SAN FRANCISCO, United States – Even as the American economy begins to show signs of life, with positive economic indicators and growing consumer confidence, the wider arc of conversation, fuelled in no small part by the debate surrounding the upcoming U.S. presidential election, has focused on a complex and politically charged question: what is the role of American manufacturing in the 21st century?
It’s a theme that has been taken up by American president Barack Obama, who in his State of the Union address back in January asserted that the “blueprint for an economy that’s built to last…begins with American manufacturing.”
A report by BCG, a consulting firm, adds that “a combination of economic forces is fast eroding China’s cost advantage as an export platform for the North American market. Meanwhile, the U.S., with an increasingly flexible workforce and a resilient corporate sector, is becoming more attractive as a place to manufacture many goods consumed on this continent.”
Easier said than done. Indeed a couple of days before Obama’s address, an extensive report in The New York Times examining Apple’s supply chain suggested that “‘Made in the U.S.A.’ is no longer a viable option” for many companies competing in today’s globalised market. One Apple executive said “the speed and flexibility is breathtaking,” in China.
And yet, American Giant, a new apparel brand that manufactures men’s cotton sweatshirts, cardigans, and sweaters just outside San Francisco is doing just that because operating in America offers the very same benefits.
“It’s not about turning the clock back. I feel like, as globalisation has happened over the last 30 years, our ability to make things in this country has dissipated; has moved overseas, allowing attention to quality to have gotten lost,” explains entrepreneur Bayard Winthrop, American Giant’s founder and CEO.
Indeed, as a result of global competition on price, most American manufacturing has moved overseas. But this has not been without drawbacks. Not only is this risky for apparel companies like Gap, Inc., for example, whose brand story is tied to American culture, but manufacturing overseas also makes it costly and difficult to manage the supply chain, ensure adequate quality levels, and provide the level of responsiveness necessary to adapt to consumers ever changing needs. At Gap, the result has too often been empty, overstocked stores filled with sales racks.
So what’s Winthrop’s solution?
“[The] industry has not been innovative as it relates to manufacturing. And to me that’s the rub,” concludes Winthrop. “We have been presented with a false choice, which is, if you want to get American made, you are going to tolerate either a higher price that’s going to relegate you to the elite of consumers or you’re going to get low quality. As a business we ought to be able to deliver to you good quality, American made, and at a price that makes sense, a price that can scale for the mass audience.”
“A brand like American Giant is in an interesting spot to be able to dispense with all of the fluff and the disposableness, the ‘fast food apparel’ stuff and build real quality with real authenticity and real customer interaction, and deliver on an old American promise, simply, that we are going to make great stuff that’s going to last for a long time,” continues Winthrop.
“At American Giant, we eliminate all the unnecessary layers of traditional selling and marketing: big advertising budgets, fancy retail stores and expensive wholesale partners which leaves us room to deliver on that promise,” adds Winthrop, whose company has adopted a direct-to-consumer, online-only model which doesn’t require the high capital expenditures associated with opening a physical retail network.
Indeed, by removing overhead costs which don’t directly impact the end-quality of the product, American Giant is able to offer high-quality American made apparel at competitive prices. What’s more, with its main manufacturer only 15 minutes away, in Brisbane, California, Winthrop says he is able to reduce lead times from up to 18 months down to only four to six weeks, better maintain quality control, and rapidly reproduce products that are selling exceptionally well.
“We not only have members of our own staff down there watching stuff getting made and coming off the line, but if we see things that we’re less than happy with, you can adjust on the fly,” he explained to Inc. Magazine.
And the results so far?
“The emotional response has been wild. And people from 90 year old guys to 18 year old guys are saying, “this is unbelievable!” Almost daily I get some combination of emails and phone calls where people say “Wow! I’ve never seen anything like this! What’s going on? It’s only partly about the job we are doing. It’s more about giving the customer the opportunity to say I can put my dollars into something I can believe in, something meaningful and that works and is going to last and is good quality.”
As told to Debra Scherer, writer and filmmaker and founder of the Little Squares.