California Apparel News

The Los Angeles County Economic Development Corporation (LAEDC) is preparing to step up its county-wide campaign to assist business owners—particularly those in the apparel sector— and the organization hopes to persuade manufacturers to keep their production in Los Angeles.

“It’s the [region’s] own special effort to prevent California business owners and manufacturers from leaving the state,” said LAEDC chief economist Jack Kyser, who also serves as the chairman of the California Economic Advisory Council.

Beginning next month, the LAEDC said it would take on a more pro-active role in seeking out businesses that need assistance finding sources for financing and operational procedures by increasing the number of regional managers and field workers who consult with local business owners. Kyser said the LAEDC would then assess the type of assistance it could give business owners on a case-by-case basis.

“There is so much concern out there,” he explained. “But, if you’re thinking about leaving Los Angeles, call the LAEDC business assistance program and they will come out and try to see if you’re eligible for past tax credits or look for incentives that you may be eligible for but not aware of.”

One such program is LAEDC’s Export by Design, a joint effort between the organization and the World Trade Center Association and the California Fashion Association (CFA).

The three-year program is being implemented under the U.S. Department of Commerce’s Market Development Cooperator Program and will cost approximately $1.2 million, according to Barbara Levine, LAEDC’s regional representative for East Los Angeles.

The program provides free consulting services by industry experts and is geared toward Los Angeles apparel manufacturers who want to break into exporting or want to expand their global sales.

To qualify for the program, apparel companies must be in business for three years or be “trade-ready,” and have more than $1 million in sales. Additionally, all aspects of the product must be of domestic origin.

“If you are manufacturing here there are a number of ways to get assistance to make your local facility more cost effective and efficient,” said CFA executive director Ilse Metchek.

Among the other assistance programs available to apparel manufacturers is California Manufacturing Technology Center, a state-funded program based in Los Angeles that charges a minimal fee to manufacturers who need assistance identifying problems that prevent them from operating efficiently.

Tracking those that leave

Currently, there are no state agencies that keep track of the number of apparel manufacturers who leave the state each year, said Kyser.

One task the LAEDC would like to undertake in the near future is to develop a way to keep such a record. Kyser said his organization may consider sending out business forms for company owners to fill out each year. Such information could be valuable to the state’s Chamber of Commerce, which could then supply the information to industry leaders, educators and lawmakers.

Employment figures give some indication of how much apparel business remains in the state, but those statistics can be misleading, according to some industry observers. There are several factors that could cause a decrease in employment figures, including shifting production offshore, downsizing operations and companies shuttering operations completely.

Still, research indicates a dramatic drop in domestic production since the early 1990s.

In 2000, only 25 percent of about 80 medium- and large-size manufacturers in Los Angeles were still producing all of their product domestically, compared to 60 percent of those same manufacturers who produced locally in 1992, according to research conducted by Judi Kessler when she was a Ph.D candidate at the University of California at Santa Barbara.

Kessler, now an assistant professor of sociology at Monmouth College in Illinois, has examined the shift in production from Los Angeles to Mexico throughout the ’90s. According to her research, approximately 17 percent of medium- and large-size manufacturers were partially producing apparel in Mexico in 1992. This number increased to 48 percent in 1997 and to 56 percent in 2000.

In the past 10 years, Los Angeles manufacturers “have become more savvy in terms of developing strategies for choosing specific regions that can produce basic or complicated clothing at lower costs,” Kessler said, adding, “We also see a growing sector of service consultants who are very adept at developing international production networks.”

Kessler said currently there are few incentives for manufacturers to remain in the state.

“I would be curious to see how effective the strategies are in bringing that production back to Los Angeles,” she said.

And there are plenty of incentives for manufacturers to produce offshore—even beyond the cost savings of producing in a country that pays workers significantly lower wages than U.S. workers. In recent years, manufacturers have seen increases in minimum wage, premiums paid for workers’ comp insurance and property taxes.

“Deciding whether to produce overseas or domestically requires balancing a lot of critical issues,” said Kyser. Indeed, recent developments have made business tougher for manufacturers producing off-shore.

Last year, companies scurried to reroute incoming goods following the news of work slowdowns, the threat of a strike—and eventual two-week shutdown—at West Coast ports. U.S. Customs also tightened up security—and increased the amount of required paperwork—for incoming shipments. The newly implemented security measures include strict regulations and shipping documentation will be subject to greater scrutiny. Plus, Kyser said shipping costs may increase in order to pay for the tighter security measures.

The LAEDC’s new campaign is not the only effort to assist domestic manufacturers. The California Chamber of Commerce has called for a general moratorium on new mandates that affect California employers, particularly those pertaining to proposals for new minimum-wage increases, according to Dave Kilby, vice president of the chamber.

“The efforts by the LAEDC and other groups to attract and retain businesses are absolutely essential to help with California’s economic recovery,” said Kilby. “The major thrust of our efforts today in the legislative arena are going to be geared toward fighting job-killer bills and supporting proposals that will improve the state’s business environment.”

The LAEDC said it would try to generate some media attention for the campaign, although Kyser declined to comment on the budget for that effort.

“We feel it is a very necessary step given the state’s business environment, so we’re going to try to do it in a cost-effective manner,” he said.