Schmatta: Rags To Riches To Rags pt.2
Mr Fashion-Incubator caught yesterday’s entry in time to call the cable company and get us hooked up to HBO; an unanticipated present. I think he’s the greatest. So you have him to thank -or not- for all this spittle.
As favorable as it was for us -if a pity party could be deemed favorable- there’s more to the story. They had to keep the film simple; it couldn’t be a full blown analysis of all that ails us. That’s my job. Heh. I can understand how people could be depressed by it but reading between the lines, I firmly believe there’s a lot of unrealized opportunity and potential. I really believe that. Here’s my take on it.
Have I ever mentioned that I majored in economics? Apparel was my first jaunt at college, a two year program I never finished. Specifically, I majored in developmental aka “third world” economics (the latter term is offensive by the way). It’s the study of developing industry when you have nothing. No money, no infrastructure, no education, little equipment and so on. In short, perfect conditions for an apparel industry. In fact, the first organized industry a nation develops are the needle trades. It’s one of the barometers of economic indices. Everything you saw in this film should be filtered through this lens. In other words, the history of US industrialization starts with the apparel industry. Workplace safety and unions were birthed in the apparel industry, not because the trade was any worse than other tangential manufacturing being developed at the time but because it was first and because it was the biggest. The bigger you are, the harder it is to hide. There was plenty of horrendous stuff going on in other industries.
Yes we lost a lot of jobs but we would have anyway due to technological improvements that led to increased productivity. As technology improves, fewer workers are needed. Plumbing is a prime example, you’re not having to go down to the river every day to haul water. China beats us on brute force and ignorance (it’s an expression, not an insult) not productivity. There’s hope here but it’s a different game today but you don’t have to play by those rules. Before, the bulk of expenditure went into production. Post Reagan/Clinton, off-shoring permitted higher margins to spend on marketing, hence all the glitz, glamor and fashion designer rock stars. You can still win by playing a different game. You have to choose though, will you spend on marketing or manufacturing? At the same time, I’m discomfited by critics who force arguments of economic evolution; a society moves through development stages starting with agriculture, then various classes of manufacturing, and finally, a service economy. I think that is a false choice. The new game is, deliver small orders quickly. Seriously. You can be small and profitable.
There was some blame thrown around in the film, consumers are to blame because they’re cheap. There’s two truths to that. First, if the average consumer dressed like a garmento, we would have gone out of business a long time ago. The fact is, with lifestyle changes, we don’t dress like we used to.
Sadly, little blame was directed at the trade itself -it can’t all be someone else’s fault. I have three paragraphs of blame. First, the apparel industry has the lowest levels of investment in education and improvements than any other manufacturing sector. Or maybe not, it depends. Textile production is also at the bottom. We’re always duking it out with them for last place. It’s tragic how many regular visitors don’t see fit to invest in their own educations (they want it free!) by buying my book and then they’re upset that consumers are cheap? It’s two sides of the same coin. For too long, the US trade was spoiled. Post WW2 saw phenomenal growth but then we were the only ones left standing, our infrastructure wasn’t war torn and starving. Still, one must ask themselves, why are the Germans the number one exporters in the world? Hint: they’re big on engineering. The relationship isn’t coincidental.
Another overlooked blame (okay, it was mentioned) was the matter of going public, cashing in the dream IPO. If you’re forced to bend to investor dictates of ever increasing profits every quarter, you cannot selectively choose to back pedal one season and plow the proceeds into rebuilding your business infrastructure the way you need to. Everybody has a bad season anyway but stocks fall and investors wail. Don’t go public, just don’t do it. If you want to cash out, become acquired and trot off to do something new. In the meantime, keep your companies small, tightly held and debt free. If your debt is limited, you won’t be forced into making painful choices.
Last, nobody wants to change. If the trade got greedier, suppliers did too. Fed by every increasing larger orders, it was too much work for suppliers to feed smaller entities (DEs) who had a hard time making headway. Once the market tightened up (CAFTA, recalibrating in a climate of reduced tariffs), suppliers employed strategies such as going head to head with their own competitors or began to outsource themselves. Then they cut design detail and quality. Thus began the real race to the bottom. Never at any time was there the consideration of feeding newest entrants to the market, the impetus of what created their businesses in the first place. There still isn’t. Doing otherwise was/is seen as a step backward.
Some things about the film annoyed me. For example, the media will never tire of flogging Kathie Lee Gifford. She’s nothing to me, she’s not a customer, I’ve never seen her show and I sure haven’t bought her clothes. This is the truth of the matter: At a time when nobody did it, Kathie Lee traveled to visit the factories that sewed her clothes. That she got a dog and pony show for her efforts is nothing different than what many get today. Do you know why she went when no one else did? It’s because she was raised in the garment industry, her father was a pattern maker. This industry fed and clothed her, making the irony of being targeted the more personal and painful. There were worse offenders but they weren’t as famous or photogenic. She was a scapegoat, a convenient target, nothing more, nothing less.
Speaking of mean, what did you think of Irving Rousso, the founder of Russ Togs? He knocked off his own father! Or was it his uncle? Talk about a meanie. My point being, DEs think people in the business are mean now, they should have seen it before. Russ Togs went on the skids in 1991 before the worst of the crisis hit.
So what’s next for us? The film made no mention of our possibilities. Then as now, we are at the forefront of change wrought by technology. The solution is nothing less than faster cycle time. The film made no mention of opportunities like lean manufacturing, a further evolved system of productivity. Your only advantage is four weeks on the water. Don’t forget it.