As Manhattan struggles to keep its glitz in the downtrodden economy, Garment Center tenants are distressed about the commercial development that stands to oust them from the neighborhood and dismantle businesses that took decades to build.
This story first appeared in the June 16, 2009 issue of WWD. Subscribe Today.
Unlike the big-name designers and labels whose creations they have a hand in making, firms like Blue Jet Industries, R&C Apparel, Buttonology, Acker & Jablow Fabrics Ltd. and M&S Schmalberg are decidedly more low profile, though their pursuit of the American dream is comparable just the same — to secure a livelihood, gain an education, build friendships and family and live free from oppression. But executives said escalating rents, cheap overseas labor, fast fashion and duty free exports are chipping away at their businesses and taking a toll on an industry already in peril.
Landlords and real estate developers have been lobbying to free up some of the 10 million square feet in the Garment Center for higher-paying tenants or even residential buyers. Industry insiders claim the more unscrupulous have not renewed leases with apparel companies, have jacked up rents and in some cases have even bullied tenants into exiting their respective buildings. In late April, city officials proposed earmarking a 300,000-square-foot building at 270 West 38th Street for apparel manufacturing.
New York City’s fashion industry and retail business accounts for 175,000 jobs and generates $10 billion in wages annually, as noted by Mayor Michael Bloomberg during a press conference last month. More than 800 fashion-related companies are located in New York City — twice the number in Paris, the next closest competitor. And fashion and fashion week were major lures for the 47 million visitors to New York City who contributed $28 billion to the local economy last year.
Outdated as the Garment Center might seem compared to the city’s swankier neighborhoods, tenants insist there are ways to revive domestic manufacturing — a promising, albeit limited, prospect for the U.S. economy, according to some financial insiders. When asked off-the-cuff for ideas, marketing a Made in New York label, offering subsidized rents for apparel-related manufacturers, having contractors pool their money to buy city-subsidized buildings and zoning a few blocks in one of the outer boroughs were among their suggestions.
“The government — local, state, federal — has done nothing to help small business owners. Nothing is being done to stop our industry from being totally decimated. Obviously, it is hard to compete with the labor prices in China when an employee here needs a $1,500 medical package,” said Mark Steinberg, president of Acker & Jablow Fabrics. “In the old days, you could always sell something to the guys across the street. Trucks were parked three deep and were fighting to get the next parking spot. You had to watch out on the sidewalks so that all the dress racks wouldn’t roll over your toes. Now you walk around the Garment District and it’s all slumped shoulders. And a tractor trailer could drive down the streets.”
In its 86th year in business, Acker & Jablow Fabrics has seen annual sales cut in half in the past decade, he said. “To help stay alive” and deal with the more recent changes underfoot, the company has opened a Seoul office to manage Asia-based clients, is working with more nonapparel businesses and is maintaining military contracts, he said.
The 270 West 38th Street building will not be sufficient for apparel-related tenants who wish to stay in the area, Steinberg said. City officials should consider earmarking a couple blocks in the South Bronx or Long Island City for apparel-related businesses, and offering subsidized rents, he said. “With the economy being what it is, you would think they would be trying to hold onto what is left of the industry. Something has to be done,” Steinberg said. “Forget what party is in office or which president you voted for. I don’t want to be the last man standing. I want my competitors to be strong and profitable. We need to be part of an industry.”
Domestic textile companies could face more even more competition from Pakistani textile firms should the aid bill the House passed last week be enacted. A section authorizing “reconstruction opportunity zones” would provide duty free treatment to a limited amount of textile and apparel products. “You kind of feel like you are in a dying industry,” Steinberg said.
Ming Lam, president of Blue Jet Industries, a sportswear manufacturer, got into the apparel industry on a lark more than 20 years ago. “I was an engineer and a friend told me this was a good business. You had the ability to hire some workers,” he said. “In those days, it was very easy to get huge contracts — companies would need 30,000 to 40,000 units of a style, and each style would last six months to a year. Now times have changed. People don’t want to see the same style very long. Fifty to 500 pieces are the average now. Sometimes we’ll sell a couple thousand units of a style that does very well.”
Lam said his “days are numbered” in the 7,500-square-foot space at 147 West 35th Street, due to a landlord who has ousted all but four apparel-related tenants and renovated the building to accommodate a greater variety of businesses. Lam plans to relocate to a comparable place at 254 West 35th Street. He has gone from leasing three floors to leasing one at his current location, but balked when the landlord requested $28 a square foot for a new lease. The average rate on Garment Center side streets is $36.31 per square foot and for the avenues the average rate is $45.31, according to the Fashion Center Business Improvement District. Moving to another neighborhood is not an option. “Brooklyn is like going overseas for designers. That’s why we have to stay here. You know how designers are — they change their minds every minute,” Lam said.
