Apparel-making picks up (slightly) in NYC as trends favor city manufacturers.
Manufacturing clothes in the garment center might seem like a step back in time—but it’s actually forward growth for Ricky Schiffer. In December, the third-generation sweater maker, with his business partner, Leonard Keff, opened a 7,500-square-foot knitting factory on West 36th Street.
“We are just the first of many to come,” said Mr. Schiffer, who has committed $2.6 million to the project. “We’ll keep growing.”
The Made in USA movement is gaining steam, as retailers from Brooks Brothers to Walmart push to manufacture their wares in the United States to appeal to patriotic consumers and avoid costly overproduction as overseas labor and shipping costs rise. Surprisingly, the trend is playing out on a smaller scale in the city.
For an area that has seen apparel-making plummet—last year, on average, there were 14,900 apparel manufacturing workers in New York City, and two decades ago, there were more than 80,000, according to the New York State Department of Labor—new factories are welcome additions.
Mr. Schiffer’s factory, Keff NYC, has eight knitting machines (each costs $100,000), and he has ordered a dozen more. Though the company is currently making samples, Mr. Schiffer expects to engage in production of up to thousands of units. The company has already signed Abercrombie, Opening Ceremony and Burt’s Bees Baby as clients. It’s also producing uniform accessories, including hats, gloves and scarves, for the 2014 Winter Olympic Games.
Orders up by 30%Meanwhile, Stoll America, a 140-year-old knitting-machine seller that also makes apparel, opened an outpost on West 39th Street in 2009 and has been growing ever since. The company employs 21 workers, up from 12 four years ago, and has seen orders increase by 30% since 2010.
“Up until now, no one was around where designers could get samples done,” said Marcus Kirwald, product development manager. “They had to send them out, and there was lot of time and frustration involved.”
Brooks Brothers has made a name for itself in local production—it has manufactured its ties at a Long Island City, Queens-based factory for decades, for example, and operates two additional East Coast facilities—and is working to strengthen its capabilities. In its neckwear factory, which last year produced 1.5 million cravats, Brooks Brothers employs 300 workers, up 10% since early 2011. Three years ago, the brand overhauled its operations from assembly line to “module,” or manufacturing by team, to become more efficient, and it began producing apparel for other brands, such as Club Monaco and Jack Spade.
The clothier now promotes its American-made wares through a special section on its website and specific catalogs—recognizing that consumers are paying attention to the origin of their clothing. (
Ralph Lauren was criticized last summer for making the U.S. Olympic team’s uniforms in China.)
“It’s really critical as part of our heritage and our culture that we maintain and actually increase American manufacturing,” said Paulette Garafalo, president of international and manufacturing at Brooks Brothers.
Asia’s rising middle class also has altered the landscape. Asian shoppers are beginning to covet U.S.-made brands, according to some designers. New York-based designer Patrik Ervell, who launched his eponymous menswear business seven years ago and manufactures 95% of his goods in the U.S., has noticed that buyers from Japan, China and South Korea are looking to stock only apparel manufactured in the U.S. If it doesn’t carry that label, they’re not interested, he noted. Currently, Asia represents 25% of his wholesale business.
Shifting pattern”People have started to fetishize this ‘Made in USA’ thing; it has an aura around it,” said Mr. Ervell, who sells to upscale stores such as Barneys New York and Opening Ceremony. “That period of churning stuff out of China and shipping it here is shifting.”
Domestic production is pricier—by as much as 40%—but the gap has been narrowing in recent years. In addition, manufacturing here means that retailers can get smaller batches of products into stores more quickly, reducing the need for end-of-season markdowns.
“It’s the unsold portion which becomes the albatross around their necks,” said Andy Jassin, head of retail consultancy Jassin Consulting Group. “It’s a matter of what’s efficient, and we’re beginning to see the efficiency of ‘Made in USA.’ “
And Americans appear increasingly willing to pay for it. About 75% of consumers said they would shell out more for American-made goods, up from 50% in 2010, according to America’s Research Group. Typically, U.S.-made products have been limited to small high-end designers, but now larger mainstream retailers, like Ohio-based Abercrombie, are investing in U.S. manufacturing.
“A lot of these stores are strategizing how they can do a ‘Made in USA’ product now because they think the country is ready for it,” said Mr. Schiffer.
Even so, manufacturing locally, whether in New York’s garment district or Garland, N.C.—where Brooks Brothers operates a factory—continues to present challenges. Most apparel sellers buy fabrics overseas, because Environmental Protection Agency rules for printing with dyes make local sourcing difficult. Meanwhile, when brands began outsourcing manufacturing and shuttering their local factories decades ago, younger workers, especially in the garment district, started abandoning the field for more lucrative industries.
So far, the return of some factories has not been enough to reverse the loss of manufacturing jobs in the city, where fashion jobs have steadily declined from 200,000 in the heyday of the 1960s.
“You don’t see the kids of the kids in the factories anymore,” said Alex Garfield, who has been in the apparel industry for more than two decades, currently as a founder of women’s pants brand Peace of Cloth. “A whole generation is missing.”
Still, the dynamic is shifting.
“Ten years ago, it was six times cheaper to manufacture in China,” said Ms. Garafalo. “Today, it is about three times less expensive, so the opportunity for better margins [there] is reducing.”
In Ohio and Beyond, President Obama Sees Model for an American Manufacturing Revival
in Uncategorized/by MAM TeamFebruary 14, 2013
Yet even before the facility is fully up and running, local business leaders say Youngstown, Ohio’s National Additive Manufacturing Innovation Institute (NAMII) is already spurring interest in a promising new technology known as “3D printing” that could bring new manufacturing jobs to the region.
They say the federal government is bringing together researchers and businesses that could make the region a hotbed of cutting-edge manufacturing.
“This is absolutely a net positive for the Youngstown area,” said Eric Planey, a vice president with the Youngstown Chamber of Commerce.
Also known as additive manufacturing, 3D printing creates solid objects from a digital model by laying down successive thin layers of material, rather than the traditional “subtractive” approach, in which objects are created by cutting them out of a solid chunk of metal or plastic.
The process has been used to build prototypes for 25 years, but now is making its way into regular production. Companies such as General Electric Co plan to use 3D printing to build lightweight aircraft parts, while dentists use it to create crowns in the space of an hour rather than two weeks.
