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What It Really Costs To Produce Locally | Ethical Expectations

Anna Roos Van Wijngaarden
September 19, 2023

They’re ready, they’re willing, but they’re no production experts yet. Ethical small and medium fashion brands are popping up everywhere throughout Europe. Great news for manufacturers with a shared mission to make the industry more sustainable, but there is ‘but’. Since they’re new to the business, these young brands tend to have unrealistic expectations of sustainable production and nearshoring in specific.

Ceasing fashion’s race to the bottom

Fashion production is still leaning on a principle called ‘race to the bottom’, which means that companies compete to reduce costs by producing in the global south, paying the lowest wages and choosing cheap factories that operate under dangerous working conditions. Too often, brand owners and buyers assume that local, sustainable suppliers that diverted themselves from these conventions, can still produce their collections at the same price level – or even cheaper. But especially if they work with next generation sustainable technologies, that’s not necessarily true, we hear from designer Sandra Andrade from Bless Internacional. “When we want to be truly sustainable, we must incur extra costs. We are always looking to improve our performance in working with environmental care. What that means? Materials are more expensive, for instance, and the company needs to ensure social responsibility for employees, which means we must invest in everyone’s know-how regarding sustainability.” These are no minor targets, and without brands’ joined efforts, they are simply impossible to achieve.

“When we want to be truly sustainable, we must incur extra costs.”Sandra Andrade, Bless Internacional

“Producing sustainably means sourcing materials that are both environmentally friendly and ethically produced”, adds Michael Klepacz, founder of Natural Materials Unlimited in Warsaw. “While the final product often has a higher value due to its sustainable nature, it’s essential to understand that the cost of raw materials and ethical labor might also be higher than traditional production methods. The adage ‘you get what you pay for’ rings especially true in this context. Brands should be ready for slightly higher costs, but can be assured that they’re contributing positively to the planet and society.”

Klepacz provides us with a simple formula to decide the bare minimum for buyers: “the cost of labor plus the cost of materials. If the labor for artisan sewing earns 7.5 euro per hour like in Poland, the materials costs are 15 euro per meter, and it takes one hour to sew the garment, then production alone costs 22.5 euro.” Depending on factors like the novelty of the facility and the standards set for workers, fair price levels may be set significantly higher – and this should be seen as a favorable development.”

A similar rule of thumb exist for sampling: they are usually priced at twice or even three times the regular production price, depending on the difficulty of the design. And you can easily add up 1 percent to the total production cost for sustainable packaging – though the original investment is often recovered. In the end, garments may retail for 2 to 4 times the production cost, so the final price tag will reflect a brand’s sustainable efforts.

‘Don’t look for a European Bangladesh’

Pricing mechanisms for ethical fashion make a lot of sense, and still brands are often not aware when push comes to shove. Klepacz calls it a stunning problem: “sometimes they ask for Chinese or Moroccan prices. We also see many brands asking for cheap fabrics that produce microplastics. We do not offer polyester, period. Brands need to learn to tell a new story that includes local jobs, supporting a local economy, and lowering carbon footprints. No sweatshops here.”

Similar experiences are the order of the day at Fush, a sustainable custom clothing manufacturer from Serbia. Content manager Nebojsa Durmanovic: “For us, realistic pricing would be between 6 and 15 euro for a T-shirts and from 20 euro for sweatshirts and hoodies. If clients really want to run a sustainable brand, they’d know that the one who has to take the biggest financial hit, is the brand itself. Sustainability equals workers’ rights to a living wage and that comes with a higher price. I see that the social factor is often lacking in clients’ vision of sustainability, which is understandable when their main driver is to appease the masses. But brands really need to understand that they are not on a platform like Manufy to find a European Bangladesh.”

“The one who has to take the biggest financial hit, is the brand itself”Nebojsa Durmanovic, FUSH Textiles

Hana Fořtová from NIL Textiles, a circular textile provider from Czech Republic, adds: “It is beneficial for brands to understand the all the factors that influence the higher production prices in the EU. Minimum wages in EU countries, cost of energy and waste management, certifications, regulatory compliance, responsible processes, and innovative technologies all need to be considered. In general, prices of garments coming from traditional exporting countries come at lower prices, but much higher costs on the environment or people. We will see a difference in a couple of years once all regulations strike with full power and those manufacturers won’t be able to stay compliant under the same low production standards.”

‘What you pay, is what you get’

The main concern for brands that deter from embracing fair pricing practices, is missing out on profit margins. However, by effectively communicating the ‘why’ behind slightly higher retail prices, these fears can be addressed. You can start with telling them the general rule of thumb: the price you pay is what you get. Don’t expect a high-quality product in low quantities for a cheap price. A too-good-to-be-true deal indicates that the quality of the material is disappointing, or that workers are treated unethically.

The path to sustainable fashion production demands substantial initial investments in eco-friendly materials, ethical labor standards, and sustainable manufacturing processes. Ethical suppliers are open to making this transition, but their commitment hinges on brands taking the lead. It’s up to these pioneers to make the cut, start the conversation with suppliers, and get the fashion system of the future moving.

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