NEW YORK — Manufacturers in New York City face a new hurdle beyond the challenges caused by rising rents and increasing competition from low-priced imports — a growing disconnect from small, local designer firms.

The issue was the focus at a meeting Thursday convened by backers of the New York Fashion Space, a proposed $64 million incubator project, which would provide dedicated space for apparel manufacturing in Chinatown.

Project organizers plan to buy four or five buildings in Chinatown with an estimated 312,000 square feet that would provide room for about 2,500 garment workers. Organizers, including the Garment Industry Development Corp., the New York Industrial Retention Network, Asian-Americans for Equality and UNITE HERE, have received approval for $1.5 million in funding from the City Council.

Adam Friedman, executive director of NYIRN, said the project’s future hangs on a $25 million grant request submitted to the Lower Manhattan Development Corp., which was created by Gov. George E. Pataki and former Mayor Rudolph Giuliani to help rebuild the neighborhood after the 9/11 terrorist attacks. A spokeswoman for the LMDC said the project was one of “many worthy proposals” the organization is considering.

With sufficient financing, the not-for-profit development would offer stable, affordable rents to manufacturing tenants, Friedman said. Money from the city and the LMDC would be sufficient to get the project off the ground, with the balance of the real estate costs financed with a mortgage, Friedman said.

“The rents won’t be driven by real estate pressures,” he said. “They won’t have to compete with residential or office space.”

Garment manufacturing in the city has been declining for decades. In September, industry employment was 30,900, down 6.6 percent from a year earlier and less than half its 1994 level, according to the New York State Department of Labor. In the Garment District and in Chinatown, manufacturers report that building owners are increasingly trying to convert their spaces to commercial or residential uses, and are turning out factories or boosting rents to create room for tenants with deeper pockets.

Several designers said they are increasingly turning to foreign suppliers rather than local factories because it is difficult to work with them.

This story first appeared in the October 22, 2004 issue of WWD. Subscribe Today.

“Specifically, the problems are minimums and lead times, and finding factories that are willing to work with you…and to take on a relationship,” said Mary Gehlhar, fashion director for Gen Art, which promotes and advises young designers.

Designers complained that factories set their minimum order limits at levels that were unreasonable for small, high-end design firms that tend to order styles by the dozens, not by the hundreds or thousands.

“They don’t want to talk to anybody small, they don’t want to work with you unless it’s 2,000 pieces,” said Wendy Mullin, designer of the Built by Wendy line.

Mullin said high minimum requirements were particularly puzzling to her, since the big chains and apparel vendors who buy in larger increments typically purchase much of their merchandise from foreign factories.

Alice Roi said small companies usually find themselves shuffled to the bottom of a contractors’ priority list.

“You always have to wait for an order that’s more important, because it has bigger numbers,” she said.

Sarah Crean, GIDC’s executive director, said economic realities have forced many local contractors to set the rules.

“These factories, they feel they’re basically under assault,” between growing import competition and rising rents, she said. In addition, “They are facing customers, much bigger than you, who are squeezing them to the bone.”

Several designers also said the fragmented nature of New York’s remaining production industry makes it harder to buy from local suppliers.

“In New York, everything is separate,” Mullin said. “I have to find where to get the trims and where to get the hangers. If you go overseas, they do the whole thing.”

Friedman of NYIRN suggested that problem could be solved by moving 50 to 75 supply companies into the New York Fashion Space project. If garment makers and fabric and trim suppliers were clustered into the same group of buildings, it would be relatively simple to coordinate their efforts and offer full-package service, he said.

“When you locate all these companies together, you create all kinds of new opportunities,” he said. “We can really reposition the industry in Chinatown.”