U.S. apparel contractors have become very resourceful in their diversification beyond the cut-make-trim business. It’s been a necessary evolution in their uphill battle to stay in the game in the face of abandonment by many of their traditional customers.
There’s no way to sugarcoat the facts. The U.S. apparel contracting industry was forced to swallow a bitter pill when NAFTA went into effect on Jan. 1, 1994.
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During the intervening period, the United States’ domestic cut-make-trim (CMT), contract-for-labor community declined from nearly 25,000 companies to about 12,000 companies, according to best estimates. In parallel, many U.S. manufacturers – which were already chasing cheap labor in Asia – moved south of the border to take advantage of NAFTA.
Obviously, the effect on garment sewers in contractor-hub regions has been profound. As an example, South Carolina’s apparel work force alone has tumbled from 29,000 to less than 14,000 since NAFTA was ratified.
That said, and considering the repeated hits contractors have taken over the years, some of the survivors have devised new strategies to keep their businesses alive, and as a result, did fairly well in 1999. Still, the year was a mixed bag for the segment overall. As one contractor puts it: “It could have been worse.”
Although many in the U.S. producer base maintain that there will always be a need for domestic apparel contractors, what the industry will look like nationally in the new millennium, both in numbers and direction, is uncertain.
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By GlobalData U.S. Contracting Associations:
Finding New Ways to Stay in the Game
In the face of increasing global competition, associations and organizations that represent U.S. contractors are working hard to ensure the survival – and prosperity – of the remaining companies on their membership rosters by being creative and encouraging members to think outside of the dotted lines.
In the South …
American Apparel Producers’ Network
The reinvention of the Atlanta, GA-based American Apparel Producers’ Network (AAPN) began before the organization changed its name. (AAPN formerly was known as the American Apparel Contractors Association.)
Since the advent of NAFTA, Mike Todaro, AAPN’s managing director, has been striving to create an Internet commerce presence to revitalize the group, which has seen its membership drop from 350 to 175 over the past five years.
His electronic efforts culminated in 1996 with the launch of a not-for-profit site, usawear.org, and not long after, the introduction of a for-profit site, usawear.com. Todaro, who stresses that marketing is essential in the current industry climate, declares: “I have been urging the members for five years that the Net would pay off. And those that have gone on-line with us, inexpensively, got business as a result. And we can prove it!”
For $500, a member can be included in the AAPN’s on-line database, which offers 60 fields of data, under 200 different categories of goods and services. Information is updated weekly if companies send changes to the AAPN. For an additional $450, AAPN will provide the member with a Web site.
In other moves, under a private venture Todaro created and registered a brand called @usawear™, and AAPN also is making several dozen different garments for Habitat for Humanity under the Habitat USA label.
Most recently, the AAPN ventured into the direct-to-consumer business by working with a member to open its first virtual store, which is selling bib overalls. In the first two weeks, sales reached $800. As Todaro recounts: “We put [the site] on Yahoo without announcing a thing, and within hours we got our first order. I got an e-mail, I sent the e-mail to the factory, the pants were shipped, the credit card was processed [through Yahoo] and we cut a check to the factory. I don’t know what could be easier than that.”
A second virtual store is now selling sweaters, and at press time, Todaro expected to have a dozen additional “e-tail” sites up by Thanksgiving, representing a variety of members’ lines. The AAPN charges $50 a month, or 6 percent of sales, whichever is larger, to manage the Web business. As he sees the future for U.S. producers, it’s not a question of whether they should stay with CMT versus offering full packages. The push is to develop full package product and sell on the Internet, he concludes.
SEAMS
If Todaro is looking for solutions to energize contractors, so too is Sarah Friedman, executive director of the SEAMS Association.
SEAMS, which had 400 on its rolls in 1994 but now maintains about 200 members, also features its members on a Web site (www.seams.org), and Friedman notes that “Net activity is getting stronger all the time.”
While the association has been able to attract some newcomers, Friedman acknowledges that it has been rough going for her members. As part of one strategy to help them, the Columbia, SC-based group is working with 14 South Carolina state agencies, including the governor’s office, to build support.
Like other association executives representing U.S. producers, Friedman says SEAMS members are finding that customers are placing smaller orders; they want faster turnaround; and they expect a high degree of quality, versatility and diversification. “If you can do that, then most of the time there’s work out there,” she states.
In the West …
Garment Contractors Association of Southern California
Joe Rodriguez, head of the Los Angeles, CA-based Garment Contractors Association of Southern California (GCA), has made it his mission to encourage GCA members to become full package contractors and deal directly with stores. The time is right for that strategy, he asserts, because the private label business has been increasing greatly as a percentage of the overall apparel business and it continues to go up.
The GCA, which has seen its membership increase from 150 firms to about 200 firms in the past five years, is educating members to become sophisticated enough to present their qualifications directly to retailers and “cut out the middleman,” says Rodriguez, who also is executive director of the Apparel Contractors Alliance of California. (The latter is comprised of the GCA, the Korean-American Garment Industry Association, the Northern California Chinese Garment Contractors Association and the American-Chinese Garment Contractors Association.)
