U.S. apparel contractors say there always will be a need for their services, especially when it comes to handling quick turns and troubled orders. But they expect the consolidating industry to shrink further, and they can’t foretell what the contracting market will look like in the future.
In the meantime, proactive owners have been casting about for new ways to remain viable. And some are seeing their efforts pay off, despite the falloff in business from traditional makers. Some had a good 1999 as a result, while others said the year was better than they expected.
Bobbin asked six contractors, based in the southern region of the United States, to describe and assess their activities in light of the changing landscape.
Hemingway: 50 Percent Non-Apparel Is a Goal
Jack Marsh, co-owner of Hemingway Apparel Manufacturing Inc., Hemingway, SC, says, “When we realized that NAFTA was going to pass, we knew that as an apparel contractor, it wouldn’t take long for us to be history if we stayed with what we’ve always done.”
So the $3 million to $4 million contractor, in business since 1978, opted for diversification.
For years Marsh’s firm, which employs about 200, down from 300 three years ago, has made ladies’ sleepwear and intimate apparel in its 55,000-square-foot facility. Today, it makes some sleepwear, T-shirts, activewear and bathing suits, along with medical products, blankets, household products and accessories. About 30 percent of the capacity is in non-apparel items now, and Marsh is shooting for a 50/50 split.
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By GlobalDataThe company realized that “if it was a product that was going to have to be cut and sewn, we had employees who could run sewing machines, and we had sewing machines,” Marsh stresses. “What does it matter what the product is? What we’re doing is networking with as many sources and people as we possibly can.”
The entrepreneur also is looking at assembly work – “it may not even be cut and sew” – to keep his operators working. In the new industry climate, he points out, “You have to be prepared to constantly look at these products and train your people to be able to change on a dime, and it can be done.”
As a part of his plan to reach out, Marsh also started a Web site. He reports that Hemingway acquired three customers electronically in the past year, including a non-apparel client that now accounts for approximately 10 percent of the company’s business.
Going forward, one thing Marsh won’t do is create his own line. The contractor emphasizes: “I’m not a designer. I’m not a marketing person. That’s something I know nothing about. I am a construction person. … Plus, I would almost be in competition with my existing business [if I did that].”
Quality Stitching Aims for Specialty Retailers
“This year has been pretty good for us,” states Tony Smith, principal of Quality Stitching, who entered the contracting business in 1962 and purchased his own business in 1988. He currently has two South Carolina plants, one in Newberry, the other in Saluda, and employs about 180.
The veteran contractor, who does between $3.5 million and $4 million in annual sales and specializes in soccer apparel, has seen the nature of the cut-make-trim (CMT) market change dramatically over a long span of years. To keep pace with the industry and take advantage of his expertise in soccer wear, Smith has diversified and created his own soccer label, which is being sold in specialty stores.
Additionally, in order to become less dependent on apparel contract work, he has taken on a variety of sewn products jobs, including baby accessories (such as crib bassinet sheets), blankets and tablecloths. Smith estimates that his non-apparel work is approaching 30 percent of the firm’s overall production, with the retail apparel business accounting for nearly 25 percent. He is hopeful that in 2000 the retail piece will be closer to 50 percent.
While continuing to put his eggs in different baskets, Smith is cultivating apparel trade, and reports that the company soon will be making soccer shorts for a “huge” player in the market that also produces in-house and in Mexico. Commenting on the arrangement, he says: “When they got to some of the more difficult goods that have quick turnaround [requirements] – a couple thousand dozen of this or that – and they saw the need to have it turned in seven to 10 weeks, they [decided to] continue to do that domestically.”
Valtex Goes Catalog Route
What began in 1990 as a one-page flyer to promote a line of children’s wear became a 20-page color catalog this year sent to more than 30,000 potential customers, including screenprinters, embroiderers and T-shirt shops. This is just one example of the diversification undertaken by Scottsboro, AL-based Valtex, a children’s and adults’ sportswear contractor that has been in business since 1988. The firm, which has a 40,000-square-foot knit goods production facility employing more than 90 workers, does about $4 million in annual sales.
At the beginning of the decade, Valtex partners Paul Kunitz and Joe Altonji made a decision to bolster their cut-and-sew business by starting a blanks business. As a result, Valtex launched two lines of blanks: Kiddy Kats for infants and toddlers and Klassy Kats for girls. The new business has increased volume “multi-multi-fold,” says Kunitz, and now accounts for 90 percent of the company’s activities, including private label.
