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American ApparelUS News & World Report
Joellen Perry and Marianne Lavelle
May 17, 2004
Roger Simmermaker makes exceptions for toys. The Orlando, Fla., father of two and author of How Americans Can Buy American eschews United Kingdom-based Dunkin' Donuts for Winston-Salem's Krispy Kremes and drives a Michigan-made Lincoln Town Car. "If Heinz Ketchup were ever bought by a foreign firm, I don't know what I'd do," he says. Nonetheless, Simmermaker says he realizes that in a global economy he can't always buy American and admits he sometimes yields to his children's pleas for, say, video games made by foreign companies.
In an election-year dominated by talk of lost jobs, overseas outsourcing, and a huge trade deficit, anecdotal evidence suggests that a growing number of Americans like Simmermaker are seeking out homemade goods. Simmermaker's book lists more than 16,000 products made in America. He says interest in the topic started to soar after Sept. 11, 2001, and his howto buyamerican.com Web site now gets 10,000 visitors a month. More than 35,000 people read the monthly newsletter of the Buy America Campaign, a watchdog group in Florence, Ala., founded in the wake of local textile factory closings in 2001. And halfway through its first season, the Travel Channel's Made in America series, which shows Crayola crayons coming to life in Easton, Pa., and Sikorsky helicopters being made in Stratford, Conn., has emerged as the network's newest hit. "Our timing is clearly right," says Vice President Rick Rodriguez.
Which isn't to say that determining what "American made" means is simple. Although the Federal Trade Commission requires that any product bearing a "Made in U.S.A." label be "all or virtually all" manufactured in the United States, global ironies abound. Japanese giant Toyota assembles Camrys in Georgetown, Ky., while last year American icon Levi Strauss shuttered its last domestic plant in favor of cheaper foreign locales. Add the complexity of products and determining country of origin gets tougher, says Frank Vargo, National Association of Manufacturers economist. Many components are made overseas, then shipped to the United States for assembly.
Some retailers, in fact, say that keeping production stateside boosts efficiency and thus the bottom line. Others argue that the small but growing U.S.-made market boasts a ferociously loyal fan base, including many unions. And some retailers say manufacturing domestically lets them command a premium for American-made goods. Still, for many consumers, the allure of an American-made item reflects a sense of history, loyalty, and identity that just can't be shipped in from overseas. Says Henry Juszkiewicz, CEO of Gibson, which has made high-end musical instruments in the United States since 1902: "It's like, would you buy a Chinese Mercedes?" Following are stories of three firms that deliberately make particular goods in the United States and why they do so.
The company that in 1954 invented the Stratocaster electric guitar, played by legends like Jimi Hendrix and Eric Clapton, has recently seen the popularity of its American-made instruments soar. That's a far cry from 1987, when demand for low-cost, mass-produced guitars prompted the firm to open a plant in Ensenada, Mexico. For several years, that factory provided some 60 percent of the firm's sales, with the rest coming from a Corona, Calif., facility that makes pricier models. By introducing guitars like the American Deluxe series--which replicate the sassy shape of classic 1950s models--and capitalizing on the Stratocaster's 50th anniversary this year, Fender expects to see sales from the Corona plant eclipse Ensenada's in 2004. Considering that the Corona-made guitars sell for about an average $800 morethan the Ensenada models, that's a real boon to Fender. "The spirit of rock-and-roll is U.S.A.," says marketing vice president Richard McDonald. "Many of our overseas markets don't even want our catalog translated, because then it becomes less American."
But even Fender's California-made guitars represent an America that's not easily defined. The Corona plant, which churns out about 523 guitars a day, uses ash, alder, and maple trees, nearly all of which come from U.S. forests, for its guitar bodies. But even the vintage-style guitars sport German tuning gears and partially Italian-made plastic pick guards (the panels that sit under the strings to protect the guitar body). And what about the 350 workers who assemble them? Noting the irony, McDonald quips: "Ninety-nine percent of the factory workforce is Mexican."
"We manufacture in the United States not because we are crazy flag fanatics but because it is the most vibrant T-shirt market in the world and therefore the most efficient place to manufacture our T-shirts." That's part of the mission statement of Los Angeles-based American Apparel which, with 1,700 employees, boasts one of the nation's largest apparel factories. Its production process--from design to cutting to sewing--takes place in the firm's downtown Los Angeles plant. Founder Dov Charney says his main goal is profitability, and the ability to brand his clothing American made is merely a side benefit. "I can cut on Monday, sew Tuesday through Thursday, and ship on Friday," he says. "If I used offshore labor, that would take me 90 days."
