American Made: That ‘Made in U.S.A.’ Premium

Her company occupies six floors in a building on West 35th Street and uses, among other businesses, six nearby sewing factories, a cutting room and even a maker of fabric flowers in the neighborhood. She organizes “Save the Fashion District” rallies, writes about the danger of losing local production and lobbies lawmakers in Washington to support the American fashion industry.

“If my only option as a young designer was to make my clothing overseas, I could not have started my business,” she said.

Yet Ms. Lepore says that when she signed a deal with J. C. Penney for a low-cost clothing line for teenagers — clothing that sells for about one-tenth the price of her higher-end lines — Penney could not afford production in New York.

Of the 150 or so items she now has featured on Penney’s website, none are made in this country. “That price point can’t be done here,” Ms. Lepore said of lower-end garments.

As textile and apparel companies begin shifting more production to the United States, taking advantage of automation and other cost savings, a hard economic truth is emerging:  Production of cheaper goods, for which consumers are looking for low prices, is by and large staying overseas, where manufacturers can find less expensive manufacturing. Even when consumers are confronted with the human costs of cheap production, like the factory collapse in Bangladesh that killed more than 1,000 garment workers, garment makers say, they show little inclination to pay more for clothes.

Essentially, to buy American is to pay a premium — a reality that is acting as a drag on the nascent manufacturing resurgence in textiles and apparel, while also forcing United States companies to focus their American-made efforts on higher-quality goods that fetch higher prices.

Last year, Dillard’s, the midtier department store, wanted to promote American-made clothing, according to Fessler USA, an apparel maker in eastern Pennsylvania. It turned to Fessler to produce tops. Theirs was a brief relationship. “Almost overnight, they called and said, ‘Made in America just doesn’t sell better than made in Asia, and you can’t beat the price,’ ” said Walter Meck, Fessler’s chief executive and principal owner.

The pattern repeats across retailers. Brooks Brothers’ American-made cashmere sport coats sell for $1,395; comparable imported ones go for $1,098. At Lands’ End, American-made sweatshirts cost $59, while the ones made in Vietnam cost $25. The label on an Abercrombie Fitch American-made sweater, which sells for $150, screams about its American origins. But most of the sweaters for sale at Abercrombie are the cheaper ones priced at $68 and up, and made abroad.

Eric Schiffer, known as Ricky, and his business partner, Leonard Keff, last year opened Keff NYC, a knitting operation in New York’s garment district. Business has been good, with contracts from higher-price retailers like Abercrombie, Anthropologie and Ralph Lauren. One afternoon earlier this year, Mr. Schiffer watched as a table full of women knotted loose threads on Ralph Lauren gloves destined for the American team in the Winter Olympics next year in Sochi, Russia. (Ralph Lauren chose American manufacturing only under pressure from consumers and government officials up in arms after it supplied Olympics uniforms made in China for the 2012 Summer Games.)

Though labor costs about 40 percent more than in China, and retail prices end up 20 percent higher, Mr. Schiffer says Keff’s clients — and, more important, their customers — can afford it.

“We can’t work with the Targets and the J. C. Penneys of the world,” he said. “It’s not for everyone. It’s really just for the higher-end companies.”

Paying for Quality, or Not

Americans spend more than $340 billion a year on clothes and shoes, more than double what they spend on new cars, according to the American Apparel and Footwear Association. And they say they want to buy American, even if it hits them harder in the pocketbook.

Two-thirds of Americans say they check labels when shopping to see if they are buying American goods, according to a New York Times poll taken early this year. Given the example of a $50 garment made overseas, almost half of respondents — 46 percent — said they would be willing to pay from $5 to $20 more for a similar garment made in the United States.

It is a sentiment that advertisers have picked up on. In the first half of 2013, according to the most recent data available from the research firm Kantar Media, spending on advertising by companies like the Toyota Dealer Association, Chevron and New Balance that emphasized products’ American-made status nearly tripled when compared with the first half of 2012.

The flurry of new promotions also has the Federal Trade Commission policing made-in-America claims. According to its rules, “all or virtually all” of a product has to be both assembled and sourced in the United States in order to qualify.

But shoppers’ statements that they are interested in American-made goods don’t always square with how they actually spend their money, especially when they are on a budget.

Article source: http://www.nytimes.com/2013/12/01/business/that-made-in-usa-premium.html?partner=rss&emc=rss