The Obama administration has been promoting the idea of a manufacturing revival as labor-saving technology, rising costs overseas and cheap energy at home have prompted some manufacturers to bring factory jobs back from overseas.
Economists say the United States is long past the days when steel mills, auto plants and machine jobs boosted millions of unskilled Americans into the middle class. Manufacturing now represents 12 percent of the U.S. work force, down from 20 percent in 1979.
Youngstown has seen some manufacturing jobs return since its giant steel mills shut down in the 1970s, but increased automation means that they employ fewer people than they would have several decades ago.
A new pipe factory that would have needed 1,000 workers 25 years ago now employs 350, Planey said, while a General Motors assembly plant that employs 5,000 produces as many cars as it did when it employed 14,000 people.
Obama administration officials say manufacturing might not ever employ as many people as it once did, but the sector has broader benefits to the economy because it spurs research and development and boosts exports.
Taking a page from similar efforts in Germany, the administration last year picked Youngstown as the site of an “innovation institute” that would spread new manufacturing ideas among a wide range of businesses.
“You are using a facility as essentially like a teaching hospital,” Gene Sperling, the director of the White House National Economic Council, said on a conference call on Wednesday. “When there are developments in technology and research, you have the capacity to share them with smaller businesses.”
GOVERNMENT, BUSINESS, UNIVERSITIES
Government agencies such as the Department of Defense, the Department of Energy, NASA and the National Science Foundation put up $30 million for the effort, matched by $40 million from businesses such as Northrop Grumman Corp and universities including Carnegie Mellon.
In his State of the Union speech, Obama asked Congress to spend $1 billion to set up 14 more innovation centers across the nation. He said he would set up three facilities on his own, using existing funds, if lawmakers do not act.
Republicans, who have fought Obama’s stimulus for green technology, are unlikely to soften their stance on spending.
“Washington has a spending problem that threatens the prosperity of every child, every family, and every small business in America,” House of Representatives Speaker John Boehner, who ran an Ohio manufacturing firm before entering politics.
When the Youngstown center is fully up and running in the next several weeks, the 11,000 manufacturers in the region will get a chance to learn how 3D printing works and determine whether they want to invest in it themselves, said NAMII president Ralph Resnick.
Local workers also could learn how to operate the new equipment, and experts could ensure that the final product will meet existing quality standards.
The idea is to create enough of a body of expertise around the technology to turn the region into a hotbed of additive manufacturing, Resnick said.
“What we’re looking to work on is pervasive issues,” ones that affect many manufacturers, he said. “If we solve it, it’s all good for the community in general.”
Like other forms of “high tech” manufacturing, additive manufacturing doesn’t have much use for low-skilled workers doing repetitive tasks on an assembly line.
But if it catches on, it could create more demand for industrial designers, inventory managers and other skilled workers, said Todd Grimm, an industry consultant based in Kentucky. It also could spur a new wave of business startups as the barriers to entry are much lower than they are in traditional manufacturing, he said.
“The economy will benefit. To what extent? Will it even be measurable? Who knows – that’s for somebody with a crystal ball,” he said.
This Might Be The Year For A Pro-Domestic Manufacturing Policy Agenda In Congress
in Uncategorized/by MAM TeamFebruary, 2013
Murphy, the youngest member of the Senate at age 39, says he intends to be a leader on issues related to “Buy American” acquisition laws, currency manipulation, tax policies that promote investment in plants and equipment in the United States, and government investment in infrastructure that improves industrial competitiveness. “I have already reached out to other senators like Debbie Stabenow [D-Mich.] to join the pro-manufacturing efforts underway here in the Senate,” he says. “If we get together as a party and movement to push this new strategy there will be a lot more people than just me in the Senate and the House ready to follow.”
Murphy says the Republican Party could come around, too, on issues that favor domestic manufacturing. “There is an examination happening in the Republican Party as to why they hemorrhaged votes and seats in 2012,” says Murphy. “They would be smart to realize that one of the reasons they lost votes is they continue to be on the wrong end of the outsourcing debate. They are coming around on immigration because they recognize that they can’t win elections unless they change their tune on immigration. I think the same thing is true when it comes to manufacturing and outsourcing. If the Republicans continue to be identified as the supporters of outsourcing, they cannot win national elections. They certainly can’t win presidential elections in places like Ohio and Pennsylvania. And so I think that our hopes — to the extent that we have any hope of moving this agenda through the House — is that the Republican consultant class, who tend to dictate what the Republicans stand for in the House, will realize that they have to get on the other side of this debate, and fast.”
Other senators ran successful campaigns on similar pro U.S. manufacturing issues, notes Scott Paul, President of the Alliance for American Manufacturing. Among them were Democrats Tammy Baldwin of Wisconsin, Joe Donnelly of Indiana, Bob Casey of Pennsylvania, Sherrod Brown of Ohio and Kirsten Gillibrand of New York. Other Senate allies include Democratic Sens. Amy Klobuchar and Al Franken from Minnesota and Charles Schumer of New York, “and that’s just touching the tip of the iceberg,” says Paul. “In the Senate, there is an extraordinary amount of interest in pursuing” a domestic manufacturing agenda. “I am cautiously optimistic that in the Senate we can make some significant progress this year. Will the House listen? I don’t know, but we were able to extract some modest improvements in the Buy American laws in the infrastructure bill that passed the Republican-led House in the last Congress because it would have been too painful for some of their members to vote against it.”
Who is working against the pro-domestic manufacturing agenda? The organizations that represent multinational companies that have outsourced production, replies Paul. Identifying those outside groups “will shed some light on who on the inside [in Congress] is working against us,” he notes. On the issues of “Buy American” and cracking down on Chinese currency manipulation and unfair trade practices, it is the U.S. Chamber of Commerce and the Club for Growth. “You think of the senators and those in the House of Representatives who take their guidance from the Club for Growth and the Chamber and you have your answer.”
Even with those forces lined up against, the China currency bill was able to pass in the Senate during the last session with bipartisan support, despite the threat of a filibuster from Senate Minority Leader Mitch McConnell (R-Ky.). “There were enough Republicans including Lindsey Graham [R-S.C.], other southern senators and even [Sen.] Rob Portman [R-Ohio] who bucked him on this to support the bill,” says Paul. “It was the only bill to overcome a Mitch McConnell filibuster. We are making some progress, but they are baby steps, not giant steps. I am hoping in the Senate this year, we can make giant steps and broader shame some of the Republicans in the House to go along with this. There are rank and file House Republicans who support this agenda — not a lot of them, but enough to provide a majority.”
