NEW YORK — Last week’s decision by the Department of Labor to radically revise the way it counts garment workers — a move that revealed the number of apparel-manufacturing workers in the U.S. was about 30 percent lower than previously believed — served to underline the continuing decline of domestic manufacturing.
The withering of the nation’s production base has gotten to the point where even the makers of high-end apparel, who typically were able to digest the higher costs of domestic production because of their higher prices, have begun to break into camps on the question of whether making clothing in the U.S. will remain a viable strategy for the years to come.
The same economic pressures that have pushed most mainstream apparel manufacturing out of the country are starting to take hold in the designer market, some executives contend. Eventually, they argued, all that will be left in this country will be a small clique of sample makers.
Labor Department data show the decline is sharp. As reported, last week the DOL revised the way it counts industry jobs, saying that there were 315,100 workers actually working on apparel production lines in May. The previous month, the department had said there were 495,000 such workers, but it reclassified about 150,000 workers that it determined actually worked in the textile, transportation or printing fields. On a revised basis, that put the head count of manufacturing workers off 12.8 percent from where it was a year earlier.
Nonetheless, there is a shrinking group of high-end designers whose dresses carry three- and even four-figure price tags who contend that domestic manufacturing in key cities like New York and Los Angeles continues to make sense. They argue that being close to their factories allows a higher level of quality control and a faster rate of turnaround than they could find overseas. That, they said, allows them to buck the overall economic trend of the apparel industry that has most major companies constantly searching for a cheaper place to produce garments.
But that clique of domestic manufacturers is a shrinking one, as was evidenced by recent economic data released by New York State showing that apparel employment in the five boroughs has dropped 21.9 percent in the year ended in April.
The economic forces driving apparel manufacturing out of the New York area are clear: It’s a lot cheaper to make garments in developing nations where workers will work for a fraction of the money that U.S. employees expect — and that the federal minimum wage law requires.
“The advantage of being domestic has nothing to do with cost,” explained Bud Konheim, chief executive officer of Nicole Miller.
Konheim said there are a host of other factors that keep half his company’s manufacturing in the U.S., and specifically at Garment District contractors.
“You can get cheaper prices by going offshore, but then you’ve got a longer lead time, you have to make your decisions earlier and you have to cut bigger quantities,” he said. “So you have a lack of control. And lack of control, in this marketplace is very dangerous because some orders you take are not real orders. You have people canceling.”
Still, Konheim said it’s only possible to use domestic manufacturing if a brand’s fashions are so distinctive that retailers can’t buy the same goods elsewhere.
“When you get out of the really fashion business and into the commodity business, you can’t do it domestically,” he said. “There’s no competitive edge there.”
Oscar de la Renta still makes the majority of its merchandise in the U.S., and a company official cited quality concerns as one key reason for that.
“We continue to produce the majority of our line domestically, using both imported and domestic fabric,” said chief operating officer Rachel Barnett. “The special and complex nature of the garments produced necessitate the uniquely skilled labor force that we find in New York. Our ability to rapidly respond to customer requests due to the proximity of the contractors is a further bonus. Our mix of domestic and foreign sourcing has not changed over the last 10 years.”
Resisting the trend to seek out lower-cost options, accessories manufacturer Judith Leiber continues to produce all of its handbags and accessories at its factory on West 33rd Street in Manhattan, according to president and ceo Maggy Siegel.
She said there are many advantages to manufacturing domestically.
“First and foremost is the control of quality,” she said. “Second of all, it does allow us to bring product to market sooner. Because so many of our workers have been with the company for so long, it is very much part of our heritage.”
Still, economic data suggests that companies like these are in the minority. The potential for lower prices has driven most major apparel manufacturers to buy the bulk of their goods abroad. For the year ended March 31, U.S. companies imported $74.95 billion worth of textiles and apparel, marking a 9.4 percent increase over the previous year. China last year passed Mexico to regain its position as the U.S.’s leading supplier of apparel and textiles. China’s lead is expected to expand greatly in 2005, when the 146 World Trade Organization nations are to scrap the quota system that has regulated trade in textiles and apparel for the last few decades. That will make it possible for China’s imports to grow at an even higher rate than they’ve seen in recent years, though most observers contend that China will primarily take market share from other Asian suppliers, rather than from the small remaining base of U.S. apparel makers.
