Fashion Industry Has Yet to Reap Benefits of Mayor's Expanded 'Made in NY' Initiative

Mayor Bill de Blasio announced $15 million in programs and initiatives for New York fashion designers and manufacturers in February, but most of those programs have yet to take hold, industry members say.
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Chantal Fernandez
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Mayor Bill de Blasio announced $15 million in programs and initiatives for New York fashion designers and manufacturers in February, but most of those programs have yet to take hold, industry members say.
The New York Embroidery Studio in NYC's Garment District. Photo: The New York Embroidery Studio

The New York Embroidery Studio in NYC's Garment District. Photo: The New York Embroidery Studio

Mayor Bill de Blasio has dutifully made an appearance at the beginning of each New York Fashion Week since his inauguration in January 2014. This past February, he upped the ante by announcing plans to triple the city's investment in "Made in NY" fashion initiatives — programs designed to benefit manufacturers, designers, emerging companies and students — from $5 million to $15 million. 

So where is all this money going? The announcement specified the programs would roll out throughout 2015, but so far only initiatives put in place before de Blasio's time have really benefitted from the additional funding, industry members say.*

One exception is the launch of MadeInNYFashion.nyc, a homebase of information for designers and manufacturers beyond the main "Made in NY" site, which has been supporting film and television productions for many years. The Mayor expanded the program to include fashion at the start of fashion week last September.

Otherwise, most of the programs outlined in the mayor's announcement in February are still in the works: a fully funded internship and scholarship program for students, seed funding to help existing companies explore advanced technologies or services like knitwear, a "Production Summit" event, a digital production platform, worker training sessions, funding for space at trade shows, pop-ups and store partnerships. 

The mayor also promised continued support for two major initiatives — the Fashion Production Fund, a loan program, and the Fashion Manufacturing Initiative (FMI), run by the CFDA

"It is our hope and our belief that as that money gets divided there will be more specifically for FMI and I hope that sometime soon we'll know what that is," says Steven Kolb, CEO of the CFDA. "We are supported very strongly by Mayor de Blasio and [Deputy Mayor] Alicia Glen, his liaison on fashion. They really see the value of manufacturing."

The Fashion Manufacturing Initiative was formed in 2013 in partnership with the New York City Economic Development Corporation (NYCEDC), which pledged $1 million if the CFDA could raise $2.5 million of its own. Ralph Lauren, Coach and Fast Retailing, which owns Theory, each donated half a million dollars to the initiative. The FMI has not received more than the initial $1 million from the city, but has continued to raise money from other private sources. 

The core of the FMI is an annual grant program that has awarded $1.1 million in matching financial and in-kind grants to 13 businesses so far. About 50 businesses have applied each of the first two years, and applications will open again this summer. The maximum amount of money businesses have received is $150,00 and recipients were required to match it dollar for dollar. The 2015/2016 program is less demanding: the grant can reach a maximum of $300,000 and recipients only need to match one third of the amount. 

Michelle Feinberg, president of New York Embroidery Studio in the Garment District, already has a running list of machines she wants to request in the third round of applications. Her business is in the unusual position of having received a grant from the initiative twice — first for $67,00 and then for $70,000. 

"Last year I asked them if it would be okay if I applied again, and they said, 'No, we are really looking to spread the wealth and bring in new talent,'" Feinberg says. But since she had already filled out the application, Feinberg sent it in anyway and ending up being chosen again. 

Feinberg's embellishment factory, which counts "better contemporary brands" like Alexander Wang and Tory Burch as clients, has used the grant money to buy advanced machinery to help her stay competitive and develop products in a more cost effective way. These machines include a 3D printer, CMT milling machine, digital printer, fabric printer and an integrated laser cutter for an embroidery machine.  She also used the grant money to get hot water in the factory bathrooms. 

"I know of a lot of machinery and equipment that's out there is part of a dying trade — pleating machines and novelty tucking machines — and just get scrapped for scrap metal," she says. "I think what we've been able to do that's unique is combine a lot of new technology, especially with the grant, with technology that we've added. It definitely complements the art or craftier side."

Kolb says that the FMI favors applicants who want to use the grant money to bring new technology to their businesses. "It goes without saying that we want business that are healthy and that will continue to be sustainable but also have the potential to scale," says Kolb. "But in general terms, we are looking at things that bring in new innovation, new technique, new technology, new processes to New York City." Kolb says technology that increases efficiency for production scale is also a priority. 

