September 27, 2012 4:59 pm

Made in the US

Rising labour costs have eroded some of the advantages of offshore manufacturing

Earlier this summer, when Senator Harry Reid and House minority leader Nancy Pelosi began posturing dramatically about the fact that Ralph Lauren’s US Olympic uniforms had been made in China, the American apparel manufacturing industry was thrust into the spotlight after decades of political neglect.

The trend has only intensified during the presidential election campaign, as the focus on job creation, stimulus programmes and trade policy, make “Made in the USA” a flashpoint for both Democrat and Republican parties. The question, however, is whether all the debate will produce real change in what has been a shrinking industry: from 1990 to 2011, 80% of US apparel manufacturing jobs were wiped out, according to the Bureau of Labor Statistics.

Recently mass-market retailers such as JC Penney and LL Bean have been publicly weighing up purchasing more products from US factories, as rising labour costs in emerging markets and protectionist tax wars have eroded some of the advantages of manufacturing offshore.

“Businesses realise that sourcing products made closer to home can maximise supply chain efficiency, getting quality stock on the shelves much faster than when imported,” says Francisco Sanchez, under secretary for international trade at the Commerce Department, noting textile and apparel exports have grown from $16.6bn in 2009 to $22.4bn in 2011. However, in the year ended July 31, US fashion retailers also imported $41bn in apparel and textiles from China alone.

The real change in the sector seems to be occurring among niche high-end labels, and the contemporary market. Marchesa, Oscar de la Renta and The Row, for example, all create a significant proportion of their collections in and around New York City. “All samples, plus cutting and sewing for our evening wear collections takes place in our factory in the North Bronx – 100% of our jewellery line is made here in the US too,” explains Alex Bolen, chief executive of Oscar de la Renta. “Keeping a majority of our production close to home is an important component of our brand and we’re looking to do more here, particularly in the knitwear field.”

Similarly, Brooks Brothers, the iconic gentleman’s retailer, makes 80% of tailored clothing and all “Black Fleece” luxury lines in the US, and has invested heavily in new facilities and staff training at its factory in Massachusetts, as well as its bases in New York and North Carolina.

“Regardless of who wins the election this year, our commitment to maintaining a strong US production base is integral to our business,” says chief executive Claudio Del Vecchio. “We know that people will pay a premium price for it too. We want to support fellow American companies, but it’s also a commercial strategy with big profitmaking potential.”

The brand has put this to the test. In 2010, when Brooks Brothers collaborated with Levis on a denim range, the former insisted that the all-American venture was solely manufactured in the USA; given the latter no longer had any domestic factories, a small factory in Los Angeles now produces the line. The result? Jeans that cost $148 – double the price of a pair of regular Levi’s. Though some consumers balked, the line has proven a success.

Indeed, premium denim brands such as J Brand, Seven for all Mankind and True Religion have been a big part of the resurgence of US West Coast manufacturing.

“Today, apparel manufacturing generates $13bn annually for LA and has really re-established itself in the contemporary market, particularly as retailers rebalance their exposure to volatile foreign markets and US labels continue to hold considerable brand equity,” says Karalynn Sprouse, vice-president of sourcing at MAGIC, the US-based trade organisation. “Luxury denim is a great market niche – it now represents around 20 per cent of the $13.8bn US jeans industry.”

New York, whose fashion sector involves 173,000 jobs and $10bn worth of wages, is following suit, with FashionNYC2020, a Mayor Bloomberg initiative that can assist start-up designers with initial production cycles and investments in automation for small factories.

“We need to see even more direct investment into our manufacturing bases if we’re to build on our position as a market-leading hub,” says Andrew Rosen, chief executive of Theory, which manufactures 30 per cent of its clothing lines in midtown Manhattan. A major investor in several leading New York fashion brands including Proenza Schouler, Alice + Olivia and Rag & Bone – the latter manufactures about 60 per cent of product in New York – and a Garment Center veteran, Rosen is also in the initial stages of putting together a fund for upgrading facilities and training.

“New York houses some of the world’s best young design talent,” he says. “They learn by working alongside skilled manufacturers on the technical side of the business, and nurturing this relationship ultimately means longevity for manufacturing.”

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