In their 30 plus years in the industry, Erickson Outdoors’ principals Tom Mann and Mark Erickson played a vital role in developing the foundation of today’s outdoor apparel industry. In the interview that follows, they share their thoughts about technical apparel design and clothing manufacturing today — and describe the unique niche that Erickson Outdoors fills.
What’s the state of the apparel industry?
Where does Erickson Outdoors fit in?
Mark Erickson: From the consumer’s standpoint, things have never been better. Average prices are going down; quality is going up; product choices are proliferating.
On the other hand in the supply chain there’s a lot of price pressure, because retailers need to control their prices to stay competitive and also cut costs to stay in business. That’s been especially tough on the American apparel industry. Frankly, all that’s really left in the US is the marketing and distribution infrastructure; there’s very little manufacturing left. We continue to do as much ‘made in the USA’ as we can, but to serve our customers we’ve got to also offer sourcing from lower-cost countries.
Erickson Outdoors is in sort of a unique position. We neither own the distribution means nor the manufacturing plants. We are the classic supply-chain information provider, but with a twist: we also assume — on our customer’s behalf — all of the risks associated with the supply chain. We do the apparel design and provide the product specifications; we research and source all the fabrics and trims, we negotiate with the sewing factories, the freight forwarders and so on. If anything goes wrong with any link of this chain, we deal with the problem, not our customer. We oversee the entire process and deliver a finished package to our customer’s door. So what we’re really selling is a service. As such, we’re only as good as the last order we delivered; if something went wrong we couldn’t fall back on our brand equity as a wholesaler might; or sell our factory, as a plant owner might. So to survive in this business — to say nothing of expanding or growing — we’ve got to be a more efficient service provider, every season, every year.
Tom Mann: and we’ve survived for 18 years so far, so I guess we must be doing something right!
How has the outsourcing trend affected Erickson Outdoors?
Mark Erickson: Outsourcing basically means paying someone else to do things you might otherwise do yourself. I outsource my car repairs for example, but I guess I could do that myself.
Tom Mann: Yeah, right…
Mark Erickson: Anyway, business owners are increasingly looking to outsource certain functions because they know they’ve got to be really careful about building overhead structures. That’s something that can get out of hand really quickly. What if you hire a bunch of people and buy a bunch of machines when business is good, but then business goes soft? Or, if you’ve got a really seasonal demand? You’re stuck with all those expenses. But if you use Erickson Outdoors instead, you still get all the work done that those people and machines would do — in this case pattern making, production management, quality control and so on — but now those costs become part of your COGS — cost of goods — rather than coming out of your gross margin. Now those costs are always going to be the same percentage of your volume, whether business is good or not. No more nasty overhead to worry about…or at least not as much.
Tom Mann: Another reason outsourcing is so popular now is that people are better at assessing their own strengths. Say you’re really good at marketing or designing or sales, but the complexities of the apparel manufacturing process are not your thing. You could try to learn all about apparel manufacturing and maybe even force yourself to like it, but what happens to the part you’re really good at? Few people have the time or inclination to do all the various functions required to make a business work, and when they try to do it all, the business often suffers.
Mark Erickson: Or they go crazy.
Tom Mann: Yeah. So, often it’s better to outsource those functions where you lack expertise or interest to someone who knows what they’re doing.
Mark Erickson: That would be us.
Tom Mann: Right! Here’s a great example: We’ve been doing business with a customer for a number of years who has been able to build his business enormously — from zero to over twenty million dollars in five years. And he only has two full-time employees dedicated to the management of this program, so his operating expenses are really low. We do the rest.
Mark Erickson: We believe in outsourcing so much we do it ourselves! We don’t try to do everything. We do what we’re good at, and rely on a network of resources throughout the supply chain that specialize in what they do. For example, some people, thinking they’re going to save money, get involved in fabric “converting“ whether they know anything about it or not. We don’t. Instead we forge a relationship with a reliable vendor and say, “We want X amount of fabric delivered on X date at X price. You handle it.” And that’s what we expect our customers to do with us as well.
Tom Mann: Now we know we’re going to have to pay that vendor his mark-up, but experience has shown us over and over again — remember we’ve been at this for eighteen years.
Mark Erickson: Thirty-six, if you count the North Face years.
Tom Mann: That if you want to get from point A to point B quickly, with a minimum of screw-ups, its best to form at team where each party is expert at a given discipline. It usually proves to be cheaper too, in the long run.
