Coming out of the Fog
S.F. apparel manufacturers hope to recast area as a northern design center
The once up-and-coming district called SOMA, or South of Market Area, no longer hums with the sounds of the sewing machines that used to propel San Francisco’s apparel center. During the late 1990s, upstart tech companies snatched up many of the industrial buildings that had housed apparel businesses. The dot-com phenomenon, which drove up real-estate prices, forced many apparel companies out of the city or shuttered their businesses for good.
But three years after the dot-com crash, industry sources say San Francisco’s garment industry is starting to make a comeback.
“We’re still licking our wounds,” said Randy Harris, executive director of San Francisco Fashion Industries, an 82- year-old nonprofit association made up of manufacturers, contractors, importers, wholesalers and financial agents. “It’s been a very difficult journey for the industry, but we’re starting to see it reemerge.”
About seven years ago, the Bay Area’s apparel- manufacturing sector represented approximately 15,200 jobs. Today the area employs about 7,500.
The number of manufacturers and contractors in San Francisco has decreased by approximately 30 percent in four years, going from 356 registered companies in 1998 to 246 registered companies in 2002, according to Susan Gard, a California Department of Industrial Relations spokeswoman.
The industry-wide setback affected the membership of San Francisco Fashion Industries. Harris said the organization lost 215 members between 1990 and 2002.
Several large apparel manufacturers, including Koret of California and Fritzi California, packed their equipment and moved to areas just outside the city or to Los Angeles. Others, such as Levi Strauss & Co. (which employed roughly 1,900 employees in the Bay Area) and Esprit de Corps, shuttered their domestic operations and shifted production overseas.
Sticking it out
The manufacturers who remained in the city were left to fend for themselves.
Apparel manufacturer Seymour Jaron said sales for his company, SJ Manufacturing, dropped from $4 million in 2000 to $1 million in 2002.
SJ Manufacturing, founded more than 25 years ago, is one of the few vertical operations remaining in the city. The company specializes in women’s, men’s and children’s private-label apparel and accessories. It processes quick-turn orders and large standing orders for several national retailers, including Talbots, at its 45,000-square-foot facility in SOMA.
To remain competitive in the market, the company offers cut-and-sew packages, salesrep sampling, full-service embroidery, pressing and packaging services for domestic and foreign deliveries.
“I do whatever I can to get the work,” Jaron said.
Contemporary womenswear designer Julie Weston counts herself as one of the few apparel-business owners who survived the dot-com invasion.
Twenty-three years ago, Weston started her company, WestonWear, in a SOMA industrial building. During the peak years of the dot-com era, two of her contractors were evicted from their buildings and replaced by upstart tech companies that could afford to pay higher rent.
“We’re a small company, so that’s a major thing for us,” said Weston, who nonetheless saw her company grow from $1 million in 1990 to $7 million last year. “Doing business became more difficult because it was hard to find contractors— the labor market got decimated.
“I was lucky because my former landlord didn’t force us out by raising our rent,” she said. “That’s how we survived.”
Weston said she purchased an 11,000- square-foot building to accommodate the growing company shortly after the dot-com era came to a halt. Even though WestonWear continues to rely on local contractors for cutting and sewing services, the company buys fabric in Los Angeles because there are few suppliers in the Bay Area, she said.
Jeff Greff, a partner in the San Francisco office of Los Angeles-based accounting firm Moss Adams, said the economy had made it difficult for new companies to get financial backing, and those that got it were up against a tough retail environment.
“Now the retail environment is improving enough to encourage more startup companies to take that chance,” Greff said. “Plus, rent prices are cheaper than they were three years ago, and startup costs are not as bad.”
In some ways, the apparel industry in the Bay Area must deal with many of the same challenges that apparel companies in Southern California face. Companies in both regions are competing with offshore producers under tighter labor-law regulations imposed by the state.
In 1997, a wage-and-hour survey in the Bay Area found that 90 percent of apparel factories surveyed were in compliance with federal and state law.
But the city’s squeaky-clean labor record is not enough, Harris said.
“We have to strengthen our labor pool,” he noted. “If there were more contractors in the Bay Area who could offer quick turnaround then there would be room for a larger manufacturing industry here. But a lot of apparel companies don’t want to move back to the city. Many of them have cut their costs by leaving the city and are still finding ways to cut their costs.”
