By Eric Peterson | Oct 12, 2014
CompanyWeek hosted the first-ever Colorado Apparel Manufacturing Summit at the Fashion Design Center Denver on the night of Oct. 9, and the crowd was standing room only.
There was a genuine hunger for a conversation about the state of the apparel business in Colorado -- and it sounds like it's just getting started.
The elephant in the room, everyone agreed, was offshoring, and its impact on Colorado's apparel industry. In a panel discussion led by some of Colorado's brightest apparel stars, concerns were raised about controlling quality and intellectual property, stalled innovation and a limited workforce.
On the flip side Colorado's apparel manufacturing sector is coming back, driven by the region's desirable lifestyle and brand attributes. But where does fashion and technical clothing fit into the economic-development puzzle? As CompanyWeek founder and publisher Bart Taylor put it, "Colorado can't figure out where to put you."
"Do they even know we're here?" interjected panelist Jon Thomas of Janska Clothing.
Founded by Thomas' wife and fellow panelist, Jan Erickson, Janska employes 20 sewers at its factory in Colorado Springs and is "totally committed to manufacturing in the United States," said Erickson.
Panelist Dan English, CEO of Pagosa Springs-based Voormi, said his manufacturing partners are on the coasts, but he keeps his sourcing local in the form of Rocky Mountain Merino wool.
"We decided to do something different," said English. "We focused on the textile industry because of a lack of innovation since 1972” -- when W.L Gore & Associates developed polytetrafluoroethylene-based fabric better known as Gore-Tex.
English said Voormi is rethinking technical clothing in a manner more akin to the tech sector than apparel, but compared the end results to a totally different product: "We are the microbrew of apparel."
While Voormi might not manufacture in-state, English said it was a goal, but it was up to the industry to build -- and rebuild -- the necessary infrastructure. "It's up to us as business leaders to find ways to drive manufacturing back here. When it comes back, he added, "It's not going to look the same."
What will it look like? A more nimble and vertically integrated industry that puts out innovative runs of products in small batches and pushes quality without worrying about retail price. "We maximize price and we don't allow retailers to discount," English noted.
Another panelist, Joe Silva, president of Denver-based Garb, echoed English's sentiment when he spoke of the issues associated with manufacturing offshore. "I would love nothing more than to do that [manufacture in Colorado]," he said.
Garb makes kid's golf and tennis clothing at facilities all over the world, including China, India, Pakistan, and Mexico. With all of those locations, "The supply chain is a very difficult thing to manage," he said. "If you can cut that cycle time, it's magic. We can't do that working in India, China, and all of the other countries, but there's nothing that exists [in Colorado] that can handle 1 million pieces, 10 colors, and 12 different sizes. I call it my Rubik's Cube -- it's very, very complicated."
Panelist Dave Boger, co-founder of Denver's Jiberish, said the snowboard-centric fashion brand started making sweatshirts and T-shirts at one of Colorado's largest cut-and-sew facility in 2005, but as volume increased, the partnership proved to be a mismatch. In 2008, Jiberish moved production offshore.
"It's a big challenge to do it in Colorado," he said. Existing facilities don't have high capacities to handle sudden bumps in demand, and the workforce is lacking in terms of both scope and skill.
Innovation, whether it's process- or product-related, is critical, said Voormi's English and Topo Designs' Mark Hansen, another event panelist. "I don't think there's any other way," said Hansen.
Topo strives not only to manufacture in Colorado, but to source raw materials domestically, he added. The end result? Higher quality and prices, and lower margins.
"That's probably not sustainable," Hansen observed. "It's interesting that people will go into Whole Foods and buy a $10 juice and say, 'That's good juice,’ but the same people will go across the street and buy a $3 T-shirt."
Panelist C.J. Riggins, VP of merchandising and development at Boulder's Kidrobot, previously worked in sourcing for Pearl Izumi in Louisville. She said innovation is critical in some sectors, but not as much so in others.