Sen. Murphy says backing a strong domestic manufacturing agenda is a good political strategy for Democrats. As the former member of the House of Representatives who created the Buy American Caucus, Murphy says that most voters realize that the U.S. economy cannot fully recover unless there is a healthy manufacturing sector. “This necessitates a new agenda,” he says. “I have always seen this issue as one of a few that allows Democrats to reach constituency groups that they might not traditionally reach. First and foremost, you are out there talking to small manufacturers and businesses which aren’t used to having Democrats coming into their factories and talk to them about what they need. Second, you are talking to a demographic of families associated with manufacturing trades that also aren’t traditionally Democratic constituencies.”
Murphy said he held a seat in the House of Representatives from a conservative district — one that had been Republican for the previous 24 years prior to his winning in 2006 — “in part to my speaking to them on the issue of making things here in America.”
The pro-domestic manufacturing issue was a big part of last year’s election campaign, notes Paul. “One of the most popular images in American political advertising in 2012 was the American factory,” he notes. “We have data to back that up.” There were almost one million political ads last year addressing issues related to jobs, companies that ship jobs overseas and the auto rescue. “There were over $45 million in ads in the presidential contest alone just on the China trade issue,” says Paul. “And in virtually every close race — Indiana, Ohio, Wisconsin, Pennsylvania and in Sen. Murphy’s race in Connecticut — one of the primary focus points for the victors was support for an American manufacturing policy.”
Even Obama pledged during the campaign to create one million manufacturing jobs over the next four years. “So now we have a metric to hold the Obama administration accountable,” says Paul. “It’s something that is easy to measure. So every month we will lay out how much or how little progress the President is making on his goal.”
Murphy says he will start a Buy American caucus in the Senate “because the U.S. government, year after year after year, is outsourcing taxpayer funded procurement to foreign countries,” he says.
Murphy would like to raise the requirement under the current law for agencies to buy 50 percent U.S. content to at least 60 percent and, better, 75 percent. He would get rid of
loopho
les that allow the U.S. government to buy foreign-made products if those products are being consumed outside the United States. And he would beef up the enforcement mechanism in the law by making it difficult for government agencies to approve waivers to the act.
As for free trade issue on Capitol Hill, Robert Borosage of the Campaign for America’s Future says the financial sector collapse in 2008 and subsequent recession may have broken the stronghold that multinational corporations and Wall Street have had on policymakers. “Corporate-defined free trade that does more to guarantee investment abroad than it does to guarantee jobs at home has been the centerpiece of the bipartisan consensus in this country for many decades,” says Borosage. The Democratic Party — directed by Wall Street and Clinton White House titan Robert Rubin — was fully on board with this strategy “even though it was widely opposed by broad majorities of Americans across both parties,” he notes. “One of the moments we are in given the collapse of that economic model is whether that broad public sentiment against that policy can start to gain traction in the Congress despite these very powerful forces lined up against it. What is interesting about the array of allies and the progress on the [last session’s] China currency bill that went further than many would have thought, is that we do have a moment here were popular opinion can finally start to be reflected in the halls of Congress in a way that it hasn’t in the past.”
Made in USA: We Are The 3%
in American Made, Made in USA, Walmart/by MAM TeamRead more
What Do American Manufacturers Owe Their Country?
in Uncategorized/by MAM TeamFebruary 5th, 2013
The moderator of the debate was Tamzin Booth, European business correspondent for The Economist, who introduced the topic by stating, “after the Great Recession, with high levels of unemployment persisting in rich countries, politicians are putting enormous pressure on firms to either keep operations at home or bring them back. The offshoring and outsourcing of work overseas have never been more unpopular. So strong is the backlash against firms which shift jobs abroad that many companies are choosing not to do it for fear of igniting a public outcry. And a “reshoring” trend, bringing factories home to America from China and elsewhere, is gathering pace and support from several American multinationals, including General Electric and Ford Motor Company.”
While Mr. Moser acknowledges that multinational corporations (MNCs) “have a responsibility to enhance shareholder return and obey relevant laws and regulations,” he believes that “MNCs also have a duty to maintain a strong presence in their country of origin,” which he defines “as investing, employing, manufacturing and sourcing at least in proportion to their sales in the origin country.”
He states, “This duty has two sources. The first is a quid pro quo for the special benefits that their charter provides. The second is based on understanding that a strong presence is almost always in the interest of their shareholders.”
In his pro argument for the first duty, Mr. Moser quotes Clyde Prestowitz: “Corporations are not created by the shareholders or the management. Rather they are created by the state. They are granted important privileges by the state (limited liability, eternal life, etc). They are granted these privileges because the state expects them to do something beneficial for the society that makes the grant. They may well provide benefits to other societies, but their main purpose is to provide benefits to the societies (not to the shareholders, not to management, but to the societies) that create them.”
This view is corroborated by a recent essay, “The American Corporation,” by Ralph Gomory and Richard Sylla, in which they provide a brief history of corporation formation in America. From 1790 to 1860, over 22,000 corporations were chartered under special legislative acts by states, and
several thousand more were chartered under general incorporation laws introduced in the 1840s and 1850s. These state granted charters were not perpetual and had to be renewed periodically, “with its “powers, responsibilities?including to the community?and basic governance provisions carefully specified.”
The essayists comment that general incorporation laws were the answer to the problem of corruption in legislative chartering, but created their own problems in the late 19th Century with the rise of “Robber Barons, both the business leaders who amassed great power and wealth in the rise of mass-production and mass-distribution industries, and the great financiers of Wall Street who collaborated with them.” The concentration of wealth and power in the hands of so few led to the passage of antitrust laws and corporate regulations at both the federal and state levels regulations in the 20th Century to prevent or rein in monopolies.
The stock market crash of 1929 and the Great Depression resulted in a multitude of “New Deal” reforms and regulations on the corporate and financial sectors to protect and inform stockholders and the general public.
Gomory and Sylla write that for decades after WWII, “the problem of corporate goals seemed under control,” and “the interests of managers, stockholders workers, consumers and society seemed well aligned” while the U. S. and the Soviet Union were fighting a Cold War.
