I understand you represent many factories, not just one. But how do you decide where to take a project for production?
Tom Mann: The first level of consideration is the specific category of the textile that we’re manufacturing. Is it a knit or a woven? If it’s woven, is it a shirt or a piece of outerwear? You’d be amazed at how specialized sewing factories are. If they don’t have the technical know-how, it doesn’t matter how good their price is. Once we qualify a manufacturing category the options narrow.
Mark Erickson: The size of the program is another important factor. Some programs don’t make sense to take to Asia because they’re too small: the cost of freight eats up any labor savings. We’re probably better off to do that in a smaller domestic factory. Other programs may be huge, but in a duty classification that favors a NAFTA or 9802 production scenario such as we do in Mexico.
Tom Mann: We also look at how much “needle” a product has: the ratio of its labor content — “needle” — to its materials content. It makes sense to place products with high labor content in factories where labor cost is low. That’s why most highly detailed outerwear is made in Asia. On the other hand, if a product doesn’t have too much sewing labor, maybe it makes sense to place that in a local factory where the labor is more expensive, but the turnaround is a month shorter.
Mark Erickson: Price obviously matters, and as a general rule-all other things being equal, we’re going to place a program where we get the lowest price.
Tom Mann: Then again, some customers may insist that a product be made in the USA for philosophical reasons. To them price is secondary.
Mark Erickson: And I’m proud to say that we can accommodate them!
Tom Mann: I think the point is that there are a lot of factors that make it advantageous to have a network of factories to draw upon. Which we do.
Mark Erickson: Maybe that’s an advantage to us being a so-called middle man instead of a factory owner…
Tom Mann: Well, there’s the whole issue of scalability too: being able to expand or contract production as the situation requires. We’ve shown that we can move a style from a low-output, quick-turn factory setting when it’s brand new to a high-volume setting when its mature.
Mark Erickson: Yeah; imagine the contrasting situation we’d have if we were the owners of a sewing factory of three hundred operators. That’s a reasonable size operation, but we’d be hard-pressed to take orders for fifteen thousand pairs of pants a week. Our factory couldn’t handle it. On the other hand, if we were larger we’d be hard-pressed to take on a job making two hundred pairs of pants for the whole season. So we gain a great deal of flexibility by being able to draw upon fifteen to twenty different factories around the world.
Tom Mann: Another aspect of the scalability question is when a customer starts out with ten styles in their first season, then needs us to jump to forty in the second season…
Mark Erickson: Well, that’s about having a network of factories, true; but it’s also about having our own product development staff — and being able to scale it — to be able to handle that number of styles.
Tom Mann: Some companies worry about our range and the depth of resources. They say, “If Erickson doesn’t own any factories, how much clout can they really have?”
So far, we’ve proven up to every challenge — entering into different product categories, expanding capacity, having more flexibility with regard to juggling deliveries into different increments, splitting them out and shipping them to distributors that they have around the world. We’ve been up to the challenge on all of those levels.
We have depth of experience and breadth of capabilities within our own staff, but on top of that our supply chain has incredible depth.
Mark Erickson: Well, here’s the thing. Business is all about relationships, right? We have long-term relationships with manufacturers around the world. We have credibility as a reliable supplier of ongoing business and honorable dealings, so that we can go back to them and ask for things that stretch them. And when we walk into a new place, there are no real secrets in the apparel business. Your reputation precedes you. So we have the ability to do business with new manufacturers who expand our capabilities. They know we have a history of honorable dealings, credible performance, and living up to our commitments, and providing good business. Our goal is for everybody in every transaction to make money at every level. That’s a successful transaction. It’s not one party benefiting at the expense of the other.
