How "Made In America" Can Mean Something Once Again
Manufacturing jobs are coming back, and U.S. apparel suppliers are finding success. How "Made in America" can mean something once again.
America's best appeared. Faces from all walks of life, each the embodiment of excellence, poised to do even greater things with passion, grace and humility. There is no one ideal vision of the United States, but this was as close as it gets.
The image wasn't hard to find. In fact, you may have seen it at 11:50 British Standard Time on July 27. That's when Team USA marched onto the track inside London's Olympic Stadium for the games' opening ceremonies. Any American who watched likely felt a wellspring of fervent nationalism. It's the Olympics, after all – this nation's most uncomplicated vehicle of patriotism.
Except this time, a crack had fractured this crystal-clear picture of American excellence. The unlikely source? The uniforms – the berets and blazers, the white slacks and skirts, the ties and scarves – all crafted by Ralph Lauren. Just two weeks prior, a flash of controversy erupted when it was discovered that the American uniforms were actually made in China. A media frenzy ensued as politicians lined up to chide both the U.S. Olympic Committee and the clothing company for their lack of judgment. The USOC initially stood by its decision – "We're proud of our partnership with Ralph Lauren, an iconic American company," it had said in a statement – but after two weeks of damaging posturing and threatened legislative action, the two entities finally relented: All Team USA uniforms starting in 2014 would be made in America.
So why now – after decades of Olympic uniforms, including the previous two outfits that were also created by Ralph Lauren – did somebody bother to check the label? And why, in a country that imports 98% of its apparel, did it become such a big deal?
Certainly it has to do with the state of the nation – a populace that is hungry for jobs and eager for signs of full economic recovery. But it tapped into something deeper: a refusal to believe that Made in America is just a slogan of a bygone era.
The funny thing is they're right, even if they don't truly know it.
The evidence is unfolding. There have been 532,000 additional manufacturing jobs since the beginning of 2010, the first certifiable growth in that sector in nearly two decades. The U.S. remains the number-one manufacturer in the world, and it is approaching the record output it produced in 2000 and 2007. Estimates say that manufacturing jobs brought back to the U.S. (a phenomenon known as reshoring) and jobs moved offshore have now drawn dead even.
True, the bulk of America's manufacturing prowess is carried by other industries; by now, the vast majority of apparel production has been moved overseas. But don't write off the American apparel manufacturer just yet. Apparel suppliers across the country have found niches in custom work and fast turnaround that validate their reasoning to stay home. Plus, changing economic and labor conditions have no longer made China the no-brainer decision when it comes to sourcing.
No one dares predict that national apparel manufacturing will come all the way back. But add it all up and there is genuine sentiment that long-dormant seeds are beginning to bloom. "Overall, in the industry, there's a lot more optimism than there has been," says Mike Hubbard, vice president of the National Council of Textile Organizations (NCTO). "The industry has been through a lot. It has retooled to be competitive in the global market. We're very optimistic that we can be competitive and grow in the future."
In August 2011, the Boston Consulting Group released a report titled "Made in America, Again" that heralded the coming swing back to American manufacturing. Its most bracing prediction stated that by the year 2015, in terms of goods for North American consumers, "manufacturing in some parts of the U.S. will be just as economical as manufacturing in China."
And, American apparel manufacturers believe they can be a factor on the global market. U.S. apparel and textile exports have grown 35% from 2009 for a total of $22 billion. The Obama administration has set a goal of doubling total U.S. exports by 2015. "U.S. manufacturers can compete anywhere as long as there's a level playing field," said Francisco J. Sánchez, under secretary for international trade at the U.S. Department of Commerce, at a recent sourcing panel.
One apparel maker that's at the forefront of domestic manufacturing is American Apparel (asi/35297). While the supplier's unmistakable brand panache has helped keep its 4,000-plus downtown Los Angeles employees busy, the fact that its clothes are domestically produced has been a factor in spurring stronger sales on the $90.2 million wholesale side of the business. "More customers are coming to us asking about made-in-the-USA," says Ray Hughes, director of distributor relations. "The recession caused a rude awakening. The country was shaken to its core. People want to support American jobs. They think it's the right thing to do."
