Here is the latest article about American clothing manufacturing company, American Giant. This is from the magazine ‘Fast Company’ – highlighting the most innovative companies for 2015, Fast Company looks at the company American Giant, a San Francisco based company, who has moved their manufacturing base from San Francisco to the Carolinas, in order to be close to the homegrown cotton. Thanks to the Alliance for American Manufacturing for highlighting this story. I have highlighted the American Giant company several times before, like ‘American Giant: A new Business Model‘ and ‘Sweatshirts Made in USA‘ but this newest article: ‘American Giant Guns For Gap By Doubling Down On the USA’ is a very good update and quite detailed. America Giant has expanded from just sweatshirts, they also offer T-shirts, graphic shirts, polos, sweatpants and shorts – in limited quantities.
American Giant Guns For Gap By Doubling Down On The USA
During the autumn harvest season of 2013, a white-haired cotton farmer named Jerry Hamill received a gift in the mail: a hooded sweatshirt. Normally, he wouldn’t have thought much of that—sweat clothes aren’t an important part of his wardrobe—but this looked like a different class of garment. It was a rich navy blue and made of heavy cotton, with a sturdy metal zipper running up the front, and made by a company called American Giant. Hamill hadn’t heard of it; he isn’t the kind of guy who looks at labels, and so wouldn’t know that Slate had dubbed the product he was holding “the greatest hoodie ever made.” But he sure liked the way it looked when he tried it on.
“Most sweatshirts, there ain’t much to ’em,” Hamill says, as he and I drive in his Ford pickup down a country road in North Carolina. “But this was a good sweatshirt.”
One year later, Hamill is eagerly showing the fruits of his harvest-in-process to Bayard Winthrop—American Giant’s CEO, and the guy who sent the present. American Giant is trying to refashion the apparel industry supply chain, which is why Winthrop, a rugged brand builder whose four-year-old company is based in San Francisco, is standing on the edge of a white-tufted field, discussing his business plan over the whir of a cotton picker. Over the past two years, Winthrop has moved the vast majority of his production line to the Carolinas. Exaggerating only slightly, the salesman tells the farmer, “All of our output is coming from a 180-mile area.”
American Giant is not yet a household name in the apparel market, like Levi’s or Gap, but Winthrop has outsize ideas about its future. He doesn’t just want to sell hoodies, T-shirts, and polos; he wants to prove that American manufacturing can be profitable again, reversing a devastating economic trend. No U.S. manufacturing industry has suffered more from outsourcing than textiles and apparel: The domestic workforce has shrunk by roughly three-quarters since the 1990s. Winthrop is crafting an American-made resurgence, one that draws its power from both a heritage appeal and the Internet. American Giant is an e-commerce phenomenon: its clothes, sold only via the web, are comfortable, flattering, durable, and popular with a fanatical fan base. As a private company, American Giant declines to release sales figures, but Winthrop says its business has tripled each year since its launch in 2012. The company’s products routinely sell out and can be back-ordered for weeks. That’s why Winthrop is here in the Carolinas: American Giant is working to reengineer its back end, experimenting with a counterintuitive approach to making clothes—and creating American jobs in the process.
“Our bet is that eventually you begin to trust American Giant,” Winthrop tells me. “And say, ‘All right, these guys are product guys.'”
Winthrop talks like Bruce Springsteen one minute, Jeff Bezos the next. We first met a few months ago in Manhattan, over lunch at an appropriately old-time tavern. Winthrop has worked on Wall Street, in the San Francisco tech sector—he ran an early dotcom that was acquired by Infoseek, a popular search engine before Google came along—and in various retail niches, making products like snowshoes and messenger bags. But neither he nor his COO, Kent Kendall, had any prior experience in fashion design. The pair had a friendship that dated back to private grade school in wealthy Greenwich, Connecticut—Winthrop’s family traces its lineage to a governor of the Massachusetts Bay Colony, while Kendall’s father, Don, is a former CEO of Pepsi—and they later worked together at a skateboard company. Their experiences eventually led them to some blunt conclusions about the retail business. Winthrop has put them into a slim new book he’s titled, characteristically, I F**king Love That Company.
