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WWD Special Report issue 09/05/2012

LOS ANGELES — If there were a poster child for the movement to make clothes here, a prime candidate would be Heidi Merrick.

This story first appeared in the September 5, 2012 issue of WWD. Subscribe Today.

Shortly after starting her namesake contemporary label in 2007, the fashion designer could be seen treading the downtown sidewalks here between her studio and the nearby buildings housing the contract factories that produce her colorful, carefree sportswear. Having inherited her dedication to domestic production from her father, Al, who hired scores of local residents for the Channel Islands Surfboards company he started in Santa Barbara in 1969, she would stick to a one-mile radius for her clothing production.

“I was only using people I could walk to,” she said. “Driving and parking is a total nightmare. It’s so much easier to just roll fabric over and put it in a big bin and go back and forth from your cutter and sewer to pressing. It just made more sense.”

One season, Merrick decided to experiment with importing knit sweaters from Portugal. The results were dismal.

“The samples came in totally wrong,” she said. “I thought it would be easier overseas. I don’t think that’s the answer.”

Los Angeles is burnishing its title as the nation’s apparel manufacturing hub thanks to people like Merrick. As part of a resurgence, she joins a growing circle of designers and executives who pick the city and and its surrounding area as the preferred provenance for making accessories, beauty products and apparel.

Katin USA, which began making surf trunks in Huntington Beach, Calif., in 1954, continues to produce beach gear, as well as out-of-the-pool togs for the U.S. men’s national water polo team in Southern California. American Apparel often touts its downtown Los Angeles factory in ads. BB Dakota, after seven years of manufacturing its young contemporary clothing overseas, opts to make its new denim line, called Dakota Collective, in Los Angeles because buyers consider domestically made denim a better product than the imported version. Michele Bohbot, who already makes her activewear line Electric Yoga in the U.S., is considering increasing the number of domestically made items for Bisou Bisou after recently producing two knit tops in L.A. for the mostly imported contemporary brand.

What’s more, L.A. represents the bastion of manufacturing for other contemporary labels, including Odilon, Wren, Amber Sakai and Black Halo. Seven For All Mankind, J Brand, AG Adriano Goldschmied and Citizens of Humanity are among the premium denim companies that maintain their competitive edge by manufacturing and washing their jeans in Southern California.

Government officials are eager to encourage local production. L.A. Mayor Antonio Villaraigosa kicked off a “Made in L.A.” initiative to boost the wholesale apparel and manufacturing businesses that generate $13 billion in annual revenue in Los Angeles County. In addition to sponsoring a Made in Los Angeles pavilion at last month’s Sourcing at MAGIC trade show in Las Vegas, he created a team that focuses on connecting small businesses to capital. He’s also working to extend the tax holiday that exempts any company that moves to the city from paying business taxes during its first three years of operation.

In response to the Obama administration’s National Export Initiative, launched in 2009 to double U.S. exports by the end of 2014, Villaraigosa formed the Los Angeles Regional Export Council last October to streamline export services in the area. Apparel exports from L.A. total $870 million, including $178 million worth of goods shipped to Japan alone, according to the Los Angeles County Economic Development Corp. Villaraigosa added that less than 1 percent of L.A.-based companies export. Of those, more than half export to a single country.

“Made in the USA means something to people,” Villaraigosa said. “But I’ve traveled enough around the world to know that made in L.A., in some ways, has even a stronger draw. It’s Hollywood. It’s glitz and glamour but also casual and free. It’s eclectic and I think that is something that we want to market more and promote more.”

In neighboring Vernon, the five-square-mile home to apparel companies including True Religion and BCBG Max Azria Group and wash houses such as Denim-Tech LLC, city officials are hammering out a rebate program for businesses whose electricity bill surpasses $1 million a year. Alex Kung, assistant to the city administrator, said the city hopes to implement the rebate by December.

“We want to provide incentives for the larger manufacturers to stay in Vernon,” Kung said. “What we’re trying to incentivize is if you’re able to bring in more business into Vernon, you use more electricity and sell more clothing, the discount gets bigger in a sense.”