Historically, many contractors’ orders have been booked by jobbers calling themselves “private label manufacturers, but [they] just take orders,” explains Rodriguez, emphasizing: “These jobbers don’t even have design facilities. They established their relationships with stores over many decades because they once were manufacturers and contractors. Now, they only handle the money, and they take sizable margins away from the contractors.”
Rodriguez believes merchants will be attracted to his members’ full package capabilities. “The retailers don’t care, and they may not even know, who is making the goods,” he observes. “The stores already have the lines styled and designed to the nth degree. All they ask is: ‘Can you do it at this price?’ If you can, you can compete.”
Looking at business in general from the GCA’s perspective, Rodriguez says that ’99 has been mixed. “We prepared ourselves psychologically for the worst, but on the whole it has been better than expected,” he notes.
That’s not to say that the executive director or the GCA’s members are happy with the current situation, although Rodriguez believes that some work is coming back to California because “people aren’t 100 percent comfortable sourcing fashion items elsewhere.”
Made By The Bay
The focus also is on helping contractors to improve their skills at Made By The Bay (MBTB), an organization sponsored by the San Francisco Bay area’s apparel manufacturing community and the California cities of San Francisco and Oakland. MBTB offers technical and marketing support designed to help Bay-area contractors spread the word about their services both nationally and internationally.
While the overall number of garment producers in the Bay area – approximately 350 firms employing approximately 13,000 operators – is only about half of what it was several years ago, MBTB executive director Paul Gill reports that business has been “pretty good” for the companies participating in MBTB’s programs. “There are times when we’re looking around for more factories to place work in,” he says, adding that Haggar Clothing Co.’s Jerell subsidiary has been placing “significant” orders in the Bay area through MBTB.
The organization’s average constituents are shops with about 60 employees and $1.5 million in annual sales. Approximately 40 contractors, representing about 2,000 workers, currently are active in MBTB.
Instilling the need for consistent quality control among Bay area firms is a major goal for the organization. As Gill explains: “We initially identified some of the impediments to good business, and we saw that quality control practices were spotty: There were 50 companies that could do JCPenney-level QC, but they could only manage to do it when the Penney inspectors were there.”
Another objective is to have members comply with federal and state labor laws through a compulsory, independent monitoring program, under which Gill and the California Department of Labor get monthly progress reports on each contractor. “This enables us to say to the contractors’ customers – be they local manufacturers or makers from other parts of the country – ‘These factories have met that test,’ ” relates Gill. “We’ve never had an incident or violation of the Fair Labor Standards Act.”
In Gill’s view, manufacturers will continue to place business in the United States because of the advantages of time and flexibility. Consequently, he thinks there’s an opportunity for up-to-snuff contractors to prosper. However, he says, “There are a lot of contractors, particularly in Southern California and New York, that have been hell bent on competing with overseas production. That’s a mistake. That’s not the niche. [We need] to find reasons that manufacturers might want to do business here. … If you can identify what the makers are looking for, and give it to them, they’ll come.”
In the Northeast …
Garment Industry Development Corp.
The New York, NY-based Garment Industry Development Corp. (GIDC) is similar to MBTB in many ways, only larger. Like the Bay area group, the GIDC’s goals are to support its local apparel manufacturing and contracting community via training and the promotion of local talent. And to help achieve the former goal, GIDC has opened a 10,000-square-foot Fashion Industry Modernization Center in Chinatown.
There are about 4,000 apparel manufacturers in the city and its environs, and by the last count, there were between 80,000 and 93,000 employed in its textile and apparel industries – a far cry from the six-digit employment figures of the hub’s glory days. Still, New York’s apparel base is second only to Los Angeles in terms of U.S. employment. (Los Angeles’ industry employs more than 100,000 at approximately 4,000 apparel-producing operations.)
Like other U.S. contracting focal points, New York City has felt the impact of competition over the years, observes Linda Dworak, GIDC acting executive director. But the city’s industry is stabilizing, she says, and becoming more focused on women’s wear. Dworak bases her evaluation on statistics that indicate that 1,000 jobs were added in 1997 and 1998. And she notes, “Anecdotally, we are hearing that a lot of manufacturers that started sourcing contracting work overseas are now looking to bring some of it back in order to get it delivered quickly and to be able to monitor the quality.”
In order to capitalize on the strong women’s wear picture – the city represents 20 percent of the United States’ employment in the women’s outerwear segment, up from about 16 percent a decade ago – the GIDC has been offering contractors and manufacturers courses in short-cycle production capability.
As Dworak concludes: “There are tremendous opportunities for contractors who are serious about competing based on quality and quick response. New York City is always going to be a center for better apparel production.”
Jules Abend is a Bobbin contributing editor and editor in chief of Clarion Inc., a Howell, NJ-based international news gathering organization.
