Why manufacturing domestically is worth higher prices

Walmart (WMT) has partnered with American Giant to roll out a line of American-made t-shirts just in time for the Fourth of July holiday. American Giant founder and CEO Bayard Winthrop joins Market Domination Overtime to discuss the partnership and some of the core principles behind the brand.

"It was a real breakthrough moment for our brand, and for textiles more broadly, when you have a partner like Walmart stepping up to a long-term commitment and a volume commitment that allows the supply chain partners to really rethink the way they're thinking about producing apparel in the United States again," Winthrop says. While textiles cost more to produce in the US, he believes the benefits are worth it: "When you make things here, you do it within the constraints of the American system, which includes human rights protections, environmental protections, child labor protections, living wages, things that I think we all as Americans really appreciate."

Winthrop stresses the importance of investing in America's manufacturing capabilities and workforce, explaining, "We begin to give good opportunities to those towns, those cities that want to have good, viable, and dignified work. And so that was a real founding mission for our brand." He notes that American Giant fulfills the need of consumers looking for access to good-quality, American-made products at reasonable prices.

He adds, "I think the larger brands and retailers have, as a generalized statement, tried to be a part of the solution here. And I think this now points a way forward for them to join the conversation."

For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime.

This post was written by Melanie Riehl

Video transcript

Bidding big A made in America, Walmart launching a line of T shirts from direct to consumer brand American giant just in time for the fourth of July holiday.

And it's a move to also combat the rise of fast fashion.

Joining us now is Byard Winthrop, he is American giants, founder and CEO Byard.

It's great to have you.

Congratulations on this partnership that you just reached with Walmart.

I'm curious what kind of insight you can give us just in terms of the ability, I guess the ease at which you have been able to 100% manufacture your items within the US and, and some of the biggest challenges maybe that you have had faced running up here and to ultimately uh reaching the significant partnership here with Walmart.

Well, thanks for having me on Shana.

You know, the the US textile base has been under a lot of pressure over the last 35 years is so much of offshoring has hit that industry particularly hard.

Um and like a lot of other offshore manufacturing bases.

Um It is increasingly dependent on orders that are one month out, two months out with a real inability to invest longer term in the automation and innovation and job retraining and hiring that's required to stay competitive uh on an international basis.

And so, um though this, this partnership with Walmart, um never easy to hit that kind of volume that Walmart requires, um it was a real breakthrough moment, I think for our brand and for textiles more broadly, when you have a partner like Walmart, stepping up to a long term commitment and a volume commitment that allows uh the supply chain partners to really rethink the way they're thinking about um producing apparel in the United States again.

So it's an important moment, I think for the industry and for and for us as a brand and beer.

I, I guess two questions for you.

I'm just curious um first is wh why, you know, it was so important Bayer to you to, to make the product here in America?

Why was that such a, a core value to you?

A core mission?

And secondly, I'm just curious Baer kind of just the economics of your business.

I mean, how much is more does it cost you to make the product here than it would if you, you know, did like so many of your rivals did and just made it overseas?

Well, well, it costs more.

Josh and I, and I would argue it should, I mean, I think one of the real benefits about manufacturing domestically is you when you make things here you do it within the constraints of the American system, which includes human rights protections, environmental protections, child labor protections, living wages, things that I think we all as Americans really.

And, and there's a bit of an inconsistency in my judgment when we allow our biggest brands to manufacture overseas, getting around many of those constraints while we hold our domestic facilities to those uh those high standards, we got to pick a lane one or the other.

Um And I felt the impact of that over the last 35 years was hitting middle class, working Americans really hard.

And um if we have as, as as many of us know, middle class wages have been stagnant over the last 35 years.

Um And that dynamic doesn't end well for America broadly.

And I think we have to start investing again into the communities that are making things here.

So we begin to give good opportunities to those towns, those cities that want to have good, viable and dignified work.

And so that, that was a real founding mission for, for our brand.

Um But, but maybe to the root of your question, it make it costs more to make things in the United States.

And that put, put uh most of American giants pricing in the premium end of the market.

And it really was out of reach for a lot of working Americans that need to have access to good quality products, ideally good quality American made products at places that make sense for them.

And this Walmart partnership really has broken into that tier in a, in a way that I had begun to wonder if it was going to be possible for us to do that without that kind of commitment and volume from a big partner like Walmart.

So, I mean, it opens up a whole new consumer segment for us and it really has caused us to think really rethink and reimagine what a domestic textile capability can be.

And hopefully that challenge begins to make its way into the big brands in the US.

By.

Have you heard interest from other big brands to similarly try to take on by sorry, sorry to cut you off there.

You you dropped for a second on Mike.

But Mike, my question is you certainly obviously now have this partnership with Walmart, are you having any sort of conversations seeing some interest from some of the other larger brands at this point?

Iii I think the larger brands and retailers have as a generalized statement, have tried to be a part of the solution here.

And I think this now points a way forward for them to, to join the conversation.

So I I'll leave it there, but I think there's a lot of interest um but there's been confusion about how to do it.

And I think this is a, this is a good example of how to get it done.

And So, hopefully that's gonna encourage others to join in all.

Have you been able to find it?

It's still a tight labor market.

It's hard out.

It's hard for employers really to find the labor that they need.

Are you, have you been able to hire the workers that you need to expand at the rate, at which you were hoping to do?

Yeah.

It's a good question.

I mean, I think we manufacture typically in, in rural and urban communities that need work.

And so we've been pretty lucky in that regard that there's a lot of talented workers that are looking for good durable jobs by and large.

Uh We've been able to hire the people and the talent that we need.

Um So I think there's lots of communities, maybe it doesn't show up in the labor numbers, but a lot of communities that need, they need good employers there and, and where textiles are domiciled, it's often in those communities that need that work.

And so, uh we've had good success in that regard by, I'm curious what's next for your company?

Um Do you, do you wanna stay private or, or would you be considering testing the public markets at some point?

Uh You know, I i it's not something I spend a lot of time thinking about other than to say, I think as a private entity, you're allowed to make decisions that are longer term in nature.

And I think that's pretty fundamental uh with an American manufactured footprint that you're not beholden to quarterly reporting and you can think longer term.

So we tried to think of our investor base and our planning in that way.

And so I think that makes it likely that we will stay private for as far forward as I can see.

Bard, give us a sense of the broader retail landscape right now, what are some of the trends that you're seeing from the consumer?

Are you?

In fact seeing the consumer remain under pressure, maybe adjusting their spending as a result?

I I, you know, I I'm probably not the person to speak to that in a lot of depth.

I can just give you my anecdotal view of it, which is, I think that in, in categories like apparel, I think the premium end of the market has been under some pressure.

Um I think that the consumers are looking for value now, I think that I think the the uh the the pressure of inflation and day to day goods uh is, is hampering people's ability to spend on things that are more discretionary.

And so we're seeing at the high end of at least in our business, some pressure, we have a lot more activity at the lower end of our pricing paradigm and we expect to see that follow through in this Walmart Partnership as well.

Byron, it was great to have you on the show today.

Enjoy the fourth.

Thank you.

Happy.

Fourth to you both.