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.