Made in USA

Cone Mills White Oak closes NC plant
Photo Credit: Bloomberg

The End of American Made Jeans – Cone Denim to close White Oak Plant

This is no fabrication. A few weeks ago, I woke from a nightmare having dreamt Cone Denim, our main supplier of denim fabric, closed its doors and people were buying up everything down to bare shelves at our retail store. However, that was just a dream. Our denim supplier has been producing quality denim for over 125 years and has the oldest denim mill in the United States of America. A shut-down of its famous White Oak Plant which produces its U.S.-made denim and is the last mill standing that makes selvage denim in the USA is very unlikely. Right?

The day before writing this, I saw a spike in sales and I thought, maybe it was due to the results of the articles being written, inspired by our press release a few days earlier. Later that night after work, my wife asked if I heard the news about Cone Mills White Oak Plant closing. I thought, clearly she was mistaken and I went online to check it out.

If you are not familiar with Cone Denim Mills, they have been America’s leading supplier of high-quality denim fabrics to apparel brands since 1891. Nearly all of the most popular and successful small to mid-sized domestic jeans makers in the United States rely on Cone Denim as a key supplier. At Williamsburg Garment Company, about 90% of the denim we use is American-made Cone Denim. I stress the point that we use American-made denim because Cone branded denim is also manufactured in mills located in China and Mexico. I learned from dealing with import complications and extra costs, to walk into the Cone showroom or tradeshow booth and stress, only show me the new American-made fabrics.

After doing some research and contacting Cone Denim, I was shocked to learn that Cone was indeed planning to close its 112-year-old White Oak Plant in Greensboro, North Carolina, which produces all of the company’s American-made denim and employs nearly 200 people. Initially, I hoped this was one of those times when an announcement is made for the closing or end of something very dear to a fan group, like Jay-Z’s Black Album. Closing announcements can sometimes be used to ignite sales, meanwhile re-organizing and re-opening is really what is planned.

I hoped and suspected something would be announced later like, deciding to downsize the White Oak Plant or move the production to a new smaller more optimized manufacturing facility. However, after remembering International Textile Group, Cone Denim’s parent company was acquired via a Public-to-Private transaction in October 2016 by the investment firm Platinum Equity, I feared the worst, knowing the thinking behind money people. When it’s strictly about turning a profit, closing the least profitable parts of an operation, like U.S. manufacturing, to focus on the more profitable parts, like foreign manufacturing, is normal thinking.

This seems to be what may be happening as a rep at Cone Denim has informed me, “ultimately there will no longer be any denim (wide and selvage) produced in the USA after December 31, 2017. All denim operations will be focused out of Mexico and China.”

Are the days of buying American-made jeans manufactured in denim fabric made in the USA coming to an end?

I sat in the park later that day teary-eyed in unbelief. Thinking this can’t be happening. Will 2018 be the last year to get true American-made jeans manufactured with denim made in the USA? Will the U.S.-made denim supply run out? Will American-made jeans be defined from that point on as jeans sewn in the USA of Mexican, Japanese or Chinese-produced fabrics?

Some 100 years plus of heritage could be wiped out by inventors looking to make profits with one-dimensional thinking. I believe it should be as simple as optimizing the business to succeed in the way business is done today. Not to look on the surface and say this is profitable and this is not, cut out the non-and least profitable. With something this important to the country, I believe you have to find a solution to make it work. It boils down to the old saying, where there’s a will, there’s a way. Too often, money-types come in and take the easy route – stripe everything down, repackage and sell it off for profit, often destroying a brand on their way out.

In this case, they would be ignoring years of heritage and stripping the growing economy of small to mid-sized brands like ours that rely on Cone White Oak denim. We do business in today’s economy. Small-batch, online, direct-to-consumer businesses that focus on making a better product. We helped to ignite the comeback of American-made products after the downturn in the economy and after bigger brands move production overseas for higher profits.

I love Cone Denim. However, I’ve always thought they were underachieving as a brand. Often, big companies are too slow to modernize in changing times or get stuck in a do-the-same-thing we’ve always done strategy. Today, more than ever, you have to think outside the box and clearly define your strengths and weaknesses. Which does not mean cutting off your weaknesses to focus on your strengths. It means being clearly aware of what they are, so you can make both work for you.

Bottom line, any type of business where deep American tradition gives it great value around the world, which produces some of the best products in the world, backed by more than 100 years of heritage and has a highly respected brand name, should be profitable. If a business that has been based in the U.S. for over a century can’t use those things to be successful. The size of a plant and order volumes may not be the problem. Looking into taking advantage of the company’s strengths could help.

Most hard-core denim heads and industry folk are familiar with Cone’s brand. This is why, after the announcement of the plant closing, it took me a day to hear about it and we are one of the company’s customers and players in the denim industry. 

