When America learned that the nation's 2012 Olympic uniforms designed by the iconic U.S. designer Ralph Lauren were made in China, a ripple of controversy put pressure on an American institution to rethink their decision-making. This was not the first time that the U.S. has turned to an Olympic rival to manufacture the American uniforms, but this year the country collectively asked: with so many capable people looking for work in this country, why are we outsourcing our manufacturing?
In truth, the U.S. Olympic Committee’s decision to use offshore manufacturing is not surprising when you consider that the vast majority of all clothing sold in the United States is made elsewhere. Each day, brands and consumers make decisions that sustain existing retail models, pushing manufacturers to move offshore.
It was not long ago that Americans were proud to buy clothing made locally, not because it was patriotic, but because the products were unbeatable on quality and competitively priced. Today, consumers often don’t have the luxury to choose to buy American because less and less of the products we find in stores are made here, and what is available tends to be of poor quality or excessively priced.
The recent Olympic controversy around overseas manufacturing brings a growing sentiment to light: Americans want to support American-made companies, so brands need to rethink their retail models.
Bringing It All Back Home
To truly drive a revival of American manufacturing, companies need to deliver American-made goods that are equal to or better on price, quality, and value than the other options on the market. Consumers today have high expectations. They demand quality but they don’t want to pay unreasonable prices. They want to support brands that align with their values but they don’t want to make sacrifices to do so. Fortunately, they are also willing--even eager--to forgo the experience of going to the mall or store, instead opting to shop through alternative venues like pop-up shops, direct sales and online.
Today the majority of apparel brands focus on cutting costs on production, and so the attraction of cheap labor, lenient environmental standards, and low overhead in countries like China is clear. However, as much as 70% of the retail price of these items is layered in as finished goods are sold from factories to the brands, then to stores, and finally to consumers. This means that the price at the register has little to do with making the garment and much to do with the incremental costs layered in at numerous points along the supply chain.
So what’s the solution? If companies skip a few of the steps in the traditional distribution chain and instead sell directly to the consumer, they can eliminate those added costs, making it possible to invest in better quality production--without asking the customer to pay more. What’s more, they can manufacture in the U.S., offer better service, and empower the consumer to support brands that stand for the things they care about--without paying premiums.
Making products close to home also brings tangible operational advantages: manufacturers can monitor quality more closely, minimize transportation costs, and take advantage of shorter lead times, thus reducing inventory expenses and quickly reacting to consumer demands. In other words, while it may cost more to provide fair working conditions and wages to American workers, those costs can be offset by the benefits of manufacturing locally.
As long as companies are locked into expensive distribution models, the pressure to cut production costs will drive quality down. But brands that are committed to delivering the best possible value can certainly find a better way of doing things, and there may be no better place for it than here in America. With a bit of innovation, the power of local manufacturing is ready to be harnessed, and by 2014 there should be no question that our Olympic uniforms can--and should--be made by American hands.
Bayard Winthrop is the CEO of American Giant.
[Image: Flickr user Andy Morris]