Then Covid 19 upended global shipping. By the summer of 2021, a business model centered on bridging the Pacific no longer seemed secure.
“It’s been something that the company historically hasn’t really worried about,” Columbia’s chief executive, Timothy Boyle, said that summer. “The logistics infrastructure was always something that was cheap and available.”
With that assumption suddenly perilous, the company prepared to move some production closer to the United States.
Columbia was not abandoning Asia. Rather, it was intent on limiting its vulnerability to another shock. That path led to Central America.
The biggest question was whether the region could produce enough fabric to supply local apparel factories.
In search of clarity, Mr. Burton and four other executives began their morning at a mill that made fabric for Zuntex.
Searching for an alternative.
The Texpasa mill sits 25 miles southwest of Guatemala City, in an industrial park carved into a thicket of jungle, and in view of an active volcano belching gray dust.
A joint venture between local investors and a North Carolina company, Texpasa was conceived to take advantage of the Central America Free Trade Agreement, which Congress enacted in 2005. It supplies fabric to regional apparel factories that export to the United States.
Inside a conference room, the Columbia executives absorbed a PowerPoint presentation promoting the factory’s plans for expansion. Below, 180 machines were laid out across the factory floor, capable of weaving and knitting yarn into fabric, dyeing it and treating it to yield the desired texture.
“We’re starting to see more and more in the region better types of fabric and yarns, creativeness of spinning that you see in Asia,” said Raul Lopez-Ibanez, the mill’s chief commercial officer. “We’re not there yet, but we’re getting there.”
He and the other Texpasa executives emphasized the benefits of accessibility to cotton producers in the United States — an alternative to suppliers in Asia.
Much of Asia’s cotton is harvested in Xinjiang, a region in western China where the ethnic minority Uyghurs suffer systemic oppression, prompting accusations of genocide from the United States. Congress banned products made with forced labor in China, intensifying the legal and reputational risks for apparel companies.
Mr. Burton was impressed by the expansion, but eager to accelerate the pace.
“You might have to speed up your timeline,” he told his Texpasa counterparts.
The clattering of machinery.
On the ride to Zuntex, the apparel factory, Mr. Burton mused over the implications of shifting production to Central America.
Making clothes in the region generally costs 5 to 10 percent more than in Vietnam, he estimated, but that was before taking into account the costs of shipping, to say nothing of the time required for delivery.
Moving a container of goods to the port of Seattle from Vietnam typically took about a month. The same cargo could be shipped there from Guatemala in a week. And that shorter duration would allow Columbia to hold less inventory at its American warehouses.
The shortages of the pandemic in part reflected how many companies had gone too far with so-called Just in Time production — essentially, making just enough product to satisfy demand. They had slashed inventories, shrinking warehouse space, while using the savings to gratify investors with cash dividends.
Moving production closer to customers tamed the risks of holding little inventory, because orders could be transported faster. Here was the element that could make Just in Time viable.
Inside the Zuntex factory, hundreds of workers — three-fourths of them women — hunkered over sewing machines, stitching fabric into sweatshirts and T-shirts. Others folded finished clothes into piles for packaging. The plant vibrated with the clattering of machinery.
Abel Navarrete wandered slowly through the building. Columbia’s vice president of sustainability and community impact, he was concerned with working conditions, a sensitive area for apparel brands that rely on labor in lower-income countries.
Reports from auditors looked solid, Mr. Navarette said, but he employed a more visceral gauge.
“Do people make eye contact with foreign visitors?” he asked. “They do.” Workers talked and joked together, he added — another positive sign.
Mr. Burton was impressed by the room for growth. The existing factory occupied about three acres of land, but Zuntex executives were readying plans to more than double that space.
“I’m seeing some of the best machines in the world here,” he said. “They have quite a lot of capabilities.”