King Louie America (asi/64860) started 76 years ago making war uniforms, and is another supplier dedicated to U.S.-based production. The company grew and morphed over the century, until as recently as six years ago when it was balancing both imported and domestic lines. Faced with the same choice, other suppliers would have chosen to shutter home production. Instead, King Louie sold off its imported activewear line and kept its Baxter Springs, KS, facility, which employs 150 people. The reasoning was simple: There just aren't many American-made apparel companies serving the market. "We not only think there's a niche here, but we think that audience buying American is growing," says John McMillan, vice president of sales and marketing.
The benefits of working with an American manufacturer are tangible and real. For example, custom order management is easier from start to finish. Overseas custom orders require thousands in minimums, and lead times are measured by weeks and months instead of days. Those barriers greatly concerned Doug Stayman, a distributor at the time. "I had a need for custom product," he says, "and I couldn't find a supplier that could do something with a quick turn time and do lower minimums." With no good choices available, he created his own by starting In Your Face Apparel (asi/62494). The business is completely domestic – dyeing and knitting in Los Angeles, cutting and sewing in New Jersey and distributing out of Dallas. Turn times are quicker, and communication is much easier.
That's why Mallory Dempster, an account executive with Jack Nadel International (asi/279600), prefers to stay local in Los Angeles with the custom garments she designs for clients. If they have questions, she can answer them without delay. Plus, she can micromanage the order from start to finish. "To be able to go to the factory anytime I want makes it 100% easier," says Dempster, whose client base includes a heavy mix of nightclubs and music acts.
But there's more to American manufacturing than streamlined logistics. Made in the USA is a powerful motivator for many large buyers. The U.S. Military, for example, is obligated to buy national goods. The federal government, as part of the Buy American Act, mandates that 51% of the final components must be manufactured in the United States. Union-based industries (like construction and industrial) are tireless domestic buyers, while political entities like campaigns and super PACs typically seek out American-made goods.
Beyond that, it's a very potent branding and philosophical tool. Cockpit USA (asi/43022) specializes in retro aviator and bomber jackets that are culled from past designs in the U.S. armed forces. Yes, it's true that the added price doesn't much affect its high-end items (compared to budget items like tees). But on a deeper level, these American heritage products wouldn't ring true if they were produced outside of the country. "We make product in the U.S. because we firmly believe in it, and it's part of our DNA," says Jacky Clyman, executive vice president of Cockpit, which is also an official supplier to the U.S. Air Force.
While U.S. manufacturers have found lucrative market niches, they must exploit every possible advantage to combat their price disadvantage. Typically this translates to manufacturing efficiency, an area in which the United States is number one in the world, with massive gains over the past decade that have distanced it from its nearest rivals. Automation has fueled much of that growth, but domestic apparel suppliers have supplemented that with tireless innovation.
One such business practice is lean manufacturing, which has been embraced by Unionwear (asi/73775). Its core ethic focuses on employees maximizing the actions that create value (in an apparel factory, sewing garments) and minimizing ones that don't (most everything else). When Unionwear six years ago received a Department of Labor grant to implement the model, "they determined that our employees, even though they were working really hard, were each only sewing a total of about three hours a day," says Mitch Cahn, founder and president. It took four years for the Newark, NJ-based company to sustain its factory-wide goal of sewing five hours a day – and six-and-a-half on a good day.
As a result, productivity more than doubled, and orders that used to take four to five weeks to complete shrunk to one to two. Successful, experienced employees can earn as much as 20% more, meaning the productivity gains far outweigh the rise in costs. "By focusing on creating value and not focusing on minimizing wages, we've been able to produce more," Cahn says. "Our wages may be higher, but our unit costs are much lower than they used to be."
The success of American manufacturers suggests an encouraging new turn in the state of made in USA. Speed to customer, niche market interest and a shrinking price gap have changed the landscape. "You put all those factors together," says McMillan, "and the playing field is just about as level as it's been in a long time."
American manufacturers have demonstrated they can find success here, but much of the future of made in the USA rests in the hands of one group: the consumer. And when it comes to purchasing American-made products, they surely say the right thing. A survey this year of voters by the Alliance for American Manufacturing found that 78% had a "very favorable" opinion of U.S.-manufactured goods, while only 2% had an unfavorable impression. Exclusive research from ASI finds that 83% of respondents would be more likely to do business with a company that reshores its production.
