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The Market for Made-in-USA

Mitch Cahn founded New Jersey Headwear in 1992 and is President of Unionwear, a manufacturer of union made shirts, bags, and headwear. He may be contacted via email at mitch@unionwear.com.

Americans love their “Made in USA” labels. But does that love translate into sales? Are the clothes you are wearing right now made in the USA? Statistically, the odds are that your clothes came from a country among those with the lowest standard of living over the last year. Even the most jingoistic of organizations—such as NASCAR—who cheerlead earnestly for the American factory, sell printed apparel produced in nations even China considers the third world.

The issue is cost. Apparel manufacture is labor intensive, its workers are relatively unskilled, and its machinery portable, plug-and-play. Clothing factories can be set up with little oversight on Pacific islands where the natives, many of them children, will work for less than a dollar a day. International giants such as Wal-Mart, The Gap and Nike continue to put cost pressure on their contractors, the consumers love the low prices, and the promotional-apparel industry continues to marvel at the low cost of T-shirts and caps—perfect for a giveaway market.

The cost to produce a garment domestically can be 50 times greater than the cost to produce a garment in a third world country. How, then, can there still be a strong industry segment of domestic apparel manufacturers?

A market exists for USA-made apparel that is big enough to keep manufacturers focused on this niche. While nearly all apparel manufacturers have shuttered or moved offshore in the last 15 years, a handful of factories still pump out merchandise destined to be decorated with the logos of unions and strong union companies, political candidates, military, government and civil-service organizations, and other forward-thinking companies and associations mindful of anti-sweatshop issues.

Current political events have created many challenges, risks and opportunities for domestic manufacturers and resellers of USA-made apparel, increasing costs while expanding some markets and contracting others. These events and conditions include:

Wartime—The US military is one of the largest consumers of domestically-produced goods, and demand expands with the size of the armed forces. Additionally, America is outfitting the national Iraqi police force with US-made uniforms. Factories have actually been built in this country just to meet the demand.

Exchange rate—The weak US dollar makes imports seem expensive by comparison. Imports are still always much cheaper, but when there is a 20 percent difference in price instead of a 50 percent difference in price, marginally patriotic consumers are more likely to buy American. Also, countries with rapidly expanding economies, such as China, are experience wage inflation, further reducing the spread between imports and domestics.

Political campaigns—Presidential campaigns are nine months ahead of 2004’s schedule, meaning nine more months of primary-candidate caps and Ts that need to be made-in-America. In general, Democrats buy union and Republicans buy non-union, but they all require the products be made in the USA.

Minimum-wage increases—The minimum wage increases that have been passing state-by-state have knocked out a large number of headwear manufacturers. Many cap companies familiar to the promotional-apparel industry have closed domestic operations in the last 12 months. (Wage rates affect headwear the most because headwear has the highest percentage of labor content of all apparel.)

Living-wage laws—At the same time, demand for goods made by sewing operators earning a living wage has increased dramatically due to the efforts of sweat-free communities, which has co-opted many “blue states” and liberal cities into enacting legislation mandating that apparel be purchased by “living-wage factories” which to-date only exist in America.

Decline in Detroit—A significant purchasing category of made-in-USA promotional items has almost completely dried up. The monolith we call “The Motor City” is struggling to stay alive, the autoworkers unions aren’t spending, and they aren’t using up any of their political capital to force the automakers to buy uniforms and promo items domestically as they once did.

Union power elsewhere—Large companies such as the telcos and utilities that are not only staffed by unions but also largely owned by union pension plans are using their clout to force the companies to by union-made-in-USA uniforms. The change in control in congress has given other, stronger unions considerably more clout and ability to organize . . . and every new union member means at least one new union-made-in-USA promotional item, in nearly every category, every year.

Green Movement—The move-to-green has indirectly benefited domestic manufacturers, as environmentalists are now discovering that certain claims of organic material coming out of economies such China and India are bogus. Most greens will only touch certified-organic fabrics, which right now are only coming in quantity out of the USA.

Fair-Trade Movement—A sister to the Green Movement is the Fair Trade Movement, which unites labor and environmental standards for companies looking to be certified as “fair.” In the apparel business, only domestic manufacturers generally qualify as Fair Trade manufacturers at this time. Consumers swayed by the push towards green products are likely to favorably consider non-sweatshop products as well.

Immigration reform—Uncertainty over changing immigration laws has made hiring more difficult, as the pool of people willing to sew for a living in areas such as New York and Los Angeles has shrunk. This has driven up labor costs for most of the apparel industry.

Customs crackdown—Customs has recently cracked down on abuses of the made-in-USA label. Now goods assembled from imported components must state the country of origin. Before, an “Assembled in USA” label was legal and satisfied the country-of-origin requirements of many end users. Now the labels must read “Assembled in USA from components made in China,” a label difficult for protectionists to defend.

So while the domestic apparel manufacturing industry has consolidated, the remaining factories are leaner and benefiting from a growing market for USA-made apparel.