True Religion said what helps drive its 10-year-old business is the quick turnaround of small orders. The company can make it from conception to production in just six weeks, compared to a minimum of six months if it were to manufacture overseas.

“Right now we do not receive benefits from the city of Vernon,” said True Religion founder Jeffrey Lubell. “We just added a second facility in Vernon and are continually committed to keeping business in the city even without incentives.”

The recent uptick in domestic manufacturing won’t completely reverse the decades-long mass migration of manufacturing from L.A. to foreign factories in places such as China, Vietnam and Honduras. The majority of companies that choose to make clothes here charge higher prices for their wares, which are produced in smaller quantities.

Despite the heightened interest in domestic production of clothing and textiles, the number of jobs continues to decline. In Los Angeles County, the number of textile mill employees decreased 4.3 percent to 6,600 in July, the most recent month that the state’s Employment Development Department compiled such statistics, from a year ago. In the same period, the number of workers in apparel manufacturing fell 1.1 percent to 44,800. In July 2000, by contrast, the county tallied 14,300 people working in textile mills and 93,000 in apparel manufacturing.

There lies an opportunity for entrepreneurs to build more state-of-the-art vertical manufacturing facilities in L.A., according to fashion executives.

“The demand is way over the capacity right now,” said Brian Weitman, chief executive officer of Security Sourcing, a full-package provider based here. “There are not a lot of good operators to fill the demand. When you find a good contractor, you find gold.”

Remy Leather Fashions Inc. opened the doors to its downtown factory in 1971. While one sewing manager retired after 40 years of employment, the average worker clocks 18 years with the company, which employs more than 75 people who produce close to 1,000 leather jackets, pants, skirts and bags a week for its namesake brand, private label business and a contemporary line called 1020 by Nicole.

“You can’t have someone walking off the street,” said Justin Remeny, grandson of founder Zoltan Remeny, who works in the family business alongside his dad, John, and his sister, Nicole Goodwin.

Being made in Los Angeles sets their business apart, said Goodwin, adding, “It’s a selling point for salespeople, especially now, in the last few years, with the economy not being good. The fact that we maintained our integrity and stayed here is meaningful.”

Speed to market is also important. Consider Pretty Rebellious, which caught the trend for pastels after seeing European fashion awash in the subtle palette earlier this spring. The L.A.-based juniors company asked local factories to switch the color for a trendy polyester chiffon top with a keyhole back from neon pink to blush, pale pink and mint green. Six weeks later, it shipped the $29.50 blouses to Macy’s, which sold out of everything.

“It was good for them,” said Debbie Batanides, president of merchandising for Pretty Rebellious. “[Retailers] need to react fast. With business being so bad, nobody has that crystal ball [for predicting trends].”

Joie Rucker got a quick reaction for her new line, Calvin Rucker, which she formed with Caroline Calvin in just eight months. After Calvin, the former senior vice president of global design at Levi’s, moved to Southern California in January, the duo started partnering with local vendors such as Security Sourcing, Atomic Denim, Monte Christo Trade Corp. and Blue River Denim. They began manufacturing the Edwardian-inspired lace tops and hand-painted jeans by March, and signed up boutiques such as Ron Herman and Guild in L.A. and Dressed in Montecito to launch the collection, which retails from $275 to $650, this fall.

“All of these people are our partners,” said Rucker. “It creates a synergistic relationship. That creates a better product, too.”

A key pitfall in growing local manufacturing is that costs, which run 20 percent to three times higher than overseas production, is inching up, and in a struggling economy, many retailers prefer a lower price to an American pedigree.

“The buyers care more about the bottom line,” said Alfonso Campos, ceo at Tarina Tarantino. “They think all consumers want is cheap. We don’t look at manufacturing and our people as numbers.”

Campos and Tarantino cemented their roots in the city by buying a seven-story building on Broadway in the fashion district for $4 million. They plan to move Tarina Tarantino’s corporate office, factory and design studio into the top three floors in October. Three other levels will be leased to other businesses such as art galleries. Next summer, they aim to open a store on the ground floor, where they’ll sell Tarantino’s own designs and other U.S.-made clothing and home furnishings.