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Reopening NAFTA could devastate apparel industry, says Winnipeg manufacturer

October 29, 2017 7:21 PM
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Reopening NAFTA could devastate apparel industry, says Winnipeg manufacturer

'It will change the playing field,' says Western Glove Works president Bob Silver

A Winnipeg-based garment manufacturer who saw his Canadian workforce shrink from 1,200 to 100 after the North American Free Trade Agreement went into effect says the best the country's apparel sector can hope for out of the renegotiated agreement is to keep the status quo — and anything less could be devastating to the industry.

Bob Silver, president of Western Glove Works — the parent company for Silver and Jag Jeans — says the terms of the first NAFTA agreement meant he could no longer stay competitive making jeans and other apparel in Canada. So most of its manufacturing was shipped to countries like China, Bangladesh, and Cambodia.

Those first negotiations saw the U.S. negotiate country of origin rules that meant only garments made from domestic fabric — made in the United States, Canada, or Mexico — were considered free-tradable across the border.

Because there is no Canadian manufacturer of denim, the company was forced to go off-shore.

"The reason there was such a bad negotiation or bad disadvantage for Canada is that there were so little textiles available in Canada," explained Silver. "So what we would be doing as Canadians under NAFTA was buying fabric from the United States, making it in Canada and shipping it back to the United States — not the greatest formula for success.

Bob Silver is the president of Western Glove Works — the parent company for Silver and Jag Jeans. (CBC)

"We're still a Canadian company, we're still proudly Canadian and proud to be here, but unfortunately the economics of the world has taken our production elsewhere."

But there has been an exception to the rule that's kept others in the industry in Canada.

The original rules of NAFTA provide preferential quotas called Tariff Preference Levels (TPL) which allow for wool, cotton, and man-made apparel made from imported textiles to be exported duty-free to the U.S.

Silver says that exemption is something the U.S. has hinted it's looking to revoke in the renegotiated version of the agreement, and he's sounding the alarm bell for others in the sector.

"It won't be as disastrous for Western Glove Works because we don't manufacture here. But it's the United States again using their textile base to move these negotiations forward," he said. "It will change the playing field. And what it might mean, is that more Canadians who are proudly making goods in Canada would then either make goods in United States or make goods off-shore and further perpetuate the decline of manufacturing in Canada."

Silver says Canadian manufacturers like Moose Knuckles and Canada Goose — which has two of its six Canadian manufacturing facilities in Winnipeg — would be affected if Canadian negotiators let TPL slip away.

With 2,000 employees — including 1,000 in Winnipeg — Canada Goose employs 10 per cent of Canada's entire apparel industry. All of the company's down-filled products are produced in Canada using materials that are sourced globally, says president and CEO, Dani Reiss.

Despite the concerns raised by Silver, Reiss says he is confident that whatever happens out of the new NAFTA talks, Canada Goose will be able to weather the storm.

"We continue to watch and listen to what's going on, but we're not concerned about our ability to navigate anything that comes our way," he said. "We've been resilient for 60 years and we're going to continue to be resilient to the extent that we need to be."

Canada Goose president and CEO Dani Reiss is confident that whatever happens out of the new NAFTA talks, Canada Goose will be able to weather the storm. (CBC)

Reiss says Canada Goose decided to keep their manufacturing in Canada — even when many competitors were moving off-shore — because the country is part of the brand.

"We believe that a Canada Goose jacket is like a Swiss watch and part of the value of our products is the fact that it's made here," he said. "We have a history, we have a legacy of craftsmanship and we've been building up this confidence in Canada for a long time.

"There was a time when the apparel industry left Canada and we're really proud to have been able to invest in Canada, to rebuild this industry, and it's working really well for us."

The NAFTA talks, which started in August, have become increasingly difficult after the U.S. made protectionist demands that Canada and Mexico have said are "non-starters."

Sources have told CBC News the negotiations are expected to blow past a new-year deadline that the U.S. and Mexico had hoped they would be able to meet. Round five of negotiations begins in mid-November.

They say it appears some members of the U.S. delegation are uncomfortable with the demands they are presenting, which appear to have been dictated to them by the Trump administration.

Oddly enough, Silver says taking the TPL off the table wouldn't make much sense for U.S.-based apparel manufacturers either. He says they may be stuck having to move their operations off-shore as well if the rules change.

Silver says despite the rigours involved in the new talks, it's important Canadian negotiators don't give up. There's a lot riding on it for all provinces, including Manitoba — which does about $26 billion in trade with the U.S., and has 250,000 jobs tied to that trade.

"If you expand that to Canada and you see how much of our business, and how much of our economic activity is based on selling to the United States, if we don't maintain that business and if we don't watch it carefully it could be a tremendous blow to the Canadian economy," he said. "We will not win be being meek and being polite. We have to stand up for our economy and what's right for our future."

As well as celebrating its 60th anniversary, Canada Goose is set to open five new retail locations worldwide — adding to two locations opened in New York and Toronto last year — and held its debut IPO in March. The company has grown at a compound annual rate of more than 35 per cent over the last three years.

Reiss says he's proud Canada Goose has been able to both succeed and stay true to its Made-in-Canada commitment, adding it's something he has no plans of changing.

"We've been very clear that Made-in-Canada is very important to us and clearly if you look at our trajectory over the past 10 or 15 years we've committed to Made-in-Canada," he said. "We've been building our infrastructure in Canada and adding Canadian jobs.

"I'm very excited about our continued ability to build our Canadian manufacturing."


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