The tipping point to ‘Made in USA’ fashion
New York City, London, Paris and Milan. What do these four cities have in common? Yes, you are right. It’s fashion. The four cities are known universally as the fashion capitals of the world. Every half year, these cities stage fashion weeks, during which designers showcase their upcoming collections for the next seasons and buyers commit to orders or incorporate the designers themselves into their retail marketing. It is also an opportunity for the media to provide sneak previews of upcoming fashion trends.
Of the countries where these fashion capitals are located, the USA is the one whose government has launched a nationwide initiative to revive and support domestic apparel manufacturing. When we talk about US fashion, which brands immediately come to mind? Marc Jacobs, Kate Spade, Calvin Klein and DKNY should be some of the names on the list. For those who are familiar with these brands, it’s no surprise that none of them manufactures 100% of their products in the USA. Instead, all of them have opted for offshore manufacturing. Even luxury brands like Marc Jacobs do not necessarily have their clothing or handbags produced domestically. Some may be made in Italy, but not in the USA.
After the decade-long decline of US apparel manufacturing, does the ‘Made in USA’ label still not carry enough weight to enable US brands to shift their production back to the USA? This may no longer be true when the demand for locally made products has recently been gaining unprecedented momentum. The tipping point will be when American spirit and pride add to the label a value that cannot be determined by an economic equation alone.
Added value for the tag
One of the reasons why US fashion brands do not wear ‘Made in USA’ tags is because of the extremely strict requirements regarding labeling. The ‘Made in USA’ label is regulated by the Federal Trade Commission (FTC), and must comply with the labeling standard that ‘all or virtually all’ of a product should be of US origin; that is, all significant parts, processing and labor that go into the product must be of US origin.
Given that apparel manufacturing is labor intensive, earning a ‘Made in USA’ label can mean a significant increase in labor costs when compared with offshore manufacturing in apparel-manufacturing hubs such as China and Bangladesh. In the business world, the obvious question is whether the value of the label is high enough to offset the increased costs and make financial sense.
According to a survey released in November last year by Boston Consulting Group, 80% of Americans are willing to pay more for ‘Made in USA’ products. Helping manufacturing jobs to return to the US was what 93% of these respondents were hoping for when purchasing US-made products.
Though the silver lining reveals that 55 cents in every dollar spent on products made in China actually goes to US companies and workers, the patriotic battle and trade-deficit numbers are what make it matter to the government and its people for more ‘Made in USA’ tags.
A ‘Made in USA’ label on clothing may give Americans a good feeling, but can this feeling be shared by non-Americans as well so that they will pay a premium for ‘Made in USA’ fashion wear?
The truly American brand
In recent years, younger US brands have paved the way to success by living the American values. One such brand is American Apparel. While the world is going for horizontal integrated sourcing and manufacturing, American Apparel is advocating vertical integration of the supply chain. They claim that by going vertical, that is to keep the entire manufacturing operation within the shortest distance and with the fewest tiers possible, the company can not only save unnecessary fuel expenditure but create jobs for more than 5,000 Los Angeles employees. A close-to-market manufacturing approach can also help the brand closely align with market demand.
Another value proposition offered by American Appeal is the assurance it gives to consumers about the working conditions of their workers. ‘Sweatshop Free’ is their slogan. Their garments workers are also known to be the highest-paid garment workers in the world. On top of all these, American Apparel advocates for immigration and gay rights.
American Apparel has all the values it needs to touch the American soul. It now owns the largest individual garment factory in the United States, sells its products in over 260 stores worldwide across 19 countries, and is listed in the American Stock Exchange. From its sales volume overseas, it can be inferred that one does not have to be an American to appreciate the American spirit behind the brand.
To be continued...