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American Giant– Reinventing American Manufacturing
EXCERPTS
FOCUS ON US-BASED MANUFACTURING
Winthrop had a hunch that if he built a brand that resonated with customers emotionally, then he would find success in the US apparel industry. He realized that there was a spike in consciousness on the part of consumers about how and where the products they consumed were being made. He believed that there was a large untapped opportunity in the American apparel industry for clothes that were ‘Made in the USA’. He thought that he would be able to attract American customers if he offered them the previously venerated American-made quality and value. |
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ENGINEERING THE PRODUCT
Winthrop spent a long time in developing a proprietary 100% heavyweight cotton fabric specially made and dyed for AG’s production needs. Most apparel manufacturers did not use 100% cotton, but a blend of cotton and polyester. As cotton was costlier, apparel with higher polyester content was cheaper to make. Polyester-blended apparel also had faster production cycles and was easier to work with. That was because blended fabrics enabled manufacturers to derive consistent clothes with minimum effort, as they shrank more evenly than pure cotton. In addition, blends could be easily made to take up different textures ranging from the soft inner lining to the smooth outer layer. On the other hand, to achieve softness in cotton, a machine that took thread loops out of the fabric had to be employed – an expensive process...
DISTRIBUTION
Winthrop thought that compressing costs on the distribution side would leave higher margins that could be reinvested in providing better products. His earlier successful experience with ecommerce through Chrome spurred him to offer AG’s products online. He thought that with the rise in the number of broadband connections and the growth of online shopping, an apparel business would be sustainable even if its products were available only online. In addition, AG offered customers services such as unconditional return and free shipping both ways....
THE MARKET LAUNCH OF ‘THE GREATEST HOODIE EVER MADE’
In late 2012, Winthrop got in touch with Slate technology columnist Manjoo to talk about his apparel startup and new sweatshirts. Manjoo was impressed with the company’s intention to manufacture entirely in the US at non-prohibitive costs, especially considering the fact that another company, American Apparel (USA), LLC , had failed at a similar endeavor. In his article, Manjoo referred to AG’s heavyweight hooded sweatshirts as ‘The Greatest Hoodie Ever Made’. He commended the looks and durability of the sweatshirt, even going to the extent of wondering why the competitors’ offerings were not of that quality...
QUALITY CONSCIOUS PRODUCTION PROCESS
At all of its manufacturing facilities, AG had a three-and-a-half month long and three-step production process. Firstly, 50 days were spent in knitting raw cotton into spooled fabric. Secondly, 15 days were spent in finishing and dying the fabric...
THE ROAD AHEAD
As of 2013, only 2.6% of the clothes that were sold in the US were made locally. According to the American Apparel and Footwear Association (AAFA) , the sales were quite low considering the fact that in 1993, 52.4% of the garments sold in the US were manufactured in the country itself. Experts pointed out that the US was unsuitable for sourcing raw materials and had outdated manufacturing equipment. ..
EXHIBITS
Exhibit I: Growth of US-based Manufacturing
Exhibit II: Cover Stitch and Double-needle Threading