“The dirty secret of the apparel industry is that shirt that you bought at Nordstrom for $80 gets made for six or seven bucks,” Winthrop says, reaching across the table to feel the thin fabric of my collar. “The rest of the margin is chewed up by a whole bunch of shit that I would argue the customer cares less and less about.” For brands that Winthrop aspires to compete with, like the Gap, much of the sales margin pays for real estate and staff.
Winthrop founded American Giant with seed funding from Kendall’s father, and hired another friend, a former Apple product designer named Philipe Manoux, as the startup’s first creative director. Manoux had worked on projects such as the iPhone’s touch screen, but he, too, knew little about clothing design. Winthrop gave him an engineering mission. “There was a trend toward basic, simply executed, but really high-end,” Manoux says. “That was the environment in San Francisco; these small restaurants were opening up with really small menus, doing two or three things really well, and we wanted to be part of that.”
Given its birthplace, it was only fitting that American Giant chose to start by disrupting the hoodie, the tech world’s signature fashion statement. “Sweatshirts were iconically American,” Winthrop says, “and had been left to go to shit.” Winthrop and Manoux started their design phase by going on shopping expeditions, buying up clothes at thrift stores to rip apart and reverse-engineer. They especially liked the “hand feel” of vintage cotton: dry to the touch, in contrast to the slick texture of newer synthetic blends. Manoux paid a great deal of attention to the question of fit, producing a prototype that was tough on the outside and soft on the inside, with a band that clung to the waist and side panels that would stretch to accommodate larger bellies. He fixated on details like the interior material of the hood, because it was visible much of the time, and the little metal aglets that sheath the ends of the drawstring.
The prototype was beautiful, but American Giant soon ran into a problem: It wasn’t easy to mass-produce reliably. Winthrop tried to source fabric from a factory in India, but it was difficult to explain his organic concept across the culture barrier. “Our ability to control the quality was really crappy,” he says. That’s when Winthrop started looking to the South, to see if American Giant could actually be produced in America.
“It’s a long process from me to the clothes on your back,” Hamill tells Winthrop. The square-jawed Winthrop, wearing a black American Giant T-shirt, a navy American Giant hoodie, and blue jeans, watches as the harvested cotton is dumped into a tub as large as a truck trailer, where it’s compressed into giant cubes. The cubes will be transported to a wheezing cotton gin in the nearby town of Enfield, North Carolina, to be de-seeded, baled, and shipped. (Raw cotton is traded on global commodities markets.) The largest domestic cotton buyer, North Carolina–based Parkdale Mills, is also in American Giant’s supply chain. Parkdale processes bales into “sliver” that is spun into yarn by enormous robotic machines, which have replaced much of the company’s human workforce. The yarn is then knitted into rolls of fabric, which end up at Carolina Cotton Works, a company in Gaffney, South Carolina.
Winthrop first met Carolina Cotton Works’ owners, the Ashby family, when he was exploring his supply chain options. “The garment was special,” says Bryan Ashby, the company’s VP and sales chief. Winthrop was different from his usual customer, who Ashby says is typically “run and gun and ton.” Still, he was dubious. “I said, ‘I hear what you’re saying,’ ” Ashby recalls. “ ‘But I’m afraid the sticker shock is going to send you back to San Francisco.’ ” And initially, it did. But after a few shipments of lackluster Indian fabric, Winthrop came back and signed a deal with Carolina Cotton Works.
On a recent morning, the three Ashbys—Bryan; his brother, Hunter; and their father, Page—take Winthrop to see what’s happening to his products inside their dyeing and finishing plant. Bolts of natural cloth, or “greige,” are piled into bins in preparation for the dyeing process. Winthrop translates the technical jargon of apparel manufacturing with colloquial, precise enthusiasm. Picking up one piece of greige, he tells me to look closely at its knit. “The tightness of the weave is here in these loops,” he says. Batch by batch, the greige is loaded into huge, dripping dyeing machines, where it’s spun around at high temperature. Fabric emerges, soaking wet, in a hue that American Giant calls phantom gray. It’s then stretched flat and run through a drying mechanism, which works like a bagel toaster, and finally loaded onto a machine called the napper.
