AIF Blog

5 Questions with American Giant's Bayard Winthrop

Apr 27, 2017
CATEGORY: Economy, U.S.A.
 
Bayard Winthrop founded the made-in-the-USA apparel company American Giant. With a sister company, it employs more than 200 people and uses facilities in North Carolina, South Carolina, Pennsylvania, and California to make clothing.
 
Winthrop will speak as part of the Making it in the USA track at the Aspen Ideas Festival this summer.
 
The American Giant website says that the company is “striving to make the best clothes on the market in the USA.” What inspired you to create a clothing company built on US-based manufacturing?
 
I grew up in the 1970s when there were still great American brands prevalent in the marketplace, like Levi’s, Woolrich, and others. I had almost an emotional connection with those brands because they were not only great products, but brands I was proud to connect myself with. And, 40 years later, I had moved to the Bay Area and was surrounded by other great companies that were innovating and fundamentally disrupting industries. Products like the iPhone and business ideas like Uber were being developed. And yet, I was being told, having spent most of my professional career in manufacturing, that we were no longer able as a country to make a sweatshirt in North Carolina. I found that to be unacceptable. I felt like the innovation happening with e-commerce, the internet, and technology could lead to an opportunity that would allow me to restructure business in a way that could unlock great-quality American manufacturing again at scale. That was a very inspiring idea, and I felt that there was a huge opportunity in the market for it. Once I got my head around that idea there was no going back.
 
In an article in Entrepreneur, you said you’re aiming to “start a revolution in domestic manufacturing.” How is your company breaking down barriers in creating clothing here in the US?
 
In apparel, and in US manufacturing more broadly, there has increasingly been a false choice presented to customers. If you want to buy quality American products, you either need to pay an unreasonably high price or you have to let go of the quality paradigm and purchase items that are the lowest quality on the market. I have always felt that that was an unfair choice. I think that, as manufacturers, if you’re unable to offer quality products at prices that can reach the mainstream consumer, there’s no real opportunity for change. You can do things in a small way, in an artisanal way, but there’s really no way to unlock a great-scaled American made brand again. I think what the internet and e-commerce has allowed for is really a fundamental rethinking of business structures. In our case, our direct-to-consumer brand uses an American-made supply chain, and leverages what the internet allows businesses to do. With that, we can think about building great American products again, and price them in a way that takes them out of the fashion boutiques of Brooklyn and brings them to main street. I think it’s a pretty compelling and revolutionary idea.
 
For years, apparel companies have outsourced manufacturing to other countries. Is this method of cost-savings becoming outdated?
 
There’s some of that. For 40 years and more, the retail apparel industry has been built on the back of expanding and opening as many doors as possible. So brands like The Gap, Abercrombie [and Fitch], and others have spent much of the last 10, 20, 30 years expanding their retail footprint. And when you end up with two, or four, or 800 doors, you are required to make massive inventory bets to stock those stores with product, and by definition, some of that will be bad and won’t sell. When you have these massive inventory bets that go sour, you’ve got to clear them at the end of the year with big sales. These businesses, over time, began to reorient themselves around building cost structures that factored in the need to withstand big, big clearances to clear bad inventory bets. That not only drove quality down, but forced manufacturing overseas. When you address that, which is the core problem that’s suffocating the apparel industry today, you make it more viable to not only make products domestically, but do it profitably and efficiently.
 
It’s very, very early days, but I think we’re going to see a lot of disruption and innovation in the coming decades. Already we’re seeing major impacts on retail. You can almost pick up the paper daily and read about the scale and the pace of store closings and financial distress that many of the retailers are suffering now. Two profound things are at the core of this: One is a shift in customer behavior. Consumers are shopping less in physical locations like malls. Two, consumers are able to be more choiceful in the brands they support. They’re voting with their dollars, and supporting brands that represent their values. The brands that don’t stand for anything have lost their resonance with customers. They’re also dependent on old-world mall and retail footprints. I think those things together are the canary in the coal mine, the initial indications of the change that’s coming.
 
What are the limitations in basing your manufacturing in the United States?
 
I’m not sure there are any. There are things that are true about American manufacturing, but we don’t view them as limitations. It’s true that it costs more to make products in the United States. There’s no question about that. The labor rates are higher here, the environmental controls are higher, worker safety standards are higher. All of those things translate into greater manufacturing costs. But those are offset by a couple of critical things. One is that customers are increasingly interested in American-made products. From a business standpoint, our ability to attract and retain new customers by standing for something, like great quality, American-made products, more than offsets the incremental costs of making the products. In other words, it’s almost a version of marketing and loyalty that we get for our decisions about how we make a product. Also, by having a domestic supply chain, one that’s close by, — I spend a ton of time in the Carolinas and Los Angeles at our factories and with our suppliers — our ability to control quality is much greater. For someone who spent over 20 years in manufacturing overseas, I can tell you it’s difficult to maintain consistency across your supply chain when you’re manufacturing products in places like China and India. For us, we have seen only benefits from having a domestic supply chain, notwithstanding the fact that it’s more expensive to make things in the United States.
 
You told Entrepreneur, “There’s a misunderstanding about the robustness of US manufacturing.” What doesn’t the public understand?
 
I think there’s a narrative out there, and it’s a narrative that’s been consistent for a long time now, about the death of American manufacturing. It’s true that the amount of things being made in the United States has declined dramatically, apparel possibly being the leading indicator of that. It looks like a lot of shuttered factories, but it doesn’t mean that there isn’t a tremendous engine of productivity and manufacturing that is waiting to get utilized. For us, going into North Carolina and working with sewing facilities and dying and finishing facilities, we’ve found that there’s a tremendous amount of knowledge, expertise, and efficiency. For those businesses that have made it through the last 20 or 30 years of contraction, they’ve come out the other side with a tremendous amount of knowledge, capability, and capacity that I think the public doesn’t fully understand. What’s coming through is a lot of negativity, that things are not going well and that there are lots of towns with high unemployment rates that are shuttering. That’s all true. But I think if brands have the courage to rethink some of their foregone conclusions about sourcing and where things need to be made, there may be a different tone to that conversation. When I started this, I was convinced that we were going to have a lot of very steep mountains to climb, and I have been almost at every turn impressed by almost the opposite of that. There’s just great talent and great productivity. So, in that way, it’s been an education for me as well. There’s just a huge amount of untapped capacity in American manufacturing.