When the apparel manufacturer Valent Mills announced in 2023 that it would move a third of its production from overseas contractors back to a domestic plant, analysts split into two camps. The cost camp, led by industry economist Priya Nandakumar, argued that the move was indefensible on unit economics: domestic labor ran roughly four times the per-garment wage cost of Valent's offshore suppliers, and Nandakumar calculated a payback period exceeding eleven years even after factoring in lower shipping expense. On her accounting, the reshoring decision traded a durable cost advantage for a marketing narrative.
The resilience camp accepted Nandakumar's wage figures but disputed her framing. Its proponents noted that her payback model assigned no value to supply continuity, and that during the 2021 shipping disruptions Valent had idled domestic stores for nine weeks while waiting on delayed offshore inventory. A reshored plant, they contended, functioned less like a cost center than like an insurance policy: the premium was the wage gap, and the payout arrived only in the disrupted years. Critics of this view answered that insurance against a rare event is worth buying only if the premium is priced below the expected loss, a calculation the resilience camp had not performed.
What both camps left unexamined was whether Valent's customers would pay a premium for domestically made goods. A modest price increase, sustained, would shorten Nandakumar's payback period far more than any appeal to resilience. Yet Valent's own pricing tests, never released publicly, reportedly showed that only a narrow segment of buyers would tolerate higher prices, suggesting that the decisive variable lay neither in cost nor in continuity but in demand.
The primary purpose of the passage is to
Five fresh questions every day, your progress tracked, every miss explained. Free with an account.