As late as 1981, the U. S. Business Roundtable issued a statement recognizing the stewardship obligations of corporations to society: “Corporations have a responsibility, first of all, to make available to the public quality goods and services at fair prices, thereby earning a profit that attracts investment to continue and enhance the enterprise, provide jobs, and build the economy.” In addition, “The long-term viability of the corporation depends upon its responsibility to the society of which it is a part. And the well being of society depends upon profitable and responsible business enterprises.”
Establishing plants in another country in order to do business in that country and be closer to your customers is a reasonable business decision for many companies whose products are sold globally, such as Coca Cola and other food and beverage manufacturers. I concur with Mr. Moser’s statement. “We do not question multinational companies’ right to invest offshore.” However, it is another thing to transfer all or most of the manufacturing of your products to be sold mainly in the U. S. market to another country, at the cost of hundreds, if not thousands, of American jobs.
This brings us to Mr. Moser’s second pro argument to the question; namely, “a strong presence is almost always in the interest of their shareholders.” He states that his experience with the Reshoring Initiative’s free Total Cost of Ownership Estimator™ (TCO) has shown that “in their excessive focus on offshoring of manufacturing, many MNCs make suboptimal decisions, actually reducing the long-term return to their shareholders. Thus many MNCs will more fully maximise returns for shareholders if they maintain a stronger presence.”
This is because most MNCs do not accurately measure the “Total Cost of Ownership” or “landed costs” in making decisions regarding where to manufacture their products. They ignore the “hidden costs” of doing business offshore about which I have written extensively in my book , such as: quality problems, legal liabilities, currency fluctuations, travel expenses, difficulty in making design changes, time and effort to manage offshore contract, and cost of inventory.
In addition, Mr. Moser states that the behaviors of MNCs include:
in Am
erican economic, technological and military strength: risk of losing sales and assets in developing countries, especially when competing with local state-owned enterprises (SOEs); loss of the government-funded R&D that gives them a head start in many technologies; loss of strong origin-country defence and legal systems that protect the corporate charter; loss of “Pax Americana” that protects their trade around the world; and populist calls for anti-MNC political actions resulting from income inequality driven by a shriveling middle class.”
One important risk that Mr. Moser did not mention is the risk of theft of Intellectual Property by offshore manufacturers, especially in China. For many years, China has been doing this by reverse engineering, counterfeiting, and cyber espionage, but it has been made easier in the past two years by the mandatory technology transfer required by the Chinese government for corporations who set up plants in China.
In his con argument, Professor Bhagwati asserts that global sourcing and locating plants around the world has happened already, and “there is little point in tilting at reality.” He states, “Multinationals’ products, after all, can now hardly even be defined as American, French or any other nationality when their parts come from every corner of the world. All that matters, he argues, is that worldwide operations bring profits to the multinational, thereby benefiting the country in which it is headquartered. , “MNC investment abroad is good, not bad, for America unless it is a result of distorting tax policies that lead to overinvestment abroad. Asking MNCs to have a presence at home, and subsidising or forcing them under threat of penalties to do so, makes little sense unless you claim that this presence produces some externalities…the benefits to the MNC, and hence to America most likely, will accrue regardless of where the MNC does R&D, in Bangalore or Boston.”
In is rebuttal, Professor Bhagwati states, “Compelling an American MNC to retain a strong presence in America would be the wrong prescription no matter which of the two rationales you accept…Forcing them to produce at home when that makes them uncompetitive in world markets is surely the wrong prescription: it makes them uncompetitive in markets which today are fiercely competitive.
While I realize and have written about the fact that American manufacturers are under a disadvantage in dealing with countries like China that practice “predatory mercantilism,” it is my opinion that American multinational and national manufacturing corporations have more than a “duty to maintain a strong presence in their home countries.” As American citizens, we “pledge allegiance to the Flag of the United States of America, and to the Republic for which it stands, one Nation under God, indivisible, with liberty and justice for all.” Thus, we owe “allegiance” to our country, which is defined as “the loyalty of a citizen to his or her government.” Other synonyms are: fidelity, faithfulness, adherence, and devotion.
Obviously, if you are a loyal, faithful, devoted citizen of the United States this means that you take actions in your personal and business life to support your country and do not purposely take actions that may cause harm to your country. Moving a majority of manufacturing to other countries, especially China is doing harm to your country since China has a written plan to replace the United States as the world’s super power. Therefore, American multinational corporations and other American manufacturers owe allegiance to the United States of America by maintaining a strong presence in our country.
Michelle Nash-Hoff is the author of “Can American Manufacturing Be Saved? “
SKILLS GAP PUTS MANUFACTURING IN THE U.S.A. AT A COMPETITIVE DISADVANTAGE
in Uncategorized/by MAM TeamFebruary, 2013
Manufacturers are committed to a reformed immigration system that accounts for all aspects of legal immigration. As part of comprehensive reforms, manufacturers are asking Congress and the Administration to focus on addressing the lack of high-skilled workers, settling the issues regarding the undocumented population and establishing a commitment to strong legal enforcement.
“Talent and skill have no borders, and it is time that American immigration policy reflected that truth,” said Timmons. “Manufacturers need to be able to hire the right person with the right skills at the right time. Congress and the Administration must move forward with comprehensive immigration reform that allows manufacturers to meet their current and future workforce needs. The current system, unworthy of our ideals, is broken and holding the United States back. Without major reforms, we’ll be ceding talent to our competitors and turning away a future generation of entrepreneurs. Comprehensive reform will ensure that manufacturers have access to innovative workers who will help lead and grow our economy.
In addition to border security, structural reforms and verification issues, immigration reform must also address the millions of undocumented individuals who currently live in the United States. It is essential that we find a solution for these men, women and children living outside the system, and in doing so, we will build a stronger country. Members of Congress and President Obama must not waste this critical opportunity. Manufacturers look forward to working with policymakers toward a more vibrant economy that leads to more investment and jobs in America.”
A study released by the Partnership for a New American Economy found that more than 40 percent of Fortune 500 companies were either started by an immigrant or the child of an immigrant. American manufacturing enterprises founded by immigrants span all sectors, from technology, to steel, to chemicals, to medical devices, to many others. All told, major companies founded by immigrants or children of immigrants have an economic impact larger than all but two U.S. competitors—Japan and China—according to the report.
Approximately 600,000 manufacturing jobs remain unfilled due to an ongoing skills gap that has left employers unable to find appropriately skilled workers. As part of its efforts in support of comprehensive immigration reform, the NAM has partnered with businesses and education groups to form a coalition to address the need to fix America’s skilled worker crisis. As the debate moves forward, inSPIRE STEM USA will call on Congress to act on immigration reform to strengthen America’s workforce and education system both for today and tomorrow.
