California Apparel News

U.S. apparel factories could be the unlikely benefactors of the global economic crisis.

For years, they saw jobs exported to overseas factories as brands and retailers outsourced production for everything from simple T-shirts to more labor-intensive contemporary fashions. Drawn by lower prices and full-package programs, labels decamped to factories in China and other countries. Now, a variety of factors is forcing labels to reconsider domestic production.

“Based on anecdotal information, almost every manufacturer that I speak with—even the largest—would state that they would bring production back if [certain requirements were met],” said Ilse Metchek, executive director of the California Fashion Association. Still, she said, California factories from denim manufacturers and screen-printers to cut-and-sew facilities and those creating more complicated contemporary fashions are enjoying a welcome surge in business.

China, which makes about one-third of all the garments imported into the United States, saw its overall exports plummet 26 percent in February as consumers around the world cut back on buying everything from furniture and toys to clothing and shoes, according to a recent report by the World Trade Organization.

The significant drop has been attributed in great part to tens of thousands of factories closing last year. According to statistics from the Chinese government, 67,000 factories closed during the first half of 2008 and tens of thousands more had closed by the end of last year.

Apparel factories have not been spared, sending their clients in search of new production options. Some brands have seen their orders drop to levels that no longer justify overseas production or that don’t meet China’s demanding minimum-order requirements. Minimum orders often range from 3,000 to 6,000 per color per style in Chinese factories.

Finally, cash-strapped retailers have taken to placing late orders and relying more heavily on at-once business—placing a premium on speed to market, something that would require costly air freight for American brands sourcing overseas.

Domestic manufacturers, with their more forgiving minimums and geographic desirability, are suddenly looking more and more reasonable to brands, despite their higher prices. Los Angeles, which represents the country’s largest apparel manufacturing hub, with 66,100 workers in the industry, according to government figures, could be poised to benefit. Jack Kyser of the Los Angeles County Economic Development Corp. said it is too early to tell how big an impact returning production could make on the local manufacturing community, but the potential is there. “It will be interesting to see what is going to happen,” Kyser said. “The big problem for the state of California is that it costs so much to do business in the state.”Taking shortcuts

Brian Meck, vice president of sales and marketing for the Orwigsburg, Penn.–based vertical knits-maker Fessler USA, expects to see a bump from brands bringing their production back to the states.

“While our overall business will be down due to the recession, I anticipate 20 percent growth from new customers that are just now sourcing in the U.S.,” he said. Much of that growth will come from retailers with private-label programs. “They’re looking to place small orders closer to shelf date. That isn’t something overseas factories will accommodate,” Meck said.

To cater to these retailers, Fessler has developed replenishment programs that allow retailers to make commitments as close to market as possible, down to as little as three weeks in some cases, and chase trends very quickly.

Fessler—which produces custom knits for Los Angeles brands such as Michael Stars, Saint Grace, True Religion and Charlotte Tarantola—works with more than 100 brands and retailers.

Dotam Shoham, founder of Pacific Blue Garment Solutions, a Los Angeles dye house, said he, too, has noticed an increase in business. “There is some business coming back; we can definitely feel it,” he said.

The main reason is that his returning customers need to fill Immediates quickly as retailers move away from making buying commitments six months in advance. “I predict a good year for the [local] manufacturers that can accommodate the [unique needs of returning brands]. The people with the ability to produce quickly and efficiently will get the business.”

While Shoham welcomes the returning business, he points out that bringing production back to the United States from overseas isn’t easy.

“It’s a hard transition. Overseas factories built in a lot of the steps and processes that brands will be responsible for if they bring their business back here. If a brand wants to move production back here, it will need a whole crew to do it,” he said. “They’ll need to do everything themselves, from development up, and give up some of their profit margin in order to produce here.”

For some, the added expense and labor of producing stateside is worth it. Moshe Tsabag, who built the Hot Kiss juniors business before leaving last year to launch a new young contemporary brand called Velvet Heart, has produced all over the globe.

During times like these, he said, it is best not to have all your eggs in one basket. “I produce both domestically and overseas, depending on my needs,” Tsabag said.

For Velvet Heart, approximately 30 percent of production is domestic. That may increase in the future. “With domestic production, I can turn faster, ship quicker, and I can go to the factories and watch over the quality,” he said. “These things, especially as I launch a new brand, are important.”

Jennifer Evans, founder of The Evans Group, a Los Angeles–based boutique manufacturer and development firm, is actively courting returning brands.

In partnership with Made in Oakland, a nonprofit group, The Evans Group created a vertically integrated apparel production facility in Oakland, Calif. “The whole idea has been to cater to the sort of brands I’ve always worked with and make domestic production a viable option for them,” Evans said.

In the past, she has worked with high-end contemporary and designer brands such as Geren Ford, Cosa Nostra, Jennifer Nicholson and Juan Carlos Obando.

The partnership, which is operating under a $700,000 federal grant to generate manufacturing jobs in the state, allows Evans to offer pricing that is competitive with overseas factories. Pricing at the Oakland facility is based on construction.

Evans, who still runs a product-development office in Los Angeles, can help brands with design, patterns, sample making and cutting. “If manufacturers can produce garments as well as offer a variety of business services, California will benefit,” she said.