In my opinion, this story is so big it should be national news and running in CNN’s hourly rotation with the headline “Is this the end of American-made Denim?” For this to be a top story at CNN, MSNBC, Fox, or the three major networks, does someone have to mention the connection with Wilbur L. Ross, Commerce Secretary of Trump’s MAGA billionaire posse? 

To complete the merger transaction, Platinum Equity acquired all of the debt and equity securities of ITG, previously owned by entities managed by W.L. Ross & Co. LLC and its affiliates. Not saying that the Commerce Secretary is at fault for the actions of who took over, but anytime an American Institution trades hands, you should have faith that the new tenant is going to take care of the place. And, if President Trump is truly trying to help American manufacturing, he and Mr. Ross need to get some billionaires together that will put this thing back in the hands of those who understand the importance of its American heritage and fix it.


American garment manufacturing & why it moved overseas

Williamsburg Garment Company denim jeans once made in China until 2013, all jeans are now made in the USA since 2014.
Once made in China until 2013, all WGC jeans have been made in the USA since 2014

Automation and foreign production didn’t erode the American garment manufacturing industry, we did it to ourselves. When you think about it, the goal of corporations is to maximize profits for their investors. Contrast this against the Chinese philosophy of keeping people working by sacrificing high profits per piece in exchange for larger volumes at smaller margins.

As consumers seek lower-cost products, companies move production to lower-cost areas to stay competitive. Oftentimes, consumers become angered with higher-priced domestically made products when compared to those made in low-wage countries. This happens even if people want to see products made in America. In economics, they use the multiplier effect to measure the circular flow of money and spending in a community. Money that is earned flows from one person to the other. From the factory workers’ paycheck to the businesses where they shop and into the paychecks of employees at those businesses. The output becomes larger than the input. Conversely, when a factory closes its doors, less money is spent in the surrounding community reducing output from surrounding businesses which also negatively affects the line of suppliers. It all starts with the consumer’s decision to buy American or buy cheaper.

Why has manufacturing moved overseas?

Americans almost always choose to buy cheaper over buying made in the USA. This is why producers not claiming the luxury sector must find ways to streamline the production process and offer a better product at competitive prices – as is our goal.

One of the most inspirational things ever told to me in this business was from a friend who owned a small factory in China that produced our very first Williamsburg jeans. While I was in Guangzhou working for another brand, my friend, who was the production manager at a large factory told me he was about to open his own small place and asked. “Malone, why don’t you start a new brand that sells at very low prices? I’m sure you can sell a lot of jeans.” I said, “no, I’m not interested in making low-end products.” I asked him, “wouldn’t you rather make better quality at smaller volumes and earn a $20 profit per jean?” He responded “no, I’d rather make a hundred thousand jeans and make $1 profit per jean. This way I keep my people working and fed.” I laughed and said, “that would never work in the U.S.” It was not until later that I realized that was the kind of sacrifice and thinking which helped make China the number one producer of the world’s goods.

When we launched the Hope Street jean, our first American-made jeans, our imports were retail priced between $105 to $116. We were making a great profit at those prices and could offer retailers attractive markups at wholesale. After producing the Hope Street jeans near the retail price ($124) of our highest-priced imported jeans, I had confidence, that if given the choice, people would choose to pay a little more for better quality American-made jeans. Thus, we began the movement to make all of Williamsburg’s clothing in the USA.

Hope Street raw denim jeans, the first American-made jeans by Williamsburg Garment Co. produced in 2014
Hope Street – Williamsburg Garment Company’s first American-made jeans

Where there’s a will there’s a way.

It was not easy to get our cost down to where we could meet the retail price goal. Compared to import production, there is more work, logistics, travel, and time put into producing jeans in the USA. Although it may not seem to make total financial sense, to me it has long-term worth. It began with making a 1-man company even savvier with cost and overhead.

Before opening our first retail store in 2016, the office was a small rented self-storage space. We had an electric outlet, no heat or air, and used a phone over the internet together with a mobile hotspot to connect to the world.

Williamsburg Garment Company's embossed W logo on waistband of the brands jeans
WGC’s embossed waistband logo

A good example of working down cost, take our small embossed W-logo on our waistband. Domestic producers that I met with wanted $2 to 4 per jean, with $1200 – $1500 upfront die cost. That was too much. The waistband logo itself could have ended up being about 14% of the total product cost. Instead, I shipped waistband fabric parts to China and had them embossed for 15 cents each, plus the shipping cost and we were off and running. By the third production of the Hope jeans, I was able to find an American-made machine that could emboss the waistband logo in production. The machine together with shipping was a little over $5500. I figured it was a good investment because it cost nearly the same as four productions from the quoting suppliers. With a little more homework, I located a local company to make our dies for less than a hundred dollars – a far cry from $1200 – $1500. Later, I worked out a new price and agreement with the owner of the sewing factory, handing him the local logistics responsibilities. This saved us tremendously because we avoided regular traveling expenses associated with doing production in Los Angeles from New York, which included rental cars, lodging, flights, etc.