Made in USA Sees An Uptick
in Uncategorized/by MAM TeamFebruary, 2013
“We are just the first of many to come,” said Mr. Schiffer, who has committed $2.6 million to the project. “We’ll keep growing.”
The Made in USA movement is gaining steam, as retailers from Brooks Brothers to Walmart push to manufacture their wares in the United States to appeal to patriotic consumers and avoid costly overproduction as overseas labor and shipping costs rise. Surprisingly, the trend is playing out on a smaller scale in the city.
For an area that has seen apparel-making plummet—last year, on average, there were 14,900 apparel manufacturing workers in New York City, and two decades ago, there were more than 80,000, according to the New York State Department of Labor—new factories are welcome additions.
Mr. Schiffer’s factory, Keff NYC, has eight knitting machines (each costs $100,000), and he has ordered a dozen more. Though the company is currently making samples, Mr. Schiffer expects to engage in production of up to thousands of units. The company has already signed Abercrombie, Opening Ceremony and Burt’s Bees Baby as clients. It’s also producing uniform accessories, including hats, gloves and scarves, for the 2014 Winter Olympic Games.
Orders up by 30%Meanwhile, Stoll America, a 140-year-old knitting-machine seller that also makes apparel, opened an outpost on West 39th Street in 2009 and has been growing ever since. The company employs 21 workers, up from 12 four years ago, and has seen orders increase by 30% since 2010.
“Up until now, no one was around where designers could get samples done,” said Marcus Kirwald, product development manager. “They had to send them out, and there was lot of time and frustration involved.”
Brooks Brothers has made a name for itself in local production—it has manufactured its ties at a Long Island City, Queens-based factory for decades, for example, and operates two additional East Coast facilities—and is working to strengthen its capabilities. In its neckwear factory, which last year produced 1.5 million cravats, Brooks Brothers employs 300 workers, up 10% since early 2011. Three years ago, the brand overhauled its operations from assembly line to “module,” or manufacturing by team, to become more efficient, and it began producing apparel for other brands, such as Club Monaco and Jack Spade.
The clothier now promotes its American-made wares through a special section on its website and specific catalogs—recognizing that consumers are paying attention to the origin of their clothing. (Ralph Lauren was criticized last summer for making the U.S. Olympic team’s uniforms in China.)
“It’s really critical as part of our heritage and our culture that we maintain and actually increase American manufacturing,” said Paulette Garafalo, president of international and manufacturing at Brooks Brothers.
Asia’s rising middle class also has altered the landscape. Asian shoppers are beginning to covet U.S.-made brands, according to some designers. New York-based designer Patrik Ervell, who launched his eponymous menswear business seven years ago and manufactures 95% of his goods in the U.S., has noticed that buyers from Japan, China and South Korea are looking to stock only apparel manufactured in the U.S. If it doesn’t carry that label, they’re not interested, he noted. Currently, Asia represents 25% of his wholesale business.
Shifting pattern”People have started to fetishize this ‘Made in USA’ thing; it has an aura around it,” said Mr. Ervell, who sells to upscale stores such as Barneys New York and Opening Ceremony. “That period of churning stuff out of China and shipping it here is shifting.”
Domestic production is pricier—by as much as 40%—but the gap has been narrowing in recent years. In addition, manufacturing here means that retailers can get smaller batches of products into stores more quickly, reducing the need for end-of-season markdowns.
“It’s the unsold portion which becomes the albatross around their necks,” said Andy Jassin, head of retail consultancy Jassin Consulting Group. “It’s a matter of what’s efficient, and we’re beginning to see the efficiency of ‘Made in USA.’ “
And Americans appear increasingly willing to pay for it. About 75% of consumers said they would shell out more for American-made goods, up from 50% in 2010, according to America’s Research Group. Typically, U.S.-made products have been limited to small high-end designers, but now larger mainstream retailers, like Ohio-based Abercrombie, are investing in U.S. manufacturing.
“A lot of these stores are strategizing how they can do a ‘Made in USA’ product now because they think the country is ready for it,” said Mr. Schiffer.
Even so, manufacturing locally, whether in New York’s garment district or Garland, N.C.—where Brooks Brothers operates a factory—continues to present challenges. Most apparel sellers buy fabrics overseas, because Environmental Protection Agency rules for printing with dyes make local sourcing difficult. Meanwhile, when brands began outsourcing manufacturing and shuttering their local factories decades ago, younger workers, especially in the garment district, started abandoning the field for more lucrative industries.
So far, the return of some factories has not been enough to reverse the loss of manufacturing jobs in the city, where fashion jobs have steadily declined from 200,000 in the heyday of the 1960s.
“You don’t see the kids of the kids in the factories anymore,” said Alex Garfield, who has been in the apparel industry for more than two decades, currently as a founder of women’s pants brand Peace of Cloth. “A whole generation is missing.”
Still, the dynamic is shifting.
“Ten years ago, it was six times cheaper to manufacture in China,” said Ms. Garafalo. “Today, it is about three times less expensive, so the opportunity for better margins [there] is reducing.”
U.S. Congressman Cicilline (D-RI) Unveils The Make It In America Manufacturing Act
in Uncategorized/by MAM Team“When they’re competing on a level playing field, American workers outperform competitors across the world,” said Cicilline. “Rhode Island’s economy was built on the strength of our manufacturing industry and that’s why I am pleased to introduce the Make It In America Manufacturing Act in order to help give manufacturers the resources they need to compete successfully, grow jobs, and get our state and national economy moving again.”
Senator Kirsten Gillibrand (D-NY), who has introduced the Senate version of the Make It In America Manufacturing Act, collaborated with Cicilline in recent months to build upon legislation they introduced in the 112th Congress. Cicilline also received feedback from Rhode Island constituents and the Brookings Institution on ways to enhance the manufacturing proposal.
If signed into law, the Make It In America Manufacturing Act would create a competitive incentive grant program, jointly administered through the Departments of Labor and Commerce. States or regional partnerships may apply for the program, and successful applicants will receive grant funds to help implement innovative Manufacturing Enhancement Strategies. Funds can be used to create a revolving loan fund, to issue low interest loans to manufacturers, or to provide grants to non-profits, including community colleges, helping manufacturers to:
“There is tremendous potential for job creation in the advanced manufacturing sector here in Rhode Island and throughout New England, and this innovative proposal would provide the kind of investment needed to support growth,” said James T. Brett, President & CEO of The New England Council. “The Council is proud to support Congressman Cicilline’s Make it in America Manufacturing Act and we look forward to working with him as he continues to fight for our region’s ongoing economic recovery.”