The third cycle of the grant program is considering two new criteria: strategic support in the form of a consultant or financial advisor and relocation costs. Because of disagreements with landlords and rising real estate prices, many Garment District businesses are considering a move to one of the outer boroughs. "The bulk of production is still in midtown but there are people in the Bronx," says Kolb. "We're interested in how Brooklyn could potentially be attractive." 

The FMI doesn't just administer grants. It also maintains an online database of manufacturers for prospective designers, helps fund a summer apparel skills training program through FIT, and launches other professional development collaborations, including a soon to be announced "Made in NYC" capsule collection featuring designs from seven CFDA designers that will be sold nationwide and manufactured, of course, in New York City. 

FMI isn't the only city funding initiative to continue under de Blasio's watch. The Fashion Production Fund was conceived as part of former Mayor Michael Bloomberg's FashionNYC2020 strategic study on the challenges facing the fashion industry and how the city could work to strengthen it. The fund is administered by a private lending and financing company called Capital Business Credit, LLC. With the support of the NYCEDC, the fund loans designers anywhere between $50,000 to $250,000 against approved customer purchase orders and offers an interest rate of 9.5 percent per annum. The program has loaned $1.5 million since the spring 2014 season. 

The $2 million fund is comprised of $1 million in contributions from both the New York City Economic Development Corporation and Capital Business Credit and has the potential to loan $32 million in financing over four years. 

"We did a fair amount of research along with the city on [the low interest rate]," says JoBeth Tananbaum, vice president at Capital Business Credit and overseer of the fund. "What we were seeing designers getting in the marketplace is almost double or triple that, depending on their size. The smaller the designer, the more expensive the cash because there's a lot of risk involved with this type of lending." She chooses recipients from the pool of 50 to 60 applicants who are in at least their third season and have interested retailers. "We are making exceptions for designers that may not necessarily be the most well-known or the most well-funded, but have a good product," she says. "We are taking a risk and having a partner like the City allows us to do that."

Designer Karolina Zmarlak, who produces her designer price point brand entirely in the Garment District, has been receiving loans from the program for four seasons. She and fellow loan recipient Rosie Assoulin were honored by the Mayor at Gracie Mansion at the start of fashion week in September. Zmarlak's business partner, Jesse Keyes, explains that each season, they submit all order confirmations from retailers and vendors and match them up with purchase orders associated with production and fabric costs for the season. The fund pays those costs directly. So how would the brand have otherwise fulfilled its orders from Saks Fifth Avenue and Neiman Marcus? "A lot of other purchase order financing out there will certainly charge a lot more and they won’t necessarily give you the total amount that you need," says Keyes. "And so the alternative is just like any other business. You need to find equity or debt investments into the business." 

Brands do not have to reapply each season for a loan. They can borrow for as many seasons as they need to as long as the previous loan has been paid off or the amount is less than the $250,000 per person limit. "It's really those brands that understand the entire business of running a fashion company, not just the design component or the PR component or the production component," says Tananbaum. "It has to be a full, relatively tight shop on its way to becoming a great business. I think that's the best way we pick people."

As for the rest of the initiatives mentioned in the Mayor's February announcement — we'll have to wait and see. A "Made in NY" fashion marketing campaign is set to launch later this summer, with a capsule collection to follow this fall. The City’s Economic Development Corporation put out a request on Friday for an operator to "develop and implement" a temporary retail concept to sell fashion products designed and manufactured in New York City in the later part of the year. It could be a physical store or it could be online. Either way, it will hopefully have a positive and targeted impact on designers and manufacturers — and continue to invigorate an industry that employs 5.5 percent of the city's workforce and generates $2 billion in tax revenue annually. 

*Update: The Mayor's office has released the following statement.

“The fashion industry is more vital than ever when it comes to our city’s economic future, employing 180,000 people and generating $2 billion a year in tax revenue. That’s why Mayor de Blasio tripled the City’s investment – and those programs are already underway, supporting the manufacturers, designers, and students who make this industry and this city so great. MadeInNYFashion.nyc launched earlier this year; the Made in NY fashion marketing campaign is on schedule to launch in late summer 2015; the Made in NY Capsule Collection will launch this fall; and an RFP for the Made in NY retail program was released last month.”

Note: A previous version of this article said Mayor Bill de Blasio allocated $10 million to Made in NY fashion initiatives this year. The amount is $15 million.