Move hat making into a US factory? Easier said than done
ADAMSTOWN, Pa. — If home is where you hang your hat, Kangol is struggling to afford its pricey new U.S. digs.
When the famous hat brand worn by celebrities like Samuel L. Jackson, Brad Pitt and Gwen Stefani moved into a Pennsylvania factory last year from China, executives with the Bollman Hat Co. billed it as an effort to create U.S. manufacturing jobs.
But as labor costs went up, profits went down. Way down. The 149-year-old company behind Kangol says it’s losing money on every kangaroo-logo cap knitted at its factory in Adamstown, 60 miles west of Philadelphia.
“It has been certainly a bigger challenge than what we could’ve ever dreamed,” said Don Rongione, Bollman’s fedora-wearing president and CEO.
The nation’s oldest hat maker expects a relatively quick turnaround once U.S. workers get better at making the popular Kangol caps. But Bollman’s early struggles with Kangol illustrate why the labor-intensive garment industry left the United States in the first place.
Employment is down 85 percent since 1990 — the biggest decline of any manufacturing sector — as cost-cutting apparel companies shifted production to Asia in search of cheaper labor. Bollman spends about $11 an hour per worker in Pennsylvania vs. $2.60 in China. So why move? In an industry where trends come and go quickly, “it’s incredibly important to incorporate speed into the delivery of the product,” Rongione said.
Other apparel companies are also trying to be more nimble. U.S. apparel production has increased 50 percent since 2009, according to the American Apparel & Footwear Association, as some footwear and clothing makers decided to accept higher labor costs in exchange for greater inventory control and proximity to U.S. customers.
KEEN, for example, began assembling footwear at a plant in Portland, Oregon, in 2010. Sportswear giant Under Armour opened a high-tech facility in Baltimore last year.
“Obviously, if you have a plant in the United States, it’s much easier to respond to trends, produce small runs and get product to market really quickly,” said Nate Herman, the trade group’s senior vice president of supply chain.
Last year, for the first time in decades, the number of manufacturing jobs created by U.S. companies that moved operations back to the nation and by foreign companies investing in America exceeded the number of jobs lost by companies moving overseas, according to the Reshoring Initiative, a nonprofit set up to bring factory jobs back to the United States.
Yet the U.S. garment industry’s production gains also show why President Donald Trump’s campaign pledge to return manufacturing jobs to the U.S. could prove difficult. Increased automation is making it cheaper to sew and knit in the U.S. but requires fewer workers. So, even as apparel makers crank out more U.S.-made shirts and shoes, the industry is losing more jobs than it’s creating. Employment stood at more than 131,000 workers last year, down from a high of 1.4 million in 1973.
Moreover, more than 97 percent of America’s wardrobe still comes from abroad.