It's no secret that the U.S. manufacturing industry is far from what it used to be, and that the price of cheap clothing comes at a horrible human cost. But despite efforts to bring manufacturing back to America, foreign imports still dominate the U.S. apparel market. Between February 2013 and February 2014, the U.S. exported $5.8 billion worth of apparel and imported $80 billion, according to the Department of Commerce’s Office of Textiles and Apparel.
But why is that, really? Your initial response might be, "Duh, it's cheaper to make things in poorer countries." However, companies' reasons for offshoring production are more varied and complicated than that. "The general assumption is that if you want a lower price you have to go overseas and if you want quality, you stay in the U.S. and that's not entirely true," says Atnyel Guedj, who formerly managed production lines for luxury brands that manufactured in China and elsewhere in Asia. He now has a sustainable fashion brand in North Carolina called Constant Simplicity. "There are certain types of garments that you can do at a very good price in the U.S. and very good quality, and certain garments that are terrible quality when it's made in the USA."
Poor working conditions don't exist only in third world countries. Despite his long career overseeing manufacturing in Asia, Guedj says he's only been offered the use of sweatshop labor in Los Angeles. "It was a big factory with very big brands, and they said, 'Do you want clean production or do you want dirty production?' I was shocked."
It's true that factory labor is cheaper at scale in Asia, even as minimum wages climb in popular areas like China, Malaysia and Vietnam. But the problem with U.S. manufacturing isn't about wages as much as it is about lack of skilled labor.
"Over time, talent became less easy to find," says Orzeck, who started intimates label Hanky Panky with designer Gale Epstein in 1977 when New York City's Garment District was booming. In the '80s and '90s, as more brands moved production overseas and Garment District facilities shrank, "it became so much more of a challenge to find people who really knew how to cut properly and deal with stretch fabrics," she recalls. So the women had to train its workforce. "One of the things that sets Hanky Panky apart is that my co-founder is not only a brilliant designer, but she knows how to sew. She was the one who was able to work closely with the sewing contractors." The company now has an entire warehouse of cutters in Queens and 100 percent of the production is still done in the U.S.
Acknowledging that there is more talent overseas for certain types of production, Detroit-based Shinola brought in skilled experts from the company's Swiss partner to train a local team on making watches. When it came to dials specifically, Shinola brought in an expert from Taiwan, which helped the company open a dial manufacturing facility in Detroit. But despite being a poster child for the U.S. manufacturing movement, not all of Shinola's products are made entirely in the U.S. "There are so many different definitions that we’ve stayed away from trying to say," says Shinola CEO Steve Bock, declining to say what percentage of its manufacturing is done Stateside. "It also changes all the time. The more we can bring back and do here, the more we'll do."
Finding and training skilled labor is one thing, but finding the right machinery is another. "Factories [in New York] are very myopic — they sew what they sew and they don't look to next week or next month or next year," says Julie Hutton, who runs a personal label as well as a private brand sourcing company for women's and men's apparel in New York and works regularly with five factories in the Garment District. "They don’t see the cycle I see and it's extremely difficult to get a factory to do anything other than what they’ve always been doing." Hutton says two machines in particular have been near impossible to find: a double-fold machine used for polo shirts and a flat fell machine, often used for athletic apparel seams. "China produces a fabulous polo shirt and it's extremely difficult if not impossible to produce here," she says.
Guedj agreed that few are willing to invest in new machines; a single weaving machine can cost anywhere between $5 million and $10 million. "No one invests serious money here in the U.S. in factories," he said. "We found an amazing cutting factory which works with Patagonia and they have solar panels and are one of the best in L.A. and I went there and they were so proud of their sophisticated machinery — but in reality they were 15, 20-year-old machines." Guedj says the U.S. industry can't compete on this point with China, where the government has poured money into making its manufacturing industry more competitive.
So what's an American-made brand to do in this climate? A key to success for both Hanky Panky and Shinola has been to keep the scale relatively small in order to manage quality and keep their businesses as lean as possible.
"Gale and I are interested in running a healthy, well-regarded business — not the biggest company on the planet," says Orzeck. "We could buy other companies, we could get a lot bigger. But we are happy to be here. We are running the show and we want to have a comfortable company that runs as team."
Shinola, which now employs 300 people in Detroit, echoes that sentiment. "We're governed not by a certain financial set of criteria; what we are governed by is producing great quality products," says Bock. "So as long as our products meet our standard of quality, then we’ll put them out onto the market. If not, we won’t do it."
Staying small is simple enough — that is, until your product blows up in popularity overnight, as it did for Hanky Panky when an above-the-fold profile appeared in the Wall Street Journal. "It was a bit of nightmare because we were inundated with requests for stores that we were not doing business with," says Orzeck. "It was easier to start in 1977 than to deal with the unexpected surge in 2004. It could have killed us and I'm really proud that it didn't." There were growing pains, but now the company can handle producing "many millions" of its signature thong every year.
"If a blogger picks up one of our garments and writes about it and and all of a sudden it explodes, we have to have a two week turnaround on the product," says Hutton. "Offshore manufacturing is impossible for that kind of turnaround because you have to manufacture it there and then ship it over by air, which is super expensive." Being local and nimble can pay off.
While manufacturing locally might be the most efficient method for these brands now, does there inevitably come a point when a brand gets so big it must begin manufacturing overseas? Hutton says it depends on how easy the brand's product is to duplicate. "If you’re working consistently in somewhat basic fabrics like silk, linen, cotton canvas or whatever and your fabrications are not changing constantly and you can get up to 600 pieces — then it would make sense to go offshore," she says. "But you still have the timing issue." A product order usually takes four weeks for production and a month to ship even before going through customs. If the fabrics have to be imported or the designs are constantly changing season to season, Hutton says it doesn't make sense to go overseas.
Of course, if a company is going to move its operations overseas, there are responsible ways to do it. Hutton gave women's contemporary label Lafayette 148 as an example of brand with the best of both worlds. The company built its own factory in Shantou, China, after 9/11. The vertically integrated supply chain makes it possible for the brand to even accommodate special orders. "The Chinese are unique because what they did is not just build good factories, they built good supply chains," says Guedj. "Here [in the U.S.] you don't have the entire supply chain together anymore, it doesn’t exist."
So what then, if anything, can the U.S. do to compete in the global manufacturing landscape? The solution might lie in advanced technology, such as 3D printing, depending on if and when that becomes commercially viable. "That's the only way to essentially take the manual labor out of the equation," says Guedj, though he believes some of America's biggest apparel importers will thwart technological innovation on the homefront. "It’s awfully convenient for the bigger brands to make the production more complex, because it reduces the chance of future competition," he says. "Gap will have a good year and J.Crew will have terrible year and they’ll rebound and restructure. It goes up and down all the time, that's the name of the game. But the real risk [for those established brands] is of someone new coming into the market and stealing the marketshare from [them]."
Under present circumstances, it's unlikely that a brand that manufactures entirely in the States could compete with the scale and cost efficiency of a big gun like Gap or Ralph Lauren. But if the goal is to slowly build a company around a high-quality product created by skilled, protected workers, a brand can make it in America after all.