“This is violent,” Bryan says. The gray fabric rolls over a cylinder that is studded with thousands of tiny, rapidly moving needles, which rip up the loops on one side, turning it fluffy.
Page Ashby says that doing business with American Giant required a leap of faith. If a startup fashion label fails, its suppliers can get stiffed. But he says he was won over by Winthrop’s earnest embrace of two magic words: American made. “If you live here, and have been in this business and have seen what has happened to it,” Page says, “when you hear those words, you have to be interested.” Over his 40 years in textiles, the once-powerful local industry has contracted dramatically, as many factories closed or moved overseas. Since joining forces with American Giant, the Ashbys’ company is prospering—and expanding and upgrading to keep pace.
Winthrop says the numbers work on his end, too. Though finely made, American Giant’s most expensive hoodie costs $89, a middle-market price. (A Gap hoodie costs $50, and one from fashion designer John Varvatos goes up to $398.) He estimates that it costs about $38 to manufacture, and could be made around $7 cheaper in Asia. He saves a little money by using American fabric. Though American labor is still more expensive, tariffs and rising costs in India and China have made domestic manufacturing more competitive, a trend that has allowed the American textile industry to rebound modestly. American Giant isn’t the only manufacturer who has noticed; one Chinese yarn-maker is even opening a plant in South Carolina.
American Giant offsets the costs of domestic manufacturing in a number of ways. The Internet doesn’t just offer a sales-and-distribution platform, Winthrop argues, but the opportunity to forge fresh relationships between brands and consumers. He says successful brands of the future will be “humanizers,” who instead of growth put “love at their core,” a concept he illustrates in his book with a big pink heart.
He tightly manages inventory, another major apparel-industry cost. Instead of churning out many seasonal styles, some of which inevitably end up on the clearance rack, the company limits its product lines to a relative handful of garments with perennial appeal.
Most notably, perhaps, Winthrop forgoes advertising. He’s quick to criticize his competitors who he says waste a lot of money on marketing, paying for things that don’t benefit the consumer, like Super Bowl ads, while chipping away at the quality of their products. Winthrop says workmanship should sell itself.
Of course, Winthrop’s critique of marketing is itself marketing. While it doesn’t buy ads, American Giant puts a great deal of effort into spreading the word through social networks, cultivating relationships with celebrities such as Bruce Willis and Michael Rapaport. (Although American Giant introduced a women’s line in 2013, it is still very much about the bros.) Sometimes this can work too well: “We’re living in a time when one tweet from Ashton Kutcher means thousands of American Giant sweatshirts that I wasn’t expecting to sell,” Winthrop says. (To be clear, that hasn’t happened—yet.)
It’s a far different model from traditional brick-and-mortar brands, which can get bogged down by poor quality, bloated seasonal lines, and excessive ad budgets—all of which Winthrop calls a “death spiral of bad choices” in his book. After we finish up with the Ashbys, Winthrop and I drive a couple of hours north to see the factory where his fabric is cut and sewn into clothing. On the outskirts of Raleigh, we pass a mall anchored by Belk, a department store chain. “Belk’s—how much longer are they going to be around?” Winthrop wonders aloud. “Barnes and Noble? See you later. Best Buy? See you later.”
To consumers, American Giant may look like an e-commerce company, but on the back end it’s a traditional manufacturer: Every click of the buy button means more fabric, more stitching, and more work in the one-stoplight town of Middlesex, North Carolina. “Two years ago, it was fucking downtrodden,” Winthrop says as we drive past double-wides and wood-frame houses with collapsed porches. On the roadside in front of Eagle Sportswear, however, there’s a sign that reads we’re growing, seeking “experienced sewing machine operators.” Every parking space outside the corrugated metal factory building is filled; we find a spot in the new overflow lot next door.
“When you run out of parking spots, you really know something good is going on,” says Brian Morrell, the company’s thin, bespectacled general manager. Inside the factory, rows of women, mostly black or Latina, work amid piles of sleeves, hoods, panels, and pockets. Sewing an American Giant sweatshirt involves 30 separate steps, maybe three or four times as many as a mass-market competitor might require. “In our business,” Morrell explains, “every stitch, every line, every seam is money.”