So when the time comes to open their wallets, will American buyers follow through on their beliefs? "That's the question that everybody's wrestling with," says Clyman. "There's a lot of talk about people wanting to buy made in USA, but when push comes to shove and you have a T-shirt for $20 made overseas and a T-shirt for $30 made here, they unfortunately probably will opt for the imported."
As Clyman illustrates, price is often the overriding factor. Pete Toole, who handles revenue generation and new talent scouting at NewClients Promotional Marketing (asi/282470), has many clients in construction and government who specifically ask for made-in-USA apparel. But sometimes a look at the bottom line has them choosing an imported alternative, or even opting out of apparel altogether. "It's amazing what a budget will do to somebody's patriotic intentions," he says.
But he also sees the price gap shrinking quickly. The sentiment is echoed on both the supplier and distributor sides; the implication is that if the difference is small enough, more buyers are willing to take the leap. "It's still 20% to 30% more expensive to get goods made in America," Cahn says, "but it used to be 200% more expensive. That's a huge difference. Companies are saying, ‘I'll pay 20% more to get things made in the USA, but I won't pay 200% more.'"
As a result, the market for American-made goods is expanding rapidly. Cahn cites major corporations like Verizon, Ford and GE that have specific company catalogs for made-in-the-USA products. Nonprofits and colleges – which strive to avoid sweatshop labor – have increasingly looked homeward for apparel. And, Cahn feels the Olympic controversy will have a lasting effect. "It's going to make a lot of companies think twice about wanting made in China," he says.
Quality perceptions can also be a significant influence. "Made in America means something different now than 10 years ago," says Marketing Analyst Joe Snigier of New England Shirt Company, a woven shirt maker based in Fall River, MA. "It's more of a quality driver than it was before. Like made in Italy is a difference-maker." Many companies play up the fact that their products are made in America, but sometimes just the quality of the product and the speed of service draw customers. "The bonus is it's made in the USA," Stayman says. "The value of the service that I'm offering is a quick turn and customization at low minimums."
Make or Break
The timing is clearly right for an increased demand for USA-made apparel. But given the general paucity of American manufacturers, any dramatic increase in demand could not be completely met. Suppliers and manufacturers would have to react by shifting production back home. And with that comes tangible roadblocks to the continued growth of made in USA.
When apparel manufacturers left the States, so did the mills, dyers and subcontractors that supported the supply chain. To have every step of apparel manufacturing completed in the U.S. is increasingly difficult. "For the few that are left, the lead times are longer. Sometimes we have to import the goods from overseas and have it dyed here so we can match our colors," says Les Tandler, sales manager for Game Sportswear (asi/55752), which makes 40% of its products in Port Chester, NY. "Years ago manufacturers – what we called converters – used to stock fabric in several different colors. And they're not doing it now. We have to import much more across the board." Equipment must be bought too, says Tandler, and he doesn't foresee these groups doing so until demand is heavy enough to warrant it.
Labor is an issue as well. Many factory jobs go to immigrants since American-born citizens have little interest. Lonnie Kane, president of fashion line Karen Kane, says there is a shortage of workers that needs to be alleviated with immigration law changes and work visas for both high-tech and low-tech jobs. "We have factories that don't want to expand because they can't get people into their facilities," Kane said at a sourcing panel, mentioning that his company makes 92% of its goods in Los Angeles.
To really spur domestic manufacturing, industry voices agree that the government needs to do more. President Barack Obama has professed that strengthening made in America is a top priority of his presidency, but many in the apparel industry are skeptical that he can deliver on his promises. "Full of hot air," says Clyman about the administration's efforts. "All lip service at this point," McMillan says. Harry Moser, founder of the Reshoring Initiative, praises the President for talking about it so much, but disagrees with his suggestion to penalize companies that offshore and reward companies that reshore. "It's not the best solution," Moser says. "The best solution is to make the U.S. the most profitable place to manufacture everything. If you do that, they won't go offshore and they'll reshore." – E-Mail: email@example.com. Twitter: @CJ_Wearables