I grew up just outside of Manchester, NH, home of the Amoskeag Manufacturing Company. The Amoskeag was once the biggest cotton textile plant in the world. A couple of my grandparents worked there, but by the time I was growing up, the cotton mills were gone as the textile industry bailed out of New England for the South. The old building on the river were beautiful but also a reminder of what had once been.
Of course, the southern textile industry isn’t what it once was. Many of the mills of the Carolinas closed as liberalized trade allowed the work to go overseas. But, as the New York Times tells it, parts of the industry are hanging on — even expanding (U.S. Textile Plants Return, With Floors Largely Empty of People, Sep 19). It’s just that it has required investing in new technology to reduce the number of hands involved.
This is in many ways in keeping with themes we have discussed before: Manufacturing in high wage countries requires a willingness to substitute capital for labor.
But there is another part as well. There have to be customers that value what the American manufacturer brings to the table. That is, if one is making just a commodity, it is not clear that the cost gap relative to overseas production can be lowered enough to win on price alone. Successful players need to offer something else, like customization, that customers value. In the case of Parkdale Mills, the company featured in the article, they offer high quality and speed — which is valued by firms such as American Giant, a firm we posted about several months back. American Giant originally sourced their fabric from India but switched to one of Parkdale’s South Carolina mills for several reasons.
With the help of a consultant, [Bayard Winthrop founder of American Giant] settled on a mill in Haryana, India, that could make the desired fabric. After several months of back-and-forth, Mr. Winthrop was ready to ship his first sweatshirts in February 2012. …
But he was frustrated with the quality, and the lengthy process. By October of last year, Mr. Winthrop had moved production to South Carolina. Now it takes just a month or so, start to finish, to get a sweatshirt to a customer. …
The problems in India were cultural, bureaucratic and practical.
Time was foremost among them. The Indian mill needed too much time — three to five months — to perfect its designs, send samples, schedule production, ship the fabric to the United States and get it through customs. Mr. Winthrop was hesitant to predict demand that far in advance.
There were also communication issues. Mr. Winthrop would send the Indian factory so-called tech packs that detailed exactly what kind of fabric he wanted and what variations he would allow. But even with photos and drawings, the roll-to-roll variance was big. And he couldn’t afford to fly to India regularly, or hire someone to monitor production there.
He also found that suppliers deferred to his wishes, rather than being frank about some of his choices, which weren’t, he conceded, always good ones.
So there are important reasons why American Giant should favor a US-based mill. What makes their focus on speed even more interesting is that they have been struggling with backorders for months. One can only imagine that the situation would be much worse if they were still relying on fabric from India.