California Apparel News

For Reo Starr LLC, Thailand was not paradise.Launched in 2002, the Los Angeles–based denim company had jean samples made in Thailand and decided to do production there, as well. The first run was okay. The second was better. The third was “disastrous,” recalled Mark Tourgeman, who runs Reo Starr with Quinn Thompson.

Thompson said the wash was a “super-dyed blue” instead of the requested indigo. The order arrived in the United States in 90 to 120 days instead of the 60 days the factory had promised, causing Reo Starr to discount heavily. Thompson and Tourgeman did not have money to travel to Thailand and could not speak Thai. They had to rely on their agent. “Our hands were tied,” Thompson said.

In 2003, Reo Star decided to produce half its garments in the United States. Last year, it moved its entire operation to the United States, even though manufacturing in Thailand was 40 percent cheaper. Reo Starr now uses laundries in Southern California and has $1 million in annual wholesale volume. “We would have been further along if we did not have the setbacks of Thailand,” Thompson said.

The elimination of World Trade Organization apparel and textile quotas on Jan. 1 accelerated the migration of production overseas. But companies like Reo Starr are learning it is better to stay local. Southern California is the home of various laundries that lead the denim industry in innovation. Other small Los Angeles–based labels—from Grey Ant to Szulika to Wooden Mustache—said they stick with domestic contractors because they cannot meet the minimum orders and cannot spare the long lead time that foreign factories require. Plus, it is easier to monitor production when it is across town, rather than across the world. Above all, many say quality control is the primary reason to keep production close by.

“We need to be on top of quality,” said Monica Nahum, who designs the contemporary line Szulika. Acting as her own fit model, Nahum said she tries on the first small-sized item that comes off the sewing machine. With overseas production, she has to account for too many variables, such as customs. The alternative is choosing a contractor here who is hungry to work. “And I can stand over the machine,” she said.

Mimi Wolfe sees enough advantages to producing clothes in Southern California to transfer manufacturing to Los Angeles from New York for the Fall 2005 collection of her Santa Barbara, Calif.–based Tamsen label. The Italian-made fabrics feature digital prints of artwork created by Robert Firestone. Each garment is sized and engineered precisely to display the entire artwork. Although the New York contractors were great, Wolfe said she could not control the quality as much as she would have liked to from Santa Barbara.

With wholesale prices running from $130 for blouses to $1,400 for a pony skin and sequin cape, Wolfe said she and her partner, Sue Firestone, who is Robert Firestone’s daughter-in-law, could afford to make clothes domestically. “We will spend a little bit more on the sewing than anything else,” Wolfe said.

For the gowns with a custom fit, customers can be fitted midway in production. “You can’t do that if you’re doing [manufacturing] overseas,” Wolfe said.

Catering to small businesses

Grey Ant, founded in 1998, continues to produce its streetwear in Southern California. Designer Grant Krajecki said his orders are not large enough to meet the 1,000-piece minimum that some foreign factories require. “We’re lucky if we even cut 200 pieces per style,” he said. Also inhibiting is the overseas factories’ lead time of three to four months. “Our showroom sells a month before we need to start making our delivery,” he said. Rotating through six local contractors, Krajecki said he fulfills an order in two to four weeks and ships about a couple thousand units each season. He said he also usually uses domestic fabrics because it takes longer to receive imported materials. “I need things to move really quickly,” he said.

Wooden Mustache’s Chuck Stolarek has a simple explanation for keeping production of his straight-hanging coats with irregular Peter Pan collars and other quirky creations in the United States: He sells domestically.

One of Stolarek’s contractors is The Evans Group in Laguna Beach, Calif. Jennifer Evans started her namesake company in 2003 after studying business entrepreneurship in college. Far from the Los Angeles Garment District, her company is housed in a Zen-inspired building. Evans handles runs of 300 pieces or fewer for new, small or high-end design companies offering contemporary apparel, childrenswear and even dog clothing. She said her big challenges are managing costs and finding skilled workers. Her two master tailors each have 35 years of experience. She said she benefited from a backlash against the quota-free rush. “All these creative minds are still here, and they’re not big enough to go over there,” she said.