"The zipper was developed in 1919 and hasn't changed," she noted. At Pearl Izumi, "We were trying to force innovation," but the key ultimately is skilled workers who can handle cut-and-sew fundamentals and produce quality garments.
However, as is the case in the southeastern U.S., China's most skilled sewers are getting older, and their kids don't want to work in the factories.
Garb's Silva seconded Riggins' notion. "In my opinion, it is a low-tech, artisan craft that is as labor-intense as you could ever imagine."
He followed up with a story from early in the Garb days when he was wandering the Garment District in Manhattan and met a bespectacled old Jewish man, chomping on the stereotypical cigar who gave him some sage advice: "Inventory -- it's like produce. After a while, it starts to smell."
The moral, Silva argued, was that while losses due to unsold surplus can be easily measured, apparel manufacturers cannot track opportunities lost to lead times of 120 days when working with overseas factories because "demand might pass you by” when the product is in transit.
"It requires immense planning, forecasting, and scheduling to make that model work," he said. If Garb could work with a Colorado facility and cut that down to 20 days, it would "cancel out” a price bump of 20 percent or more. "It would reduce the headaches and the risks," said Silva. "My banks would be thrilled -- they'd kiss me on the lips."
Janska's Thomas illustrated the industry's risk with some hard data: U.S. apparel manufacturers with $1 million to $4 million in sales have an average profit margin of negative 7 percent. Scary stuff.
Jiberish's Broger said the discombobulated supply chain will help drive investment into the industry, noting, "People with money will get behind consumer products because it's not efficient right now."
Attendee Jack Makovsky, VP at stalwart supplier Ralph's Power Sewing Machine Co. in Denver, said the local apparel industry hit hard times in the 1980s after the government actually incentivized offshoring. "In the late 1960s, '70s, '80s, we had quite a booming industry in this area," he said. "We need to get this thing reversed."
Moderator Carol Engel-Enright of Colorado State University's Design & Merchandising program pointed out that three new cut-and-sew facilities opened in Denver in 2014, but "now that we have cut-and-sew happening, we don't have skilled operators."
Steve Weil of Rockmount Ranch Wear was in attendance. "The issue is: How complicated are your products?" he said. "My shirts have 25 operations -- they're complicated."
Rockmount makes its shirts in the Southeast, but embroiders them offshore. When he "The bottom line is who wants to grow up in the United States and work in a shop for $10 to $12 an hour?" he added. "It's really tough."
Janska's Erickson said immigration -- and immigration reform -- was critical to building Colorado's apparel workforce. "We need some of those people from other countries to come and help us.
Julie Worley, executive director of the Phillips County Economic Development Corporation in Holyoke on the Eastern Plains, offered a partial solution.
"In every rural town in Colorado, you have the 4-H champion seamstress, you have the sewing club, you have women who want to work from 9 a.m. to 3 p.m.," she said. "You have the workforce in rural Colorado -- I guarantee it."
Riggins said that research from her Pearl Izumi days showed the company's margins would drop by nearly 15 percent if the company manufactured in the U.S., but that wasn't a deal-killer. "We still could have been a $150 million company, I have no doubt," she said.
Garb's Silva did a back-of-the napkin calculation and said that he could conceivably pay skilled sewers $20 an hour and make the numbers work -- if there was a local manufacturer that could handle thousands of SKUs.
Phillips County's Worley jumped out of her seat. "Do you know what $20 an hour can do in a rural community?"
Another attendee, Rachael Cox from the African Community Center of Denver, chimed in with another means of bolstering the local workforce: refugees who are resettled in Denver. "It's gorgeous and it's making my heart jump out of its skin," she said of the possibility.
Though the two-hour discussion felt like it was just getting started Taylor closed the night's conversation. "Can we count on everybody to stay involved in this process?"
Judging from the sound of the applause of the 150-plus attendees, the answer was a resounding "yes."
[Read about the 2015 Summit.]