Some apparel manufacturing 'reshoring' to USA

Paul Davidson | USA TODAY

Apparel manufacturing, which left the U.S. in massive waves for more than two decades, is trickling back.

In the past few years, major designers and retailers such as Brooks Bros. and Saks, as well as dozens of smaller companies, have moved some production from foreign countries to the U.S., creating perhaps 1,000 jobs.

That's minuscule compared with the 800,000 jobs lost to foreign clothing factories since 1990. Yet it's raising hopes that the trend will grow, even though garment production remains highly labor-intensive and U.S. manufacturers still face stiff competition from low-wage countries in Asia and elsewhere.

Asian factory wages, however, are rising rapidly and U.S. consumers have shown a willingness to pay more for Made-in-America products.

Brooks Bros. bought a plant in Haverhill, Mass., five years ago and has moved 70% of its suit production there, mostly from offshore locations, says John Martynec, who heads domestic manufacturing for the venerable designer and retailer. Employment at the plant has increased to 475 from 300 the past few years.

The company also has been bringing back to the U.S., or reshoring, production of some dress shirts, overcoats and pants. Chinese wages that used to be a sixth of U.S. pay are now a third to a fifth, Martynec says.

"We feel this is going to be the wave of the future — manufacturing in the United States," he says.

If a style is popular, he says, new orders can be filled from a U.S. factory in two weeks, vs. up to seven weeks from an overseas plant. Making clothing in the U.S. also bolsters Brooks Bros.' fast-growing international business. "A U.S. product is perceived as a luxury item in other areas of the world," he says.

American Apparel, the No. 1 U.S. clothing maker, with 6,000 factory workers, has added about 100 employees at its Los Angeles plant since last year as designers and retailers bring back some production from overseas, CEO Dov Charney says.

Margaret Bishop, an industry consultant and adjunct professor at the Fashion Institute of Technology, says most clothing brands and retailers are considering reshoring. She estimates that as many as 200,000 apparel-making jobs could return to the U.S. over the next decade.

Others are cautious. Clothing will be among the additional $50 billion in U.S. products that Wal-Mart has pledged to buy over 10 years, partly by reshoring, says company Senior Vice President Michelle Gloeckler. But she says U.S.-made apparel likely will be among the categories benefiting least from the retailer's plan due to other countries' lower manufacturing costs.

Small labels, though, are already seeing big benefits. A few years ago, School House, which designs and sells high-end university-licensed clothing, began routinely receiving shipments from a Sri Lanka factory one to three months late, says Rachel Weeks, CEO of the Durham, N.C.-based company. Since School House placed small orders, "We were getting put on the back burner," she says. "That kind of thing can put you out of business."

In 2011, Weeks moved all manufacturing to U.S. contractors. Besides eliminating late deliveries, she says she's saving $5,000 a month on staff to oversee production in Sri Lanka. And when neon T-shirts were suddenly in vogue last February, Weeks says she rushed more of them to university bookstore shelves within days. Although labor costs are still lower in Sri Lanka, she says profit margins are now 35% to 40%, vs. about 22% when the work was offshored.

Others bemoan the deteriorating quality of some foreign-made apparel. Designer Karen Kane of Los Angeles began seeing more flaws in clothing shipments from China several years ago, including tears and slightly off colors, says marketing director Michael Kane.Because of long lead times from China, the company also frequently ordered too much of certain styles, prompting sharp markdowns, and not enough of others in demand. Since 2009, the designer has moved more than 90% of its manufacturing to the U.S.

Last year, Karen Kane dresses, blouses and jackets promoted with Made-in-USA posters at Dillard's department store posted 15% higher sales than similar non-promoted clothing, Michael Kane says.

The industry, however, is struggling to rebuild apparel manufacturing's infrastructure. Its mostly small contract manufacturers, with 15 to 25 workers, have seen a 20% to 30% increase in sales the past year, says Sarah Friedman, head of SEAMS, a trade group that represents apparel makers.

Many can't handle the added workload in part because sewing machine mechanics, seamstresses and managers are often in short supply. Karen Kane had to hire about 40 seamstresses because it couldn't find enough contractors to handle the work.

"There's categories we'd love to make in the U.S. (like sweaters) but we can't find the people to make them," Michael Kane says.