Despite the advantages some companies see in manufacturing in New York, the city has continued to lose apparel-manufacturing jobs at a faster rate than the country. The 21.9 percent April decline drove the ranks of manufacturing workers to 32,400. That still represents about 10 percent of the national pool.
While the city’s economy has been hard hit by the aftereffects of the Sept. 11 terrorist attacks and the slump on Wall Street, the apparel industry’s payroll decline was deeper for that period than all but one sector of the economy. The motion picture and sound recording industry saw its workforce fall 23 percent, to 29,400.
The city is currently considering a proposal to lift special zoning protection that sets aside half the space in side-street buildings in the Garment District for manufacturing. UNITE and some manufacturers contend lifting those protections will only accelerate the exodus. Supporters of the proposal contend that zoning regulations can’t stop the other forces driving manufacturing out of the U.S.
One of the problems the industry’s severe decline has caused is that many of the businesses that supported apparel manufacturers — everything from local trim suppliers to firms that stocked replacement parts for sewing machines —?have gone under because of the lack of customers.
“It used to be ‘I need a pale blue zipper with gold teeth,’ and I could go out to Manny, Moe and Mack on the corner or someone in the neighborhood would have it,” explained Konheim. “Now you have to order that. It takes away the advantage, it’s nipping away the advantage of being in New York.
“When there were 400,000 sewers in New York, those guys were busy, busy, busy,” he said.
Konheim said his company moved many of the operations it now contracts overseas — including labor-intensive processes like beading, embroidery and handknitting — because it could no longer find domestic companies that did those jobs.
“You just can’t do it,” he said. “There’s no vendors.”
Now the problem he faces is that the small manufacturers left in the city can’t always keep up with the volume demands of some of his customers.
“There are some special-occasion chains that are capable of buying in very big quantities,” he said. “When that happens, we have to go offshore to do it.”
Even companies that retain their own manufacturing facilities have started to move to foreign contracting.
Made in New York Group, which produces the Lafayette 148 line, started out as a Chinatown contractor and later launched the brand — it came up with the name by inverting its address. Today, the company is slowly giving up its manufacturing presence in Chinatown, though it continues to operate in Brooklyn. It now does only 30 percent of its production in the U.S., with most of the rest coming from China.
“We see domestic production becoming less of a meaningful source of supply for our high-end products for the coming couple of years because the cost is too high and we must remain competitive,” said Deirdre Quinn, president of Lafayette 148.
The company has found it easier to expand in China because its owner, Shun Siu, is of Chinese origin and already had business contacts there.
“China is a sourcing location outside the U.S. that we see growing in importance for our company,” Quinn explained. “We can make everything there that we can make here — jackets, pants, skirts, etc. — as well as handwork. There is an endless supply of skilled labor there, as well as trim sourcing opportunities. We’re moving some of our operations there in order to stay competitive in a difficult market.”
Lafayette 148 is not the only company to take that approach. In January, the Greater Blouse, Skirt and Undergarment Association, a Chinatown contractors’ group, also took the if-you-can’t-beat-’em-join-’em approach, sending an 11-member trade delegation to China. Their goal was to form alliances with Chinese manufacturers.
Teddy Lai, executive director of the group, said at this point, the designer and eveningwear business are among the few sectors of the apparel business that remain profitable for Chinatown manufacturers.
“We would like our contractors to stay away from the budget lines, because that will not be able to sustain them, that will put them in trouble, in terms of doing everything by the book,” he said. “We do have many members that already are doing the design and couture lines…in those areas they have more flexibility” because the brands are willing to pay higher rates.
He also contended that designers should remember that abroad, the Made in the U.S.A. label still retains cachet: “When they want to sell their products overseas, particularly to Asian markets, the consumers from those countries will always enjoy buying product that’s really made in the U.S.A.”