Andy Rosen, founder of the designer brand Theory, along with the Council of Fashion Designers of America (“CFDA”) and the New York City Economic Development Cooperation are launching the Fashion Manufacturing Initiative to raise funds for New York city factories that are at least two-years-old. By encouraging American designers to manufacture domestically, this initiative is an important step in reinvigorating American garment manufacturing. The initiative, which seeks to raise $3 to $5 million in start-up funds, has already received $1.5 million from the city Economic Development Corporation and Mr. Rosen. The initiative, which includes factories in all five New York City boroughs, will involve investing in equipment, improving real estate and working conditions, recruiting and retaining skilled labor, and centralizing the information needed to produce in New York. Factories with at least two years of fashion industry work can start applying for the funds on September 16th, and finalists will be selected in November. A committee of industry experts will interview and visit finalists on-site, and the winners will be selected in December. Funds will be delivered in February 2014.
Rosen explained that it is no longer the case that it is less expensive to manufacture in China: “Between the rising prices in China, the freight and the duty rates, there is no advantage price-wise in manufacturing in China.” In 2006, the gap in labor prices between the United States and China was about $17 per hour, but according to Dan North, an economist with Eurler Hermes, a credit insurer that works with manufacturers, by 2015, the gap could shrink to as little as $7 per hour. North indicated that “If you’re a U.S. company and the advantage is only $7 per hour, suddenly it may be worth staying home. If I stay here, I have lower inventory costs, lower transportation costs. I’m closer to my market, I can have higher-quality production and I can keep my technology.” In fact, a 2012 Boston Consulting Group survey showed that 37 percent of U.S. manufacturers with sales above $1 billion said they were considering shifting some production from China to the United States.
In addition to rising prices, China has enacted stricter labor laws, and is experiencing more frequent labor disputes and strikes. At the same time, worker productivity has been rising in the U.S., and there is a growing appetite for domestically manufactured items. Between January 2010 and May 2013, the United States added 520,000 manufacturing jobs. In the apparel sphere, the rise of domestic manufacturing has also brought with it an expansion beyond traditional fashion manufacturing hubs like New York and Los Angeles, and into smaller cities like Raleigh, North Carolina and Fort Wayne, Indiana.
Nevertheless, many designers still send work abroad, in part because of more advanced technologies available overseas. Mr. Rosen explained that it’s more complicated to manufacture in America “because you have the pattern making over here, the marking and grading over there, the cutting, sewing elsewhere.” Barbara Blair Randall, president of the Fashion Center Business Improvement District, has indicated that several designers have complained that New York’s factories are sorely in need of modern updates. Rosen believes that “if these factories develop the technology, designers will come back in droves.