California Apparel News

With a crowd of more than 180—which included 52 first-time attendees—the American Apparel & Footwear Association hosted its three-day Executive Summit March 13–15 at the Four Seasons Hotel with a speaker lineup that included entrepreneurs and industry veterans, as well as politicians and pundits who discussed how the political process has changed over the years.

The theme of this year’s conference was “Finding Optimism in Political and Economic Uncertainty,” and AAFA President and Chief Executive Officer Kevin Burke kicked off the event with an optimistic statistic for an association whose members largely produce overseas.

“The public’s view [on foreign trade] is beginning to change,” he said, citing a Gallup poll from February that found 57 percent of Americans view foreign trade as “an opportunity for economic growth through increased U.S. exports.”

“Thirty years ago my predecessor would have talked about keeping business in the U.S.,” Burke said. “We are a changed industry.”

But with that shift from domestic to offshore production comes new risks, including threatened port strikes on both the East and the West Coast of the United States in the last year.

“A port strike would be catastrophic,” Burke said. “We were fortunate that cooler heads prevailed.”

Burke outlined several ongoing key issues for his Arlington, Va.–based organization:

• Open international markets for U.S. products. “That’s our primary job,” he said, adding the proposed Trans-Pacific Partnership agreement “will be the next great trade agreement.” The recently proposed trade initiative between the United States and the European Union is also promising, bringing together two regions that represent “40 percent of total world consumption of shoes and apparel,” he said.

• Protect intellectual property for U.S. brands. “We are the most copied industry on the planet,” he said.

• “Reining in” regulation. “We are the most regulated industry I’ve ever worked in,” Burke said.

• The Berry Amendment and its impact on domestic production. “The downsizing of the military in Iraq and Afghanistan—which is a good thing—has a tremendous impact,” he said.

• Safety, compliance and social responsibility. “We are a very visible industry,” Burke said. “We have to be very careful that our products are made in a safe and ethical way.”

• Domestic production. According to Burke, 98 percent of the world’s apparel and footwear is manufactured offshore, but domestic production has increased. “Is this a trend? Maybe,” he said. “Is it going to displace [imports]? Probably not. Our goal is to facilitate that Made in America is an option you all have.”

Growth opportunities

Although most of AAFA’s members produce overseas, there are some who have found success with domestic production, including Brighton, Mass.–based athletic-footwear maker New Balance Athletic Shoe Inc., which was among the companies participating in a panel discussion titled “Topline Growth in a Global World.”

Rob DeMartini, president and chief executive officer of New Balance, said his company produces shoes in five factories in the United States. New Balance can take custom orders online and “put it on the customer’s doorstep in 48 hours.”

DeMartini was one of several panelists, including Rick Darling, president of LF USA; Rick Helfenbein, president of Tellas Ltd. and Luen Thai USA; and Philip Williamson, chairman, president and CEO of Williamson-Dickie Co. Paula Zusi, executive vice president and chief supply-chain officer of Ann Inc., moderated the panel.

Luen Thai’s Helfenbein stressed the importance of lean manufacturing to meet retailers’ price requirements. To do that, Helfenbein said, “you get rid of the waste.”

When Luen Thai shifted to lean-manufacturing practices in 2006, the company was able to open up 47 percent more space. “We could put another factory on the second floor,” he said.

The company also saw efficiency improve by 20 percent and was able to cut production time by 15 days.

“Then 2008 came along,” Helfenbein said. “And you know what? We did just fine.”

The panelists also discussed growth through acquisition. For LF USA, that means strategic acquisitions “to build a platform” or to acquire competitors in key markets.

“Buy profitable companies,” Darling advised. “Don’t buy turnarounds. [They have to] have great relationships with retailers that we [do] not have relationships with.”

Helfenbein joked that his company has “a strategy of buying everything that [LF USA parent company] Li & Fung hadn’t bought already.”

He said Luen Thai also uses acquisitions as a “means to diversify geographically and by product. But he also cautioned against buying turnaround businesses. “No sick puppies,” he said. “You buy a healthy company and make it healthier.”

Lisa Green, head of industry, fashion and luxury brands for Google, discussed ways to use Google tools—such as Google Docs, YouTube, Google + Hangouts and Google Glass—to engage consumers across multiple platforms.

“We’re merging all platforms so mobile and desktop will behave the same,” Green said. “The customer doesn’t care if [he or she is accessing a website] on phone or computer. They’re device agnostic. We see a number of searches that start on mobile and end up on desktop. The question is how do we unite that with the offline shopping experience?”