Los Angeles area manufacturers are going to need regulatory relief — and a more global perspective — if they are to take advantage of the growing opportunities to bolster local apparel manufacturing.
This was among the messages delivered at a panel discussion on “The Future of U.S. Manufacturing and Opportunities in Los Angeles” moderated by American Apparel & Footwear Association chief executive officer Kevin Burke at the L.A. Chamber of Commerce last week.
The panel included several participants with manufacturing assets in Southern California, including Marty Bailey, chief manufacturing officer of American Apparel Inc., and Deborah Greaves, secretary and general counsel of True Religion Apparel Inc. They were joined by Ilse Metchek, president of the California Fashion Association; Tracy Gray, senior adviser to former L.A. mayor Antonio Villaraigosa; Carlos Valderama, senior vice president of global initiatives for the L.A. Chamber of Commerce, and André Raghu, chief strategy officer of Tradegood.
The vulnerability of L.A.-based companies was dramatized in April when the European Union boosted the tariff on U.S.-made denim to 38 percent from 12 percent. True Religion was forced to move production of a portion of its women’s product outside of L.A. and the U.S. in response.
“The orders for these particular goods were placed some time ago at certain prices, and in order to meet those prices for sales in Europe, there was no way that we could ship from Los Angeles. So already jobs have been lost,” she said. “It’s distressing.”
Metchek added, “It’s not just women’s denim, all areas of production are affected. Profits will go up, but jobs are lost. What suffers is the ‘Made in USA’ values.”
In addition to the tariff, manufacturers expressed concern about the extensive regulations in California, from the state’s Proposition 65 — a statute regulating toxic chemicals which Gov. Jerry Brown has vowed to reform — to the requirements of the federal Affordable Care Act. The full force of state and federal regulations can make goods produced in California up to 20 percent more expensive than merchandise produced elsewhere.
“Our industry needs exceptions,” said Greaves. “Year after year more regulations on the state and federal level occur, and it doesn’t seem to align with this whole government initiative of keeping manufacturing in American and Los Angeles.”
American Apparel’s Bailey encouraged the audience to use these burdens to increase efficiency. “We should take a hard look at why we do things this way,” he said. “Look at every aspect of the pipeline in order to improve our costs. In many situations, challenges like increased tariffs can turn into blessings.”
Raghu said the growing pains are a necessary part of the transformation of the U.S. into an export economy. “This has a lot to do with the rebalancing of the global economy. As China is moving faster toward a consumption economy it’s changing things everywhere. We have an opportunity to look at things we thought were blips on the radar but are really critical. As an industry, we have to accept the things that we haven’t done.”
Tradegood works to facilitate U.S. manufacturing, and Raghu believes it is primed for a resurgence. “There is an understanding even by offshore players that there is value in re-shoring,” he said. “Is it really that beneficial to go offshore when you consider the rising wages in China and the huge supply chain? A change won’t happen immediately, but the jobs that should be here will come back.”
Where will Made in USA product stand in five years? Burke said it was critical for American companies to expand outside of traditional markets, and remained hopeful that trade restrictions would ease in countries like Brazil. “Their protectionist regulations will begin to work against them. Their manufacturing base will drop, and they’ll find themselves where the U.S. did 30 years ago,” he said.
Metchek also believed that marketing is critical. “As an industry we’ve done a lousy job marketing the value in ‘Made in USA.’ Youths don’t look at a clothing label to see where it’s made. But look at the Apple ad that says ‘Designed by Apple in California.’ Obviously there is value added to something coming from the United States.”
The panel was organized by the L.A. Mayor’s office, the Los Angeles Regional Export Council and Tradegood.
From overseeing America’s fastest-growing speciality retailers to codifying cool, WWD talked to the women who are leading the way for the future of beauty. Check out our Instagram Stories to see how these women built today and are creating tomorrow. (📸: @hannah_khymych) #wwdbeauty
For @laperlalingerie's spring 2018 show, the brand chose to host their event at @thevenetianmacao. With Chinese megastars @bingbing_fan and @hubing in attendance, La Perla debuted a rock ‘n’ roll-inspired collection. The show marked the start of Sands Macao Fashion Week, which runs from October 19 to 24 — the city’s first such event. Pictured here are models backstage with glimmering eyes. #wwdfashion (📷: Cheuk-Yin To)
Trending for spring 2018: top stitch design. Gone are the days of stitch just for seams — designers are using the once-minimal detail to create strong decorative elements. (📷: Paola Testa; Styled by @andrew_shang) #wwdfashion
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)