NEW YORK — As the base of apparel manufacturing jobs in this city continues to dwindle, a growing number of think tanks and government agencies are turning to the question of what, if anything, can be done to save New York’s production base.
The same economic forces that are causing manufacturers of all sorts to move operations out of the U.S. and to countries abroad where costs are lower — particularly China — have contributed to the sharp contraction in New York manufacturing. But local makers face a number of other challenges, including high real estate costs in comparison with other parts of the country and, especially for manufacturers in Chinatown, the aftereffects of the Sept. 11, 2001, terrorist attacks.
In July, the most recent month for which data is available, apparel-manufacturing employment in the city’s five boroughs stood at 32,600, off 20.5 percent from 41,000 a year earlier. That rate of decline is the sharpest seen over the past decade. In July 1993, the industry workforce stood at 83,500, and through the Nineties the rate of job loss slowly crept upward from low-single-digit percentages. But the rate of job loss never reached double-digit levels until 2001, when it plummeted 18 percent. In 2002, the rate of job loss was 15.8 percent.
The accelerating decline of the industry has caused some observers to ask whether there’s a danger of the size of the trade in New York falling below the critical mass level needed to support the suppliers and related services that apparel makers rely on —?everything from button vendors to sewing-machine repair experts.
“There’s a lot of concern that the cluster is disappearing, that we’re losing key parts of the industry,” said Linda Dworak, president of the Garment Industry Development Corp. “That would end up being quite dreadful.”
The GIDC, along with the New York Industrial Retention Network and the apparel union UNITE, recently submitted a proposal to the Lower Manhattan Development Corp. seeking a $25 million grant to start a nonprofit real estate management concern that would provide space in which apparel manufacturers could operate, as reported.
That proposed group, which would be called New York Fashion Space, would aim to buy one or more buildings downtown containing about 300,000 square feet of industrial space. That would provide room for about 2,500 garment workers.
The LMDC was created in the wake of the destruction of the World Trade Center to manage $2 billion in grants from the U.S. Department of Housing and Urban Development. Chinatown’s garment makers were especially hard hit by the attacks since, in addition to the slowdown in orders faced by many domestic suppliers, most of the neighborhood’s factories were forced to close for a period of weeks or months after the attacks because of the security cordon around the cleanup effort.
Dworak said the group expects a decision on the grant to be made by the end of the year. She added that one of GIDC’s goals would be for Fashion Space to have a diverse enough base of tenants that together they could offer something akin to the full-package garment services that Asian suppliers provide, in which the customer can assign the factory every aspect of production, from design to sewing and shipping.
“That’s kind of where the industry is working now in many ways,” she said. “A lot of people doing work in New York tend to be doing reorders and whatever requires a quick turn. You need to diversify or you run a risk, the world being as volatile as it is.”
The shift to full-package services was one of the key recommendations in a study called “NYC’s Garment Industry: A New Look?” released by the Fiscal Policy Institute last month. That study was the first in a pair of analyses the FPI plans to release. The second one, due out in the fall, is to be more comprehensive and run to about 100 pages, compared with the 21-page August edition.
The FPI was started by state labor unions and today draws much of its funding from foundations. The report noted that contractors who focus on just cutting and sewing but don’t coordinate all aspects of production — the traditional building block of New York manufacturing — run the danger of seeing their business model become extinct.
“Their relatively small size is a source of speed and flexibility,” the report acknowledged. “However, contractors often lack the resources and/or scale of production needed to purchase fabric, support cutting facilities and purchase specialized machines necessary to compete in markets for full-package supply favored by most large retailers.”
It went on to state: “Identifying and assisting contractors who have the potential to become full-package suppliers will open new markets for higher-value garments and can improve the competitiveness of the New York industry by allowing contractors to sell directly to retailers.”
GIDC’s Dworak said: “A lot of retailers are asking for full-package production, and many New York factories aren’t set up that way. They are cut, make, trim. We need to see some kind of transition toward full-package manufacturing.”
For many small firms, the biggest challenge of full-package production is financial. In the CMT model, the contractor never owns the piece goods, it merely processes them, which means it does not have to buy them or hold them in inventory while production is ongoing. In the full-package model, the customer pays for completed goods on — or after —delivery. This means the factory has to have the money to pay for supplies up front. Abroad, letters of credit — which are highly secure financial instruments — are typically used to finance full-package orders.