Blue Jet’s staff has dwindled from 300 people 15 years ago to 40 today. While it was “only 10 years ago that city officials were still begging us to stay,” Lam said most never considered buying, as rents were only $10 a square foot. Now, getting a group of contractors to buy their own building in the Garment Center could be the best way to deal with escalating rents in this uneven economy, Lam said.
“If designers could pay contractors’ factories just a little more, it would go a long, long way. A jacket or pair of pants can retail for more than $200 and the designer gets $100 or $110. They pay us $14, if they paid us $16 that would help us a long, long way,” Lam said. “They are so used to chiseling us. They are not used to helping us.”
Developing a Made in New York label that is a sign of quality and can be used for marketing purposes is essential, according to Ramdat Harihar, owner of R&C Apparel, a 32-year-old business. “And designers have to keep some of their collections’ [production] here rather than go overseas. I give Anna Sui a lot of credit. She has been very good about keeping her business together and most of it is made in New York,” he said. “To survive, you have to be working closely with designers and maintaining quality and pricing. Right now is not the time to increase prices.”
The same cannot be said for some Garment Center landlords, such as Harihar’s previous one at 344 West 38th Street, where his 3,500-square-foot space cost nearly $10,000 a month. In May, R&C Apparel relocated to 338-340 West 39th Street, where the rent is more reasonable.
With business running 15 to 20 percent behind last year now that some clients such as Zac Posen have shifted production overseas, Harihar spends each morning trying to rustle up sales by making phone calls, visiting customers and offering new embellishment techniques such as microwave pleats and crushed fabrics. “You have to try to get what small business there is and not refuse anything,” he said.
Like Lam, Harihar also fell into the apparel industry. Growing up in South America, his mother made all the clothes for him and his 11 siblings. Once in the U.S., he put his electronics studies to work, helping his apparel industry working friend Sam Klein repair sewing machines. Today his great pride is employing 25 people and supporting their families. “A lot of people who work with me are putting kids through college. They all take care of their families,” Harihar said.
Business has gotten so bad that Teddy Haft, co-owner of Buttonology, doesn’t think he will ever be able to retire. In 2005, he and Richard Levy merged their respective companies Button Gallery and Fallon Wren, but more recently cheap overseas labor has taken its toll. “It’s an incredible struggle right now. Finding people who need buttons domestically is very difficult. Most businesses have gone overseas as everybody else can explain,” Haft said. “I’m a lifer in this business since I started helping my father when I got out of high school. The changes I have seen in this industry are horrible.”
Buttonology’s lease at 264 West 40th Street expires in March, but he’s waiting to see what the landlord offers before committing to keep the space. Lepore, Kay Unger and Betsey Johnson are among its clients, but some orders have dropped off substantially in the past two or three months.
“I don’t think we can stay competitive. Consumers have to be made aware of where things are made. When they go into stores, they need to look at labels to see where things are made. Otherwise, we will keep supporting all these other countries with their very cheap labor,” Haft said. “If we start making more clothes in this country, more people will be employed and more people will be making money and putting something back into our economy.”
Warren Brand, who owns M&S Schmalberg with his sister Debbie, said there are only about nine other companies left in the U.S. that design floral fabrics. But he refuses to become disheartened, due largely to his father, whom he succeeded in the family business. A Holocaust survivor, his father was an orphaned, malnourished teenager when he immigrated to the U.S. after the war, thanks to a good-hearted American soldier he befriended who found his relatives at work in the Garment Center and informed them of the young man’s plight. Years later in the company’s offices, the elder Brand was shot by an employee whom he had just advised to take an inter-office dispute outside. “When people complain about this and that, I think, ‘God raised our dad as an example of what a human can stand,” he said.
With demand waning, M&S welcomes all orders — corporate or individual. When a competitor goes out of business, Brand buys their equipment, primarily to avoid having a new company use it to start up. “There’s not a biased bone in my body. But I don’t want an Asian company to open, work around-the-clock and put us out of business,” Brand said. “If we use 10 percent of what we have, that’s a lot.”
Manufacturers refuse to pay more even though they often have massive mark-ups. “We might charge $5 for a flower that retails for $200,” Debbie Brand said. “And they will still say, ‘You gotta do better.’”