Comments on: SIGNALS

By: Harrier

Harrier — Wed, 31 Mar 2010 16:34:00 +0000

We could probably GROW, or at least re-grow, the textiles industry in this country if we shut out cheap overseas labor. Tariffs would be very useful in this regard.

By: Chris Bryer

Chris Bryer — Mon, 29 Mar 2010 21:19:25 +0000

Hi DBTH:

I am not sure what their internal overhead costs are but I am sure that since they are public it is possible to find that information. Believe it or not the needle trade does require some level of skilled labor to acheive the kind of quality US consumers desire. I dont believe that J Crew could currently find the capacity needed to supply the chain even if tax incentives were in place that made it palatable for them financially.

The truth is that almost 100% of manufacturers would prefer to make products locally as the logistics of overseas production makes it much harder than here at home. It is all a matter of economics and capacity.

By: DBTH

DBTH — Mon, 29 Mar 2010 20:25:22 +0000

@Chris Bryer – So its $17 a shirt, but that doesn’t include the cost of selling it (rent, utilities, labor, catalog, etc) which probably gets you to the 15-20% overall profit margin per shirt, right?

I agree with the labor force, manufacturing clothing is a hard, detail oriented business. But its extremely honest work, and does not require much in terms of education. So if it was possible to find the labor force, would the Made In the USA label, similar quality, and tax incentives, be enough to keep a J crew competitive and possibly help it capture increased market share?

By: Chris Bryer

Chris Bryer — Mon, 29 Mar 2010 19:40:33 +0000

Hi DBTH: Please begin by understanding that J. Crew is making at least 75% markup on those $68 wovens and most likely more. That means they are paying approx. $17 landed, duty paid for them. If they were made locally they would never ever make that kind of initial markup on them and their entire business model would fade away. Another issue to consider with made in USA product is that we no longer have the labor force with sufficient skills for much volume.

I love made in USA product. But the larger chains are simply not able to make that work financially. Americans want quality and price.

By: Makaga

Makaga — Mon, 29 Mar 2010 17:55:04 +0000

Does anyone know of any such research paper or “game plan” that DBTH brought up?
It would be great to have one of the larger companies (J.Crew etc.) really make a stand and start manufacturing solely in the US..

By: DBTH

DBTH — Mon, 29 Mar 2010 17:05:56 +0000

@Brian – I know absolutely nothing about the retail or clothing business, but I am assuming that their $68 button downs deliver a 15-20% profit margin back to the company. But if labor costs (including benefits etc) added 30% to the production cost (again a guess), the shirt would now cost $100 (so J Crew could get that 15-20%), meaning less sales. But people like you would support it and buy J Crew, and the President has pushed for tax breaks for bringing these jobs back. Not to mention local incentives from cities who would kill for this kind of industrial development and union jobs.

Would it be worth it? Is that 30% increase not high enough?

By: Brian

Brian — Mon, 29 Mar 2010 16:17:31 +0000

Your question re: J.Crew assumes that they are passing a substantial amount of their labor-savings onto the consumer already, and I’m not sure that’s the case. I’d buy clothes from J.Crew if they were made in the U.S.; I don’t buy now because they’re not.

By: DBTH

DBTH — Mon, 29 Mar 2010 14:24:27 +0000

What would the impact of a J Crew for example shifting all of their production to the US? The cost of labor would increase the price, but would the tax breaks for bringing jobs back here off set that cost? Would sales increase if they could say that it was MiUSA? Would love to see a research paper on that

By: matthew langley

matthew langley — Mon, 29 Mar 2010 04:47:53 +0000

Pop up flea (international version) was also mentioned in the latest issue of Monocle.