Cicilline, who was a leading advocate for the House Democratic Make It In America agenda during his first term in Congress, has pledged to continue working with colleagues to find commonsense solutions for the obstacles facing small business owners and manufacturers – especially those in Rhode Island.
Congressman Tim Ryan (D-OH), an original co-sponsor of the Make it in America Manufacturing Act and the Co-Chair of the House Manufacturing Caucus, added, “I am proud to support the Make it in America Manufacturing Act of 2013. This bill should receive the support of my colleagues from both parties as it seeks to maintain the revitalization of manufacturing that continues around the country. This competitive grant program will provide low-interest loans to small business and job training assistance to employees and community colleges, just the things we need in my District to keep our traditional manufacturers thriving and continue building our advanced manufacturing sector. This bill will also allow U.S. manufacturers to refine their processes, train both new and existing employees on the most updated machinery, and innovate their product line to stay ahead of the competition. This is what we need right now.”
The Make It In America Manufacturing Act has already received endorsements from several national groups, including the American Small Manufacturers Coalition, National Association of Counties, National Skills Coalition, United Steel Workers, AFL-CIO, and National Association of Development Organizations.
Woolrich Bringing Manufacturing Back to Pennsylvania
in Uncategorized/by MAM TeamCORPORATE ANNOUNCEMENT
At Woolrich, we have been actively manufacturing in the United States since our company’s founding in 1830. We proudly operate the oldest continually running mill in America, right here in the town of Woolrich.
As proud as we are of our manufacturing legacy, it’s true that we don’t make 100% of our products in the USA as we once did. As the global economy grew and matured over the last 20 years, many core mill customers took their woolen business overseas. To remain relevant, competitive and solvent, we made the same difficult choice.
In today’s world, the hard reality is that making things here is hard to do. But like our customers who embrace adventure every day, Woolrich is preparing to tackle a new challenge… bringing manufacturing back to Pennsylvania, one step at a time.
Toward this end, Woolrich is setting three significant domestic manufacturing goals: for our mill, for our customers, and for our brand.
1. To increase the yardage of wool produced in our woolen mill by 50% in 2013.
2. To introduce a 100% American-made apparel collection in Fall 2013.
3. To increase our American-made product offerings by 2015, ensuring that more than 50% of Woolrich Woolen garments proudly include American-made wool.
In the coming months, for Woolrich to set and accomplish these goals, it’s going to take more than a company commitment. It’s going to take support from our loyal customers as well.
At Woolrich, we are proud of our rich heritage, and eager to begin writing the next chapter of the American manufacturing story. Moreover, we are excited to work side by side with you to accomplish these worthwhile goals.
Sincerely,
Nicholas P. Brayton
President
Woolrich Inc.
Confronting the U.S. Advanced Manufacturing Skills Gap
in Skills Gap/by MAM TeamIt is generally acknowledged that there is a shortage of skilled manufacturing workers in the United States, but estimates of the size of the shortage vary widely. At a time when unemployment in the United States remains stubbornly high, and while the U.S. manufacturing sector may be in the early stages of a renaissance, having a shortage of skilled workers is a serious challenge that needs to be addressed.
In October 2012, the Boston Consulting Group (BCG) released a study, “Made in America, Again: Understanding the U.S. Manufacturing Skills Gap and How to Close It,” concluding that the existing manufacturing employee skills gap that has been widely reported is “more limited than many believe.” In contrast to several previous studies and widespread anecdotal evidence from the manufacturing sector, the BCG researchers found only limited evidence of a high-skilled manufacturing labor shortage nationwide — as only 5 of the 50 largest manufacturing centers are currently experiencing significant or severe gaps. High-skilled workers are generally considered to have technical training and industry certification, or an associate’s or bachelor’s degree in a manufacturing-related field.
However, in 102 out of 389 Metropolitan Statistical Areas (MSA), located primarily in the Southeast and Gulf Coast areas with relatively small manufacturing bases, manufacturers are facing skills gaps in specific job categories, such as machinists, welders, and industrial machine mechanics.
The BCG researchers also estimate that the high-skills gap in the United States translates to a shortage of only between 80,000 and 100,000 manufacturing employees, or about 8 percent of the nation’s high-skilled manufacturing labor force of 1.4 million workers. Those estimates differ significantly from other research that suggests a much greater shortage of skilled factory workers.
In this article, we discuss the various estimates of the current skilled worker shortage, consider the demographic trends that will affect the future skills gap, and explore the alternative approaches to closing the skills gap.
Do Skills Pay the Bills?
In its report, the BCG concludes that U.S. manufacturers are trying to hire high-skilled workers at “rock-bottom” wage rates, and that is not what it would characterize as a “skills gap.” As Adam Davidson asks in his recent New York Times Magazine article “Skills Don’t Pay the Bills”: Who wants to operate a highly sophisticated machine for $10 per hour? Answer: not a lot of people. As a result, says Davidson, there really isn’t a skills gap. Rather, it’s the unwillingness of manufacturers to pay higher wages that is causing the skilled worker shortage, which is a view that is consistent with the BCG report.
Regardless of exactly how serious the skilled worker shortage is, U.S. manufacturing employment has increased by more than 500,000 jobs over the last three years, as factory payrolls have grown from 11.46 million to 12 million at the end of 2012.
This recent expansion in manufacturing employment has played a critical role in supporting and strengthening the overall economy as it has emerged from the Great Recession of 2009. In fact, there is ample evidence that manufacturing has been at the forefront of the U.S. economic recovery over the last several years, and it’s generally expected that manufacturing will continue to play a key role in the future of the U.S. economy.
According to “Leadership Wanted: U.S. Public Opinions on Manufacturing,” a national survey of 1,000 Americans released in October 2012 and commissioned by Deloitte, a consulting and accounting firm, and the Manufacturing Institute, a Washington, D.C.–based affiliate of the National Association of Manufacturers (NAM), survey results reveal the importance of the manufacturing sector to the health of the U.S. economy.
For example, the national survey results show that 90 percent of respondents rated manufacturing as “important” or “very important” for their economic prosperity and America’s standard of living.
