By Kevin Meyer
And I don't mean San Francisco, Mexico. This is "high cost" San Francisco in nutty "high cost" California in the "uncompetitive" United States. I used to talk a lot about American Apparel as an example of a manufacturer of traditionally low margin clothing products that was also successful in California, but I've held back lately due to some of the… uh.. "controversial" aspects of the CEO. Maybe I've found a few more examples to embarass the pants off of companies that think they can't compete from the U.S.
Thanks to regular reader David for pointing out this recent article in The Atlantic.
There are 200 to 300 businesses that actively manufacture products in San Francisco. I work for one of those companies – Timbuk2 Designs. Timbuk2 has been making custom bags in San Francisco since 1989.
We were started by bike messenger Rob Honeycutt, who became fascinated with just-in-time manufacturing and applied the Toyota model to the making of messenger bags. He hired a team of highly skilled sewers, several of whom are still with the business. One of Timbuk2's sewing leads, Hui Wu, has been with Timbuk2 for thirteen years, and she and her 15 person team – 13 sewers, 2 cutters – can make up to 400 bags a day in our San Francisco factory. Wu and her team are fully cross-trained so they can work on any machine, and their skill is incredible.
You can probably already see the threads I'll weave in describing why they're successful – a knowledge of Toyota principles and practices, hiring for experience and talent instead of just a pair of hands, cross-training.
It may not sound modern or even possible, but local manufacturing is happening in American cities and it's actually working. Here's why.
Kate Sofis of SFMade – a non-profit dedicated to supporting and growing manufacturing in San Francisco – explains, "Companies here share a few very noteworthy traits. They are almost all consumer-products companies [that are] design-driven, intensely customer focused, increasingly sell direct, and often marry technology in their business model."
Larger companies, specifically Nike and Converse, manufacture their products in Asia and FedEx them directly to the customer. The model works well for everyone but the customer who has to wait 3 – 6 weeks to receive a product. But because Timbuk2 is local (i.e. in the USA), we manufacture and ship custom bags in 2 – 3 business days. And if the customer is in San Francisco, we can do same-day manufacturing and delivery.
Units of one shipped fast. As opposed to having to wait for a container load(s) and hope the design is still in style. WalMart fell victim to that problem last year. The ability to rapidly test new designs is another competitive advantage.
Low minimums and speed to market are other huge advantages. We can make and sell one unit of a bag to see if anyone bites. Betabrand, another company that designs and manufactures in San Francisco, similarly benefits from producing locally. Betabrand's founder Chris Lindland explained, "Quick lead times and limited batches allow Betabrand to test out new ideas in a snap and quickly follow up when they have a hit."
We see that story time and time again. Smaller and smaller batches creating the ability to rapidly incorporate new designs and get them into customers' hands in days or even hours. Lower inventory, especially inventory at risk from a quality issue or style change.
If clothing and other consumer goods manufacturers can compete from higher cost and even highly regulated areas, then anyone who thinks they have to chase supposed lower labor costs overseas should be embarassed.
Joseph T. Dager says
Heck, I did not you worked for them. I always thought you drank wine!
My feeling has been for many years that if we were going to bring manufacturing back to the United States it would be for the reasons mentioned above. Customization, small batch sizes, testing and condensed supply chain(no boat) should make us competitive. And in many instances, the price could even drop.
Marketing Singularity is not that far off and I hope U.S. manufacturers start thinking that way too. With Supply exceeding demand in most cases, the competitive edge is giving the customer exactly what they want, when they want it and at the price they want. It can be done utilizing the methods you described above.
My compliments to you for being ahead of the curve.
Kevin says
Uh… I don’t work for them! But I do drink wine, and several people have recommended Timbuk2 bags to me! Agree on your points though.
Tony says
That’s great for boutique manufacturers. But the hostile business climate here (SF & CA) limits what you can do.
400 messenger bags a day? Great! Build new power plants? Nope. Build a new semiconductor fab? Nope. Build new refinery (which CA desperately needs)? NO WAY!
I don’t think special tax breaks and such for mfg are needed — they only benefit the connected. But increasing the costs of starting, running, and expanding a business through increased requirements, regulations, and taxes is not a recipe for creating jobs, and we’ve seen the results.
Greg Manter says
Good post. I love made in the USA success stories.
New York City has lots of manufacturers too.
http://www.madeinnyc.org/
Jim Fernandez says
Good piece. I think the future and health of manufacturing in the US will be in the hands of smaller companies.
I am struck by the thought of why companies grow larger. I recall the notion that manufacturing in larger volumes causes the price of the items to drop. But then I’m not well educated in that area.
So why would a company go from a Mom and Pop operation, to a small company with several employees, to a larger corporation, to a massive conglomerate and finally to a company that is “too big to fail”? And how many companies would still be here today if they had only stayed small?
Is it demand for product that causes companies to expand? Seems to me like the right reason to expand. Or is it greed that causes a company to expand? I’m guessing when a company expands and then fails, it is due to greed.