In order to move away from traditional contracting, Valtex also began to buy its own textiles, design garments and, over time, hire sales reps. As it happens, the firm started its shift in this direction at just the right time. As Kunitz reflects: “Many of the customers for whom we have done contract work in the past are out of business, or they have discontinued making their own goods in the U.S. [However,] we have found that our [new] customers still prefer to have that ‘Made in the U.S.A.’ label.”
The catalog also has become a springboard for other ventures, notes Kunitz, who now considers Valtex “a distributor that manufactures and isn’t limited to its own products.” In that regard, next year the company will start to buy imported children’s denim products and is looking “very strongly” at infant and toddler headwear.
Analyzing the big picture of U.S. CMT activity, Kunitz says: “I have a gut feeling that we won’t see a big surge. Those that are hanging in there will make some improvements over the next couple of years, and contractors have to try and figure out new ways to do business. We went from a customer base of six when we started to a clientele of over 600. It shows that it can be done. It takes a lot of innovation and the willingness to forego personal gain while the building is taking place.”
North River Sells Garments
Seeing the handwriting on the wall, 13-year-old contractor North River Apparel, Berry, AL, started selling its own garments about four years ago.
Larry Johnson, president of the $2 million to $3 million business, which operates a 33,000-square-foot plant with about 120 employees, says his garment sales account for about 10 percent of volume and plans are to move that to about 25 percent. The company, which specializes in manufacturing prepared-for-garment-dyeing (PFGD) blanks, has been purchasing fabric to make its own goods “so we can control a little bit of our own destiny,” Jones notes.
Johnson also has created a catalog directed at screenprinters, embroiderers and others. Working with a dye house in Tuscaloosa, AL, North River Apparel inventories the blanks and ships them to the dyer as orders come in. He explains: “That helps us on the inventory position because I don’t have to stock six colors in five different fabrics or hold models that could become obsolete. It’s almost personalized ordering.” The company is also offering smaller quantities of goods for adults and children, in products ranging from sweatshirts and leggings to placket shirts and cardigan dresses.
Creative Outlet Offers Full Service
Business has been good for 10-year-old, Moorehead City, NC-based Creative Outlet, says president Jim Garner, noting that the company has had three straight record years of 35 percent increases.
The contractor of health care apparel – including scrubs, patients’ gowns, nurses’ uniforms, lab coats and surgeons’ gowns – attributes the growth, in part, to being a full service provider.
The company, which also makes pillowcases, sheets and surgical wrappers, employs about 175 people in a 50,000-square-foot facility. Creative Outlet does everything from preliminary pattern work through manufacturing of the finished product, and it is equipped with a CAD system, inventories customers’ textiles at no cost, and has no minimum orders.
As a result of the full range of services that the firm supplies, Garner notes that his company hit $2 million in contract labor for the first time in 1997. This year, he expects to see $3.5 million, and he’s projecting $4 million to $5 million in 2000.
A large part of Creative Outlet’s business goes to fewer than a dozen independent health care products distributors. Garner emphasizes that the company has found its niche serving independent firms that don’t have the volume to go to Mexico. They want small runs of special items on a short term delivery basis, with average work-in-process time of three days.
Aiken Industries Broadening Scope
Aiken, SC-based Aiken Industries is striving to become unique. But Cary Friedman, owner of the 37-year-old CMT business, is a realist. Looking at ’99, he says: “It could have been worse … it really could have. We had a couple of good accounts carry us through the year.”
Friedman, whose firm produces women’s pants, skirts and shorts and employs 65 – down from 165 – reflects: “I consider us lucky to be here. … Anybody who is keeping his head above water and is still here is winning.”
Like his contracting counterparts throughout the Southeast, Friedman diversified this year by starting to serge, fold and package sheets for a U.S. mill. Twenty percent of Aiken Industries’ 28,000-square-foot facility, which brings in annual sales of approximately $1.2 million, is working on the new account, and Friedman hopes to double that percentage within six months. He notes: “It’s only two sewing operations vs. 20 on a bottom, so your money turns quicker as a result.”
As he puts it: “There just isn’t enough apparel work any more,” and he continues to look for other non-apparel jobs, and would even consider making a modest investment for equipment if that were necessary to obtain customers.
In his view, there won’t be a resurgence for apparel contractors. But he says, “I do see some manufacturers keeping some contractors alive. I’ve always felt there would be a niche for some good contractors, those who are flexible and deliver on time with good quality. I just don’t want to quit.”