While Southern California can count on the Los Angeles County Economic Development Corp. to track its apparel business, San Francisco had a quasi-economic committee that took only a cursory look at its local apparel industry.
Last year, however, the San Francisco Chamber of Commerce decided to get serious about the apparel industry and created the Center for Economic Development (CED) to track activity for the garment industry and others.
“The city was hard-hit by the economic downturn,” said economist John Crapo, who was recently appointed to serve as director for economic development and research at the CED. “San Francisco has all the underpinnings for continued growth. The city’s financial center created venture capital— that’s what created Silicon Valley. Moving forward, we will seek new businesses to further diversify our economy.”
Currently the CED is working with a team of economic analysts to assess the strengths and vitality of the city’s core industries. It has yet to determine what kind of focus will be put on the apparel industry.
“The Center is entering a whole new phase of marketing this year,” Crapo said. “We want to keep the businesses here and keep them happy.”
Support systems
The CED could work on ways to transform the city into a design center that focuses on fashion and profitability, Crapo said.
“The city is rich with artisans who translate their work into software, fashion, furniture and interior design,” he said. “I would be surprised if we see the return of a large-scale manufacturing sector. Instead, the city could revitalize itself as the core of a small cluster of creative designers.”
There are currently a number of financial programs available to new apparel startups. Crapo said the center plans to create smallbusiness assistance programs that could help apparel business owners connect with the city’s resources.
Some of those programs include Start-up San Francisco and SFBIZinfo.org. There are also a number of business loans available to apparel upstarts, including the Micro-enterprise Loan Program, which is directed at borrowers with low or moderate incomes.
“So it would be just a matter of building on the city’s strengths,” Crapo said.
Harris pointed out the overwhelming support that Bay Area apparel professionals give to their industry. Many local apparel companies have created sponsorship programs to promote the regional market and increase productivity, he said.
In addition to San Francisco Fashion Industries, some of the industry’s ardent supporters include the Northern California Chinese Garment Contractors Association; the Union of Needletrades, Industrial and Textile Employees; the Mayor’s Office of Community Development; and the San Francisco Center for Applied Competitive Technologies.
The Golden Gate Apparel Association (GGAA), a 140-member organization that holds apparel and accessories trade shows at the Concourse Exhibition Center in SOMA five times a year, is the regional market for buyers in the Pacific Northwest.
“Apparel shows are important to business,” said GGAA president Craig Hinds. “We can see more of our customers at trade shows than we can on the road.”
Steady flow of new talent
Local design schools such as the Academy of Art College and the Fashion Institute of Design & Merchandising provide the Bay Area with a steady flow of new talent.
SJ Manufacturing produces samples and quick-turnover collections for a small pool of independent designers.
“[San Francisco] is still a great place for designers to create great fashion,” Jaron said. “Recently, I made a few bags for an upand- coming designer, and it was featured in the New York Times. I think the new talent is good. I think we just have to encourage them to stay here.”
Indeed, San Francisco’s design scene is being validated by some of fashion’s major players.
British designer Simon Ungless worked as an assistant to Alexander McQueen, Nigel French and Ralph Lauren before he joined the faculty at the Academy of Art College in San Francisco.
In part, Ungless moved from London to the Bay Area because he was intrigued by lifestyle brands such as Gap and Banana Republic.
“I thought it was so amazing that an apparel company could build an empire on cool, casual lifestyle,” he said.
Once in San Francisco, Ungless realized that the city has much to offer budding fashion designers, as well as those who are already established.
Ungless points to the growing number of new designers and design companies that have recently started businesses in the Bay Area. Among them are Nice Collective, an urban sportswear collection for men and women; Deborah Hampton, a former design director for Michael Kors; and Ilya, a directional womenswear collection.
“Some designers [from the city] have their collections sold at specialty department stores like Forg.Barneys and Neiman Marcus, and people still have a hard time associating the fashion with San Francisco,” Ungless said. “As they grow, so will the industry’s support system. There are a lot of fashion students who want to make their own lines after they graduate—they’re going to need that support.”
Gladys Perint Palmer, executive director of fashion at Academy of Art College, agrees.
“Students are getting jobs in New York, San Francisco and Paris,” she said. “Fashion design is so international now. What makes an important fashion place is how well it connects with the world.”