Morrell comes from a sweatshirt family— his father was the director of manufacturing at Champion—and he tells me that for the past couple of decades, he only had to answer one type of question from clothing brands. “This stitch, this detail: Is this needed, and why?” he says. “How can we increase the margins and keep the prices the same?”
Like the Ashbys, Morrell didn’t quite know what to make of Winthrop when he first walked through the door. “I looked at the product and loved the product and said, ‘Thanks, but no thanks,’ ” he recalls. Morrell didn’t think there was any way American Giant could possibly turn a profit. But Winthrop is a convincing pitchman. “This is a very different approach,” Morrell says. “It’s really kind of a change of the DNA.”
The main reason it costs more to make a hoodie in America than in Asia is hourly wages. Every stitch is money because every stitch takes time. To save time without sacrificing stitches, Winthrop has been pressing for greater efficiency in the manufacturing process. This not only saves on production costs but also will allow him to better control his inventory, so he can respond nimbly to events like Acts of Kutcher and better manage the growing demand for his merchandise. So American Giant recently brought in an outside consultant to help Morrell’s factory institute a concept called Team Sew.
Traditional garment manufacturing works like this: A worker sits at a sewing machine all day long, making the same seam over and over. When she fills up a bin, someone comes along and moves the batch to the next seamstress, who adds on her piece, a process that continues until the garments are complete. Because some operations take more time than others—and people work at different paces—garments naturally tend to pile up. Seamstresses spend roughly 80% of their time performing tasks other than stitching.
In the Team Sew approach, adapted from Toyota’s manufacturing process, the seamstresses work on their feet, performing multiple operations and collaborating on the fly. “This is like an elegant dance,” Winthrop says. Actually, a more apt Tarheel metaphor came to my mind: If the old system looked like basketball’s four-corners offense, plodding and methodical, Team Sew resembles Phil Jackson’s fluid triangle system. The seamstresses, wearing beige American Giant branded aprons, move along a horseshoe-shaped bank of workstations, seemingly in constant motion. When one falls behind on an operation, a teammate comes over to help her catch up. Above the team, a scoreboard displays how many items they complete and how that compares to efficiency targets.
Team Sew is still in the implementation phase; most of the workers in the factory when Winthrop and I visit are still using the old approach. But Morrell says that the results have been encouraging: Each worker produced roughly 60% more than before, and some of the factory’s savings have gone back into performance bonuses.
Morrell confesses that he wasn’t sure how Team Sew would go over at the factory. A kinetic eight-hour shift is exhausting, and a consultant hired to institute the change tells me that it takes workers three weeks to adapt to working on their feet. But with the bonuses, Winthrop says Team Sew workers are “now averaging north of $13 an hour,” almost twice North Carolina’s minimum wage of $7.25. Morrell says there are plenty of new volunteers for training. “Everybody who reads the news,” he says, “knows that change has to happen for us to survive.”
At the end of a Team Sew assembly line, worker Adela Villa performs the last step in manufacturing a gray American Giant hoodie. She uses a metal rod to insert the drawstring, and does a final inspection, trimming errant threads with a tiny pair of scissors. Then she folds the finished product and places it in a plastic bag for shipping.
A few weeks earlier, I had received an identical sweatshirt in the mail. Without knowing the story behind its design, or the complex mechanics of its construction, I opened it up and tried it on. It fit. Since then, I’ve had similar success with American Giant T-shirts and polo shirts. Amazingly, my wife even complimented the cut of a pair of American Giant sweatpants. I’m not a locavore. I’m not a foe of globalization. I’ve never known where my clothes come from, and I don’t really care. I just like things that look good and feel good on my body.
There’s a definite gloss of salesmanship to Winthrop’s “made in America” talk. It’d be easy to be cynical if not for this undeniable fact: American Giant delivers the goods. Like most everyone else Winthrop encountered along his supply chain, I approached the world’s greatest hoodie skeptically. But American Giant sold me on the merits.
“If you can do that,” Winthrop tells me as we drive through rural North Carolina, “you can build a brand that can put a bull’s-eye on Levi’s.”
[Photos: McNair Evans]