This position is supported by national industry sector data, as NAM reports that the manufacturing sector’s economic multiplier effect on the U.S. economy is significant, with every dollar in final sales of manufactured goods adding $1.48 in economic output from other sectors of the U.S. economy.
It is thus not surprising that when Americans were asked in the “Public Viewpoint on Manufacturing” survey what type of facility they would establish if given an opportunity to create 1,000 new jobs in their community, they placed manufacturing at the top of their lists, ahead of energy, technology, health care, and communications.
Advanced Manufacturing Skills Shortages
While BCG estimates a current shortage of between 80,000 and 100,000 skilled manufacturing workers nationwide, manufacturers themselves report a much higher skilled labor deficiency.
In a September 2011 report, “Boiling Point? The Skills Gap in U.S. Manufacturing,” commissioned by Deloitte and the Manufacturing Institute, an online survey of 1,123 U.S. manufacturing executives across 50 states was conducted, and 83 percent of American manufacturers reported a moderate or severe shortage of skilled workers that translates into approximately 600,000 skilled manufacturing positions that are currently unfilled.
In the not-so-distant long term, the manufacturing skills gap is forecasted to worsen. While the BCG and the Manufacturing Institute differ on the current number of unfilled positions, they both agree that certain demographic realities will contribute to a much greater skilled worker shortage in the future.
According to the U.S. Department of Labor, the percentage of manufacturing workers aged 55 to 64 years and the share of workers older than 65 years have both significantly increased since 2000. Moreover, the Department of Labor reports that the median age of the manufacturing workforce rose from 40.5 years in 2000 to 44.1 years in 2011. The Society of Manufacturing Engineers predicts that the shortfall of skilled factory workers could increase to 3 million jobs by 2015 due to the aging manufacturing workforce and the resulting retirements of older workers, at the same time that an anticipated manufacturing rebound will increase demand for skilled workers. This expected skilled labor shortfall is reinforced by BCG research that finds 37 percent of manufacturers who had shifted manufacturing to the United States from another country cited better access to a skilled workforce as a strong factor in their decision; only 8 percent cited this as a reason for moving production out of the United States.Even with a limited skills gap today, the BCG study forecasts a future high-skills gap in manufacturing that could approach 875,000 machinists, welders, industrial engineers, and industrial machinery mechanics by 2020. Nevertheless, whether on the high end or low end of the estimated current manufacturing high-skills gap, in a 21st-century American economy increasingly built on capital-intensive, cutting-edge technology-based “advanced manufacturing,” high-skilled employees are the key to a successful enterprise.
Looking forward, there is general consensus by both BCG and the manufacturing industry that any skilled worker shortages today will be eclipsed by much larger challenges in the coming decade because of the pending wave of retirements.
Do We Have a “Skills Gap”?
How do we reconcile the fact that NAM is reporting a skilled worker shortage of 600,000, while the BCG’s estimate of the gap is only 80,000–100,000 workers, and Adam Davidson dismissively refers to the current situation as a “so-called skills gap” and a “fake skills gap”?
To start, just because workers may not want to train for a job that has a low rate of pay does not necessarily mean that a real skills gap does not exist. The discussion should not focus so much on whether the worker shortage is 80,000 or 600,000, but rather on identifying the root cause of the skills gap, large or small, and how to address it. Concerns about finding just the “right” labor for advanced manufacturing in the United States is a much more complex issue than has been presented in the popular media. As referenced above, both BCG and NAM have identified current and projected shortfalls in the supply of skilled manufacturing labor, even though they disagree on the magnitude of the deficiency. And the current general demographic shift of the workforce will significantly impact the manufacturing sector in the future due to the aging workforce, a reality that even the BCG clearly acknowledges.
Davidson asserts that manufacturers are only willing to pay their skilled workers $10 per hour, and it is employer stinginess that is responsible for the “so-called skills gap.” In response to that claim, Paul Downs (proprietor of Philadelphia-based Paul Downs Cabinetmakers) wrote in a New York Times blog post, “Why Training Workers Costs More Than You Think,” that his experience as a factory owner was much different than Davidson’s narrative. In fact, Downs personally prefers to pay his skilled workers at a higher rate, essentially saying that you “get what you pay for” in terms of reliable and valuable workers.
What Downs identifies as the “Achilles heel” in Davidson’s allegedly low-wage argument is the cost (and feasibility) of extensive on-the-job training. If employers were to assume all the costs of training, it would be very costly, especially for cross-training existing high-skilled workers in a current organization. Downs does a very good job of breaking down the costs of training in terms of lost productivity, the costs of paying someone to train instead of “produce,” and other related and often “hidden” but real costs of in-house training.
The solution to closing the skills gap lies in between these two alternatives – employers’ willingness to pay competitive wages and assume some of the employee training costs, and job-seekers’ willingness to pay for an education and acquire the marketable skills in demand by manufacturers.
Many of the barriers to developing a healthy pipeline of dedicated, skilled workers for the manufacturing sector lie in perceptions. Employers who view labor as capital – and capital that is worth investing in – will view money spent to train their employees as an investment rather than an expense, as Downs suggests. However, he is correct that training requires substantial and possibly prohibitive costs to employers; this is where job seekers must be willing to assume part of the training costs as well by enrolling in training programs at their own expense.
The Manufacturing Institute has developed partnerships with high schools, community colleges, and national accrediting bodies to ramp up the pool of skilled labor – but this isn’t happening fast enough for the manufacturers currently experiencing labor shortages.
What to Do?
It is apparent that some mixture of employers’ and employees’ perspectives is needed. Companies want to have workers who are proficient in general skills – math, science, communication, reliability – and it is incumbent upon the job candidates to obtain these skills at their own initiative and expense. However, more job- and firm-specific skills can be taught to these workers through time-limited internships/apprenticeships in conjunction with formal skills-related educational programs, thus easing the burden on employers to field these costs and allowing employers to observe the performance of potential employees. In the longer term, employers will need to offer an appropriate market rate of pay to retain quality employees, ensuring that they reap the benefits of their personal investment.
If these avenues are made available, then why aren’t young people flocking to get trained in a sector like skilled manufacturing with such a high demand for workers? One reason can be perceptual: for years we have been telling our young adults that manufacturing jobs are headed overseas, and that these types of occupations are not a worthwhile educational investment. At the same time, parents and counselors have been encouraging high school graduates to attend college.
