California Apparel News

The recent natural gas crisis that has raised some companies’ utility prices 400 percent and has already claimed a highly visible casualty—L.A. Dye & Print Works—is also affecting the other value-added segments of the apparel and textile industry.In the past year, Los Angeles-based Garment Industry Laundry has closed three of its four facilities—most recently, ACCW in Anaheim, Calif., which shut down last week, according to Dean Foreman, president of Garment Industry Laundry.

“Let’s face it, gas was $0.17 a therm in 1992 and it’s $1.84 today,” he said. “That’s 10 times as high and we’ve not been able to increase our prices even a little bit. So in the last nine years, basically our prices have been going down.”

The 17-year-old company currently has 200 employees working at its Los Angeles facility. The laundry processes denim for companies such as Levi Strauss & Co., Tommy Hilfiger, Lane Bryant, Gap, JNCO and Guess, which Foreman describes as a “major” customer.

“We’ve done just about everybody from the Gap and Levi’s to the even small guys in the alley,” Foreman said.

Garment Industry Laundry currently buys its natural gas from independent marketers, rather than Southern California Gas Company, Foreman said, adding that he once inquired about switching services with the Gas Company.

“We asked the Gas Company if we cancelled with [the other gas marketer] and go back to them, what would we have to do,” he said, “and they said, ’We don’t really have to take you.’ I don’t think they really care.”

Foreman said one of the most frustrating things about the energy crisis is that there is plenty of laundry business in Los Angeles these days.

“We have more business right now than we know what we to do with,” he said. “It’s a terrible thing to have to go out of business when you have plenty of it.”

The company owns a small facility in Agua Caliente, Mexico, but has been doing the majority of its work locally. Foreman said he is offering his customers the opportunity to place production at the Mexico facility, but processing garments locally still has the benefits of quick-turn and proximity to the ports.

“What we have, this being the center of activity for the West Coast for garments, we have the ports here,” he said. “The reason we are doing it this way is because we can move so quickly on their products, we can cut six to eight weeks off of production. And we have all these skilled people here.”

Foreman said he sent a letter to his customers explaining that the company’s December gas bill went from $11,500 to $47,000. The letter further stated that due to the increased price of natural gas (over 400 percent, he said), along with the dramatic increase in other utilities, labor and workman’s comp insurance, the company has instituted a $0.20 increase on each unit effective immediately. The increase could be noted as an “energy surcharge” on customers’ next bill, the letter said.

The letter concluded by noting that the company is working with the Association of Textile Dyers, Printers and Finishers to find a solution to the crisis and reminded customers about the facility in Mexico.

Company executives then scheduled meetings with their accounts to discuss the energy surcharge, but Foreman said he is unsure how many will agree to pay the increase.

“We met with Guess,” he said, noting that the denim manufacturer did not approve or disapprove the increase.

“They do understand; we’re not their only laundry, obviously,” he said. “I feel strongly that they will probably understand and be able to go along with us.”

But another customer has already rejected the surcharge, Foreman said.

Foreman was also uncertain whether his customers would take him up on his offer to place future business in Mexico, but said if the prices remain high more companies may opt to move business offshore.

“I’m sure more will go to Mexico; they’re not going to put up with this,” he said.