Whatever the motivation, the T-shirts are hot. Last year, the firm grossed $80 million, double its 2002 sales. The bulk of its sales are to wholesalers who imprint the shirts with their own designs, then resell them. This year, with hip new stores in Manhattan and Los Angeles and others scheduled to open in Berlin, London, and Miami, Charney expects sales to double. One recent weekday, throngs of young people roamed a Manhattan store fingering the cool, minimalist designs like the "Baby Rib Basic," a short-sleeved women's classic that has sold millions.
American Apparel's factory workers average $12.50 an hour. Toss in a host of other perks--free English classes, on-staff masseuses, subsidized lunches--and it's clear why the firm has a 1,000-person waiting list for employment. The Montreal-born Charney says he could save a few pennies by offshoring production. But the zeitgeist wouldn't be the same: "Young girls making 25 cents an hour to sew T-shirts is not sexy," he says. In fact, says Charney, if he ever does open plants in Asia, it would be to serve local markets, and he vows to pay U.S. wages."We're selling much more than 'Made in the U.S.A.,'" he says. "We're selling the American dream."
For Harry Avila, who was 17 years old when he bought his first Harley-Davidson motorcycle at a police auction in 1964, tradition is important. "There's been 100 years of Harleys being made in this country, and there's the whole Harley mystique and way of life," says the Fairfax, Va., businessman. "Many foreign competitors are out there that are cheaper, but that doesn't pull many of us away from the Harley brand name."
In fact, the only U.S.-based major motorcycle manufacturer is attracting more riders than ever, with domestic shipments in 2003 of nearly 238,000 bikes, up 12 percent from 2002 and a stunning 75 percent from five years ago. Harley-Davidson posted $761 million in profit last year, capping 18 consecutive years of record earnings since its initial public offering in 1986, all while continuing to make its iconic road machines in Wisconsin, Missouri, and Pennsylvania.
Harley-Davidson doesn't overtly market its made-in-the-U.S.A. status. Indeed, the company declined to discuss why or how it continues to build products here profitably while other manufacturers move offshore. "We prefer not to go down the road of commenting on that aspect of our business," says spokesman Bob Klein. But earlier this spring, an article in Advertising Age magazine credited the company's success to years of "linkage to American culture, values and imagery."
For a time, it also became an emblem of manufacturing's decline, as Harley-Davidson persuaded the Reagan administration to slap tariffs on the sleek, cheap Japanese models that threatened to drive it into bankruptcy. In one of the most storied turnarounds in the annals of U.S. business, Harley pared its workforce, improved product quality, and adopted its foreign rivals' management techniques, such as just-in-time inventory.
Today, if one counts scooters, small sport models, and off-road motorcycles, chief competitor Honda still sells more units in this country than Harley-Davidson. But in the heavyweight highway motorcycle realm that is Harley's core business, the U.S. manufacturer roared from a low of 12.5 percent market share in 1983 to 48 percent in 2003. Second-place Honda lags in this category with 18.6 percent. Harley, however, has not been immune to the cost woes that trouble U.S. manufacturers. Late last year, the company threatened to outsource some of its powertrain operations unless its unionized workforce in southern Wisconsin accepted a cap on retiree healthcare benefits. In a decision unpopular with workers, the union agreed to the healthcare concessions. "It was essentially a trade-off to keep the work here," says Richard Krause, head of the Paper, Allied-Industrial, Chemical and Energy Workers local. "As painful as it was, the workers at a lot of companies aren't getting that opportunity." Krause says Harley is investing well in excess of $100 million in improvements to its powertrain facilities. The company last year also signaled its commitment by building a new factory in York, Pa.
Perhaps Harley-Davidson's most important marketing of its all-American image is through its network of more than 1,000 Harley Owners Groups (HOG s), encompassing 800,000 members. Jeff West of Arlington, Va., a federal government worker who is director of one local chapter, says he admires Harley's focus on employee involvement in management decisions, charitable activities, and its safety classes. Yes, there's the riding experience, says West. But "the fact that they are heavily invested in the American community is of great value to me."
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