Harry Friedman, senior vice president at Rosenthal & Rosenthal Inc.’s office in Woodland Hills, Calif., said he has noticed that more companies are producing in the United States. “With the added security and overall congestion at the U.S. ports, it is becoming easier for U.S. manufacturers to control their production cycle on this side of the ocean than overseas,” he said.

Marketing made in the U.S.A.

Blue Pen Inc.—the Vernon, Calif.–based maker of Blue Cult, Blue 2 and other denim lines—said it receives a tremendous advantage in declaring that its products are made in the United States. “The Japan market loves ’Made in the U.S.A.,’” said Blue Pen President Scott Drake.

He said he will not rule out future offshore production, however. “There is definitely possibility,” he said.

But Jeff Enoch, vice president at Rosenthal & Rosenthal, said a tag declaring a garment was made in Korea, China, Guatemala, Mexico or elsewhere does not carry panache.

Some companies cited American Apparel as a model in domestic manufacturing. The vertically integrated company employs 4,200 people—3,200 in its Los Angeles factory and 1,000 in 75 retail stores—in a “sweatshop-free” environment. Owner Dov Charney said in the past he hired subcontractors both inside and outside the United States and used a factory in Mexico. But in 2002, he decided to make everything in-house. With the consolidation, “there is a huge synergy between the manufacturing and designing,” he said, listing advantages to optimizing fits, creating new designs, managing inventory and having speed-to-market. Plus, people “still haven’t figured out how to put the texture of a fabric in an e-mail,” he said.

Offshore growth, local shortage

Nevertheless, the trend to send production overseas is not abating. The U.S. Department of Labor estimated that 261,600 people were working in apparel manufacturing in April 2005, down 10 percent from 291,800 a year ago. Szulika’s Nahum said the handwork done overseas, such as embroidery in India, is incomparable and inexpensive.

Joe Rodriguez said the Garment Contractors Association of Southern California lost 50 to 75 members last year and gained none. Rodriguez, who is executive director of the Los Angeles–based organization, declined to provide the total number of members. He said some companies closed prematurely out of fear that everything was moving to China. He said contractors should have understood that China was taking the production from other countries such as Mexico, not from Southern California contractors, who produce for many of the region’s strong contemporary resources. “There is perhaps a shortage of contractors now,” he said.

That shortage is a boon to Adrian Borrego, who founded Kicking Horse Production & Sourcing in Los Angeles in March 2004 as a one-stop shop for development and production of high-end clothing and small volume. Borrego said that since the beginning of the year, he has turned away 15 jobs because he did not have the resources to handle them.

With six employees and in-house capability for everything except for washing and dyeing, Borrego said he can produce 15,000 to 20,000 units a month and fulfill orders in four weeks. His clients include CorseTny, Skore, Louis Verdad and Naqada. He charges, on average, $40 to manufacture a fabric-dyed blazer with satin lining. He said the key is to focus on high-end ready-to-wear that carries better prices and margins. “The money is there so that we can all make money,” Borrego said. “That is what will let L.A. survive.”

Help is out there

Manufacturers struggling to survive in the face of increased overseas competition can find help from the Western Trade Adjustment Assistance Center. The organization is based at the University of Southern California and funded by the U.S. Department of Commerce. It focuses on providing assistance to companies based in Arizona, California, Hawaii and Nevada, said director David Holbert. An applicant must provide two years worth of data showing it has suffered a drop in business due to increased imports, he said.

Holbert said that after a company is accepted into the program, USC will help it assemble a business plan detailing projections, strengths and weaknesses. For instance, in the case of a former participant that made Hawaiian shirts in Hawaii, the center bought and implemented software that managed retail points-of-sale, accounting and manufacturing. The center also trained the Hawaiian company’s staff to use the new systems. The program pays for 50 percent to 75 percent of the costs to make changes, Holbert said. “This is a substantial benefit. It is not a loan,” he said.