The October 2012 Deloitte–Manufacturing Institute survey results give credence to this perception. According to survey results, when it comes to choosing manufacturing as a career choice, only 35 percent of survey respondents would encourage their children to pursue a career in the manufacturing sector, ranking manufacturing only fifth among seven key industries listed. This perception has not yet changed sufficiently to encourage people to seriously consider skilled manufacturing as a viable career choice, enough so that they would invest in the education and training required for advanced manufacturing careers.
Manufacturing’s “image problem” may also be contributing to the skills gap. The correction of current misperceptions of U.S. manufacturing needs to be broadcast to a wider audience, especially to those individuals who can positively influence the critical demographic of high school–age potential manufacturing employees. While the Manufacturing Institute has initiated “Dream It. Do It,” a national career awareness and recruitment program to “engage, educate, and employ” the next generation of skilled manufacturing employees, the manufacturing sector faces formidable obstacles.
The Challenges Ahead
At the same time that some manufacturers are struggling to find skilled workers, there has been a recent trend of U.S. companies “reshoring” manufacturing output and jobs back to the United States from overseas, due to a number of favorable factors that have made domestic production increasingly cost-competitive.
In a recent article titled “The Insourcing Boom,” author Charles Fishman outlines five trends that have lowered the cost of manufacturing in the United States: rising oil prices, falling natural gas prices, rising wages in China, wage concessions by unions, and increasing U.S. labor productivity. As those five factors have combined to significantly lower U.S. manufacturing costs, many companies like GE have started increasing production at domestic locations, which has been accompanied by an increased demand for U.S. factory workers.
Some of the 500,000-person increase in factory payrolls since 2010 cited above is surely a natural outcome of the economic recovery, but another part of the increase in employment is coming from the many companies that have reshored production back to the United States in recent years. In a May 2011 report (“Made in the USA, Again: Manufacturing is Expected to Return to America as China’s Rising Labor Costs Erase Most Savings from Offshoring”), BCG predicted that within a few years, China’s manufacturing cost advantage will disappear for 70 percent of the products currently produced there for the U.S. market, and increasing amounts of production will be “reshored” and “insourced” back to the United States, with the potential to create 2–3 million new factory jobs in America.
We could be facing a situation in the future where U.S. manufacturers will be trying to bring millions of factory jobs back to the United States at the same time that the industry is experiencing a wave of retirements from the aging manufacturing workforce. In that situation, the manufacturing skills gap will produce an even greater challenge for American manufacturers, and in fact, will increase the urgency of the situation.
Although there are some differences in estimates of the magnitude of the current skilled worker shortage in manufacturing, there is general consensus that a skills gap exists and that it will likely worsen in the near future. Fortunately, the issue of the skills gap is generating a fair amount of national media and industry attention, which is bringing some well-deserved debate to an important topic that is crucial to a key sector of the U.S. economy.
The future of America’s advanced manufacturing sector looks very promising overall, especially if the reshoring/insourcing trend continues and manufacturers can find skilled workers for the factory floor of the 21st century. Now that the manufacturing sector and the education establishment are working together to confront the advanced manufacturing skills gap and train skilled workers for advanced manufacturing, we are hopefully on a path toward resolving the current skilled worker shortage.
American Manufacturing Bouncing Back
in Uncategorized/by MAM TeamJanuary 2013
The Manufacturers Alliance for Productivity and Innovation, the industry’s trade group, predicts that manufacturing output will rise 2% this year, 3.3% in 2014 and 4.2% in 2015 — a modest rebound, but headed in the right direction. Some industry experts see decidedly better days after that, and talk of a renaissance in U.S. manufacturing fills the air.
The sweeping structural changes that manufacturing companies have undergone are putting U.S. factories back in the game. Over the past few years, U.S. productivity has improved, wages have remained flat, and automation has replaced many human workers. Labor unions have lost much of their clout. Other costs have fallen sharply: Interest rates are low. Oil and gas supplies have mushroomed, while energy prices, particularly for natural gas, have plunged. And the dollar’s value has declined, making U.S. exports less expensive and foreign imports more costly to buy.
At the same time, rising wages in China, combined with the spread of robotics here at home, are eroding the attractiveness of outsourcing production to low-wage countries. The nuclear disaster in Fukushima, Japan, gave companies pause about global supply chains. The upshot: A growing number of U.S. firms have begun to bring production home.
“The U.S. has gotten more competitive,” says Harold L. Sirkin, a Boston Consulting Group analyst who watches manufacturing. He predicts the U.S. will create up to 1 million manufacturing jobs over the next 10 years. “The U.S. will become a manufacturing center, and not just for American companies,” he says.
Sirkin foresees visible gains in overall manufacturing output in industries such as computers and electronics, appliances and furniture, chemicals, fabricated metals, plastics and rubber, and automobiles and automotive parts. “We’re really seeing signs of a turnaround,” he says.
Even so, most analysts expect that manufacturing won’t take off for another couple of years, at least. The U.S. economic recovery continues to be anemic, without enough oomph to propel factories at full speed. And the global economy is lagging further, so manufacturers can’t count on exports to spur production at home.
“The missing ingredient is demand. Everything else is falling into place for manufacturing,” says Mike Montgomery, an economist at IHS Global Insight in Lexington, Massachusetts. “The structural issues that manufacturing faced before have almost entirely sorted themselves out. But demand isn’t growing fast enough.”
And the golden days of the 1960s and early 1970s aren’t likely to come back anytime soon. The resurgence will be modest. Large multinationals will continued to retain large plants abroad. At best, the gains will replace much of the employment losses incurred during the recession.
“You can say that the worst is over for American manufacturing,” says Barry P. Bosworth, a Brookings Institution economist who keeps tabs on manufacturing. “The loss in factories will be slower than it’s been over the past three decades because we no longer have to shed low-skill jobs and increase our efficiency in order to compete.”
Even so, while U.S. manufacturing has come a long way in adjusting to the post-1970s world, it still faces some daunting challenges. Already, factories are having difficulty finding skilled workers for today’s manufacturing jobs, and the problem will intensify as the work force ages. So far, the U.S. has done little to address it.
And while innovation in this country is going strong in a few high-profile scientific fields, such as nanotechnology and computer science, translating that into manufacturing is going more slowly than economists say is needed. Labor Department figures show, for example, that the number of new start-up firms has been declining steadily since 1998.