A cutter in the U.S. denim manufacturing chain cutting the jeans patterns from markers in Los Angeles, Calf.
In the jeans-making supply chain, the pattern parts are cut by a Cutter, before moving into the printing and sewing factories.

As the owner of a small business, I fully understand the value of finding vendors that will work in small volumes and invoice at higher volume production rates. High minimums and prices have prevented even established brands like ours from expanding and producing other products in the U.S. Aiming to reverse the snowball effect, we believe that starting small and developing our own production chains within The United States will help reverse the outflow. For consumers, our goal as manufacturers must be to produce reasonably priced, completive goods. Unlike those who find it convenient to say, “you can’t make that in the United States,” we believe in “where there’s a will, there’s a way.” We are small now but know as we grow, we will be part of building a stronger supply chain. 

Our big brand competitors, if they choose to make the investment, could easily find pieces in their collections that could be produced in the U.S. or manufactured using their own or cooperative U.S. facilities. However, in corporate America, where more often it is profit over people, I believe it is unlikely. Still, we are hoping more companies will join us and choose to come back to the USA.

The rebuilding of American manufacturing has already begun thanks to small companies like ours. Williamsburg Garment Company will be ambitiously continuing to do our part to drive infrastructure development as we expand into sewing new knit products in-house, in Spring / Summer 2017. As we perfect our manufacturing process, we plan to also produce for other small and mid-sized brands, just as we do in denim. It is an uphill battle but we believe in becoming our slogan, “The world’s favorite American denim brand.”

Williamsburg American-made selvedge raw denim jeans with flag pocket bags
Grand Street selvedge American-made jeans produced in Cone White Oak denim made in USA

Angry voters, cheap products, free-trade & trickle-down policies

Angry voters addicted to cheaper products have finally woken up and realized free-trade and trickle-down policies haven’t really worked out well for them.

Denim manufacturing factory inside China in 2006. Jeans are hand-sanded for aging effects before washing.
Hand sanding area inside Chinese denim factory in 2006

In this super-heated political season, the one good thing politicians are finally talking about is bad U.S. trade policies (we accept goods from some countries with less restrains than they give us to export to them). Many angry voters addicted to cheaper products have finally woken up and realized Free Trade and Trickle Down policies haven’t worked out well for them. It feels like there are now more closed factories than good-paying factory jobs and both Democrats and Republican voters are angry with their Party Establishment whose main interest seems to be supporting Big Businesses and Contributors to their campaigns, which has aided in eroding the U.S. manufacturing base in exchange from greater profits for investors. Over the past few decades, the rich have gotten richer and the middle class has shrunk as the U.S. economy transformed into an Entertainment, Service, and Tech-based economy.

In a manufacturing-based economy, there is usually an economic community that flourishes around manufacturing. Factories require suppliers, part manufacturers, restaurants, travel, and other community businesses that usually thrive around them. When American businesses moved to manufacture overseas to increase profit margins, basically good-paying factory jobs were traded for retail jobs. Great, if you are a teenager but not so great if have a family to support. With few American businesses placing manufacturing orders within the U.S., factories closed and the supplier chains died along with the communities that depended on them.

For years I’ve been saying that Americans have purchased the country’s economic health and manufacturing base away. Big business, politicians, and consumer purchasing decisions have aided the collapse of our manufacturing base and erosion of our infrastructure while contributing to the sudden growth in low-labor countries now manufacturing our products.

Let me tell you a story

When I first traveled to China in the mid-1990s we drove to the factory on dirt roads. Along the roadside were old wooden homes that you would swear no one could possibly be living in. Within 15 years those dirt roads were replaced by paved highways with exits that spun off into other new highways in construction. Not far in the distance were massive new factories, apartment buildings, and whole new communities in construction. Now, juxtapose that to what has happened in the U.S. over the same period.

Hope Street American-made jeans

During the downturn in the economy, a small percentage of Americans started paying attention to where the products they bought were made. This small change in the buying habits of some has helped contribute to slowing the tremendous growth in China and other countries while the U.S. economy rebounded. During my last trips to China, I noticed business was no longer booming and many construction projects were stalled.

Many factors go into changes in economies and I know this to be true: How you spend your money makes a difference along the chain of who you decide to spend it with as much as it affects you. I can go on, but I’m not trying to be a political pundit or running for office so I’ll leave it at that.