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In New Jersey, a toll bridge that spans the Delaware River proclaims, “What Trenton Makes the World Takes.”
This story first appeared in the September 5, 2012 issue of WWD. Subscribe Today.
It’s a reminder of America’s industrial heritage that now seems outdated as most manufacturing has left Trenton, and more broadly the U.S., in search of cheaper labor abroad.
The beauty industry, however, bucks the trend, with New Jersey and New York serving as the hub of local contract product manufacturing.
U.S. cosmetics and beauty product manufacturing is on track to generate $54.9 billion in 2012, said Nikoleta Panteva, senior analyst at IBISWorld Inc., a market research firm. By category, the three biggest segments are hair care, accounting for 24 percent of the products, followed by skin care at 23.7 percent and cosmetics at 18.6 percent.
The industry has rebounded from a slight downturn during the recession — revenue dropped 0.1 percent in 2009 for the first time in five years. This year, it’s expected to gain 2.2 percent, bringing the average annual growth rate to 1.3 percent over the five years to 2012, according to IBIS. What has dropped off are the number of people the industry employs, as manufacturers worked to sustain a profit. Its workforce has contracted to 53,619 people in 2012, from 58,474 in 2007, said IBIS.
Despite competitors from aboard, particularly in Italy and France, the industry is poised to grow steadily over the next five years at an average annual clip of 3.3 percent to $64.5 billion. But as beauty firms expand their global reach, manufacturing will become more global, as well. For instance, Procter & Gamble Co. has manufacturing facilities in 42 countries. That said, the level of exports is expected to also rise. Over the next five years, exports are forecast to increase an average of 6.3 percent a year to $9.5 billion, according to IBIS.
The firm said areas of opportunity for U.S. firms include men’s products, eco-conscious packaging, formulas with a natural bent and sun protection.
As sun care products — and their regulations — have grown more complex, the category has presented an opportunity for some American beauty product manufacturers with the wherewithal to sift through the regulatory paperwork.
Mana Products, a beauty supplier and contact manufacturer based in the Long Island City area of Queens, N.Y., is one of them.
Nikos Mouyiaris, the founder and owner of Mana, said, “In the past few years, [U.S. Food and Drug Administration] regulations and those from other agencies are becoming more demanding. We’ve had to hire four to five people to handle the regulatory paperwork needed to satisfy the authorities.”
Mana develops products across skin care, hair care and cosmetics, and its expertise and investment in sun care has become a competitive advantage, said Mouyiaris. The independently owned, contract manufacturer has been working with some of the most well-known beauty firms and retailers in the industry since 1975, and currently employs about 800 people. It’s also helped to incubate smaller, niche cosmetics lines by developing formulas for them from its private label business, Your Name Cosmetics.
Mouyiaris acknowledged that as beauty companies expand overseas, particularly in Asia, they will source more formulas from international manufacturers.
“For U.S. consumption,” he clarified, “most of the products are made in the U.S. and Europe.”
During a presentation at the WWD Beauty CEO Summit in May, Revlon Inc. president and chief executive officer Alan Ennis said he hopes to see more manufacturing return to America, especially as regulations for beauty products become standard across the industry.
“We are all striving to produce high-quality products at affordable prices that are safe for the consumer and that work,” he said. “The issue with regulation is that it’s disintegrated, that there is no common set of standards around the world. There is no common set of standards in the U.S. There is a real opportunity to harmonize what’s considered to be the acceptable regulations.”