Australian fashion and premium jeans label Nobody Denim is renowned for its dedication to local production and manufacturing. Its founder John Condilis has also been a champion of supply chain innovation and transparency over the years.So a recent report that the business had laid off 40 garment workers was seen as a blow to fashion brands that view local production as a sustainable and profitable enterprise. The justification behind the decision to let go of staff did not come as a surprise to many in the industry. Local clothing and textile manufacturing has shrunk over the years, partly due to higher costs compared to overseas, inadequate, long-term investment and brain-drain.Condilis recently told the Australian Financial Review that “manufacturing in Australia has become the biggest challenge ever,” and that it is “impossible to run Australian manufacturing.”The decision has prompted debate over how to revitalise domestic supply chains, and how local manufacturing and production can become a sustainable enterprise moving forward.Insufficient infrastructure investmentAccording to Leila Naja Hibri, the CEO of the Australian Fashion Council (AFC), clothing and textile manufacturing constitute just 1.5 per cent of Australia’s manufacturing output. This decline can, in part, be attributed to the outsourcing of production to countries with cheaper labour and other costs.  Despite 88 per cent of businesses designing products in Australia, just 29 per cent source materials from local suppliers. Hibri noted that labour costs were frequently cited as the primary challenge when it comes to local production and manufacturing, however she believes that the rising cost of energy is arguably the most significant concern.“Even though Australia is one of the largest exporters of gas and coal globally, the cost of energy is prohibitively high compared to China for example,” she said. “We are very behind in the adoption of advanced manufacturing processes such as robotics, and other innovative technology that promotes efficiency and improves affordability.”Hibri added that, on the whole, many fashion brands face significant skill-gaps when it comes to scaling and expanding their manufacturing capabilities.Rosanna Iacono, CEO and advisor at the strategic consulting firm The Growth Activists, observed that demand for local manufacturing is currently outstripping supply in Australia.While local production accounts for less than five per cent of products sold in Australia, she believes this number could be higher if there had been long-term infrastructure investment in local manufacturing. She said that several factors have contributed to this underinvestment. These include shifts in the 1980s and 1990s, which saw businesses move production overseas to minimise costs. Meanwhile, factory owners are now nearing, or at, retirement age, with their kids pursuing different career paths. As a result, more fashion and textile factories are closing rather than opening in Australia.While Iacono noted that there weren’t strong incentives to encourage the expansion of local manufacturing and production, she said that brands specialising in premium or designer segments – like Bassike and Viktoria & Woods – have managed to produce locally by orienting their business model around this objective.Higher volume retailers, like Country Road and R.M. Williams, have successfully gotten in on the act in recent times, which is an encouraging sign.“Brands can absolutely manufacture ethically and cost-effectively in Australia on a long-term basis,” Iacono said.“However what these businesses have in common are high-quality branded goods with high levels of consumer desirability, where the higher price-points enable higher local labour costs to be absorbed effectively.”De-risking supply chainsDr Lisa Lake, the director of the Centre of Excellence in Sustainable Fashion and Textiles at the University of Technology Sydney, told Inside Retail that there’s a shortage of skilled machinists in Australia.She said that people working in the space have expressed frustration with the skilled labour shortage, with few interested in learning the art of local production.Regarding what needs to be done to support local manufacturing in Australia, Lake believes that government support is needed to promote the sovereign production of garments, and Australia’s fashion and textile industry in general.A consideration is to reverse the removal of tariffs – implemented decades ago – which made it cheaper to import goods than produce it domestically.Meanwhile, Hibri emphasised the importance of innovation and technology in making local production more efficient. However, she reinforced Lake’s view that government support – as well as private investment – is needed.Hibri added that Australia’s uniforms, and high quality goods, are opportunities that Australian producers can lean into, in order to become a “textiles manufacturing powerhouse.” This could become particularly important, due to the geopolitical global supply risks continuing to occur following the Covid-19 pandemic. “Many brands are now looking to manufacture locally to deliver vertical, sustainable and de-risked supply chains,” Hibri said.The AFC’s proposed government action plan Create a foundational roadmap to develop a right-shoring plan, and to promote its activation in conjunction with the government’s National Reconstruction Fund.Map existing local industry production and manufacturing capabilities.Undertake feasibility and pilot studies to bring fashion and textiles production and manufacturing – including sorting facilities, reuse, resale and recycle units – to regional Australia.Support ‘value adding to fibre’ pilot projects with the Wool and Cotton sectors to create Australian fashion and textiles circular products, from farm to fibre to textiles to clothing. Develop a local uniforms procurement scheme for Australian government agencies – including the Australian Defence Force and the Australian Federal Police – to buy from Australian-owned businesses that incorporate local manufacturing, wherever possible.More work needs to be doneAlthough there are immense challenges involved in producing locally, Iacono believes that the opportunities involved in doing so are significant. From a sustainability perspective, brands can gain greater control over their supply chain, and reduce their environmental footprint. The potential for face-to-face interaction can also facilitate greater collaboration, which can be critical in achieving environmental and other goals. Iacono pointed to Bassike, which successfully convinced the majority of its local makers to transition to solar or renewable energy sources.Iacono added that brands that produce and manufacture locally are in a stronger position to achieve social impact goals. For instance, in Australia, the minimum wage is similar to the living wage, with businesses having the opportunity to contribute to the well-being of the local community.“[Through local production] brands are able to achieve and demonstrate positive impact on multiple levels,” Iacono said.Regarding Nobody Denim’s efforts to produce locally over the year, Hibri noted that the brand has been a pioneer. She highlighted its resilience and commitment to innovation, noting how it had successfully shifted production to create masks and personal protective equipment during the Covid-19 pandemic.When it comes to the viability of small to medium-sized fashion brands – such as Nobody Denim, which aspires to produce locally and compete globally – Hibri once again emphasised the need for governments to step up and support the industry.This is critical in developing relevant infrastructure supported by skilled expertise, cutting-edge technology, affordable green energy, and closed-loop supply chains..While Iacono disagrees with Condilis’ assessment that it’s impossible to run Australian manufacturing, pointing to other brands that have done so successfully, she said that it is by no means an easy proposition. “It really works when you have highly desirable branded goods that are mostly selling at full price,” Iacono said.“When all factors are aligned, local manufacturing works extremely well.”Policy initiatives and financial support.Iacono stressed the importance of prioritising policies that advance the circular economy. Brands seeking to produce locally should implement practices that reduce waste and promote product longevity, and recyclability at the end of the item’s lifecycle.She reinforced the view that Australia has the opportunity to be leaders in local production, but more investment, and collaborations between industry, governments, academia and the peak body, is required. Dr Lake suggested that a change in vision needs to take place, toward a long-term commitment to supporting local production and manufacturing. “It makes no sense that we send all of our rich raw materials [such as cotton and wool] offshore for processing and production,” Lake said.“Just implementing more processing of fibres in this country could add more jobs and generate more income for the nation, and importantly help us close the loop in the fashion system from farm to hanger, [and] back to farm again.”Hibri added that the future of local manufacturing hinges in large part on government action. She observed that the right mix of policy initiatives, with minimal financial support, has the potential to grow the industry by at least 30 per cent.“Imagine what we could do if we had a fraction of the love poured over mining and alcohol,” Hibri said.