Part of the reason for the FPI’s study of garment making was a growing concern at the institute that New York’s increasing reliance on Wall Street as a source of jobs and tax revenue was leaving the city and state economies too vulnerable to cyclical swings in the capital markets.
“The city economy has become increasingly dependent, and I would say overdependent, on the financial services sector,” said James Parrott, the group’s deputy director. “We have a very diverse population in the city, and not everyone can be an investment banker.”
It’s a similar sentiment to what the growing movement of textile industry lobbyists has been expressing. At a recent meeting in New York of mill executives, one commented that an economy can’t be supported by people who “just sell stocks, flip burgers and sue each other.”
In a sign that the city government under Mayor Michael Bloomberg is concerned about the future of manufacturing, the New York City Economic Development Corp. is doing a broad study on the industrial businesses in the city.
“It’s a study looking at the industry, all segments, considering that it is an important segment of the city economy,” said an EDC spokeswoman. “In this administration, we are trying very hard to reach out to the different segments and listen to them to tell us what we can do to them.”
She said the study’s goal was to learn “what we can do to help the [manufacturing] sector stay in the city and grow.”
Providing full-package services was only one of the suggestions in the FPI’s survey. The study also suggested that local makers continue to focus on “short-cycle production,” concentrating on quick turnarounds on hot fashion items or in-season retailers.
Several contractor officials said that, particularly in Manhattan, makers have been focusing on that business for years. It’s one area where they argue they have a natural advantage?— the close proximity of local garment makers to stores in Manhattan or elsewhere around the Northeast means that the time from an order being placed and the merchandise reaching the selling floor can be a matter of days, rather than weeks or months for foreign factories.
However, local makers said they face two problems in the reorder area. One is supplies: The local textile industry is also in decline, which means that in some cases, makers need to order foreign fabric, which adds time to the cycle.
Also, the reorder business tends to ride boom-and-bust cycles. Lately, sources said, the soft apparel market has meant fewer occasions where retailers were scrambling to refill shelves to keep up with consumer demand. That, in turn, has led to less work for contractors, who in turn cut back on their operating hours or furlough workers. Contractor executives said an increasing number of skilled and savvy garment workers, fed up with irregular hours, have decided to seek out greener pastures and steadier work.
“They have a hard time finding workers, and then also, the manufacturers who give the orders don’t have the patience to wait till [laid-off workers] come back,” said Teddy Lai, executive director of the Greater Blouse, Skirt & Undergarment Association.
Contractors also said the intensely competitive retail market, in which merchants increasingly rely on markdowns to drive sales, means that more buyers consider only imported fabrics. That assertion is backed up by statistics showing the continued rise in imports. In the year ended July, the U.S. imported $7.71 billion in textiles and apparel, a 12 percent increase over the previous year, according to Commerce Department data.
The FPI study also suggested that small businesses in the fashion industry should band together to support one another. For small contractors, particularly those who focus on only sewing, cutting, embroidery or some other niche, that can mean forming alliances that together can produce completed garments.
But the study also suggested that small contractors continue to focus on young designers without the wherewithal to produce overseas and high-end couture houses who can more easily absorb the costs of domestic production because of their high prices.
The group also said makers should continue their efforts to market the Made in New York label. While UNITE and other industry groups have made many attempts over the years to promote locally made goods as having cachet, industry executives said consumers and retailers have shown little enthusiasm for the idea, as evidenced by the continued withering of the local industry.
However, Lai of Greater Blouse offered another twist on the Made in New York idea. While American retailers and consumers are avidly snapping up goods produced in China and elsewhere in Asia because of their low prices, he suggested that consumers abroad would find U.S.-made goods to be status symbols.
“If I produce in China, I can sell the same goods back to China,” he said. “But if you have a label that says ‘Made in China,’ that doesn’t have the same image as a product that was made in the U.S. There you have a different level already.”
Lai said he believed U.S.-made goods could command higher prices in China than locally produced products.
Still, many New York makers with the means are expanding their horizons and looking into foreign production. For instance, the Made in New York Group, makers of the Lafayette 148 brand, has opened a factory in China and is slowly trimming back its operations in Chinatown.
Lai said the members of Greater Blouse, who last year went on a trade mission to China seeking to align themselves with producers there, are planning a return trip next spring.
“The only way the garment factories can survive is they have to open up their focus,” he said. “It’s no more just one location, one city, one business.”