Originally posted at >>>/qresearch/22265905 (010005ZJAN25) Notable: How a $12.98 T-Shirt Is Made in America - at a Profit
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How a $12.98 T-Shirt Is Made in America - at a Profit
Walmart aisles are piled high with goods this holiday season, but one item sticks out: cotton T-shirts that were made in America and cost $12.98.
The U.S. is awash in a sea of cheap imports that has destroyed much of the domestic apparel industry. In 2023, less than 4% of the apparel purchased in America was made here.
Seeking to turn the tide, Donald Trump imposed tariffs in 2018 on Chinese imports during his first term as president and has proposed additional tariffs on all imports in his second term, including items from neighboring Canada and Mexico.
But it wasnât tariffs that made the $12.98 shirt economically feasible, says Bayard Winthrop, the chief executive and founder of American Giant, the U.S. apparel company producing them. It was Walmartâs heftâand guaranteed orders.
The countryâs biggest retailerâand importer of consumer goodsâpledged in 2013 to buy more items that were made, grown or assembled in the U.S. In 2021, Walmart increased its goal and promised to spend billions more each year through 2030. More than half of Walmartâs sales come from groceries, most of which are produced domestically.
Winthrop said that without Walmart acting as a backstop by committing to buy a predetermined number of shirts over time, American Giantâs suppliers wouldnât have had the confidence to make the investments in automation and other upgrades that drove down production costs. A Walmart spokesman confirmed that the retailer essentially signed noncancelable purchase orders.
The T-shirt project brought together what Winthrop has called âstrange bedfellows.â
Born in Greenwich, Conn. and a descendant of the first governor of the Massachusetts Bay Colony, Winthrop started out on Wall Street as an investment banker before moving to San Francisco and the apparel industry. He started American Giant in 2011 to re-create the soft, thick Champion sweatshirts and flannels of his youth.
âThere are a million things that I disagree with Walmart about,â Winthrop said. âAmerican Giant is premium and made in America. They are mass market and global.â
But on a 2023 podcast, Winthrop praised Walmartâs American-made program, telling the host, âYou might think on the face of it that Iâd be an anti-Walmart person, but boy do I value a company like that that is taking a stand.â
The podcast made the rounds of Walmart executives, who invited Winthrop to the companyâs Bentonville, Ark., headquarters for what would be the first in a series of discussions that would last around six months.
âIf you had asked me a year ago if I could make a T-shirt in the U.S. for $20, Iâd say no way,â Winthrop said. American Giant sells T-shirts on its website and in a handful of retail stores for $40 to $60.
The company buys yarn that is grown, spun, dyed and sewn in the U.S., contracting with suppliers mainly in the Southeast. It also owns a cutting and sewing facility in Middlesex, N.C., and is part owner in another sewing facility in Los Angeles, which was opened specifically to make the Walmart T-shirts.
How did it get the price down? By automating parts of the process to keep labor costs low, American Giant was able to compete with countries like Vietnam and China where workers are paid a fraction of the U.S. minimum wage.
âYou can make almost anything here, as long as it doesnât require lots of labor,â Winthrop said.
Unlike some other industries that have become highly mechanized, there are limits to automation in apparel. For the most part, fabric is still sewn by humans.
To fulfill Walmartâs order for hundreds of thousands of shirts, American Giant and its partners hired 75 people to staff the Los Angeles sewing facility. The company and its suppliers also spent $1 million on machinery designed to make production faster and more efficient. It also tweaked the design.
To arrive at the $12.98 price, American Giant sifted through data provided by Walmart that forecast how many shirts it could expect to sell at various prices. âWe could then go to our partners and say, âDepending on pricing, weâre either going to sell 10 T-shirts or 10,000 or a million,ââ Winthrop said.
The T-shirts arrived in 1,700 Walmart stores in time for the July 4 holiday. They were up against other 100% cotton T-shirts selling for half as much. Those shirts didnât have any American emblems. Walmart bars suppliers from using the term âAmerican Madeâ or the American flag on products that arenât made in the U.S.
Now, American Giant is making 100% cotton sweatshirts for Walmart that will arrive in stores in January and sell for $38.98. A similar-looking pullover hoodie with a front pocket that American Giant sells to its own customers retails for $148.
Despite the success of American Giant and a handful of other apparel companies that have figured out how to produce domestically without losing their shirts, it is unclear how much Americans care about buying products made in the U.S.
The opening of borders ushered in a golden era of ever-lower prices for American consumers and fatter profits for manufacturers who chased cheaper labor in offshore locales. With the uptick of inflation in recent years, budget-minded shoppers have become even more price conscious.
âPeople say they prefer American made but they often donât put their money where their mouth is,â said Neil Saunders, who tracks the retail industry as managing director of research firm GlobalData.
Despite tariffs and other efforts by the Trump and Biden administrations to bring back manufacturing, 23 U.S. textile plants have closed in the past 18 months, according to the National Council of Textile Organizations.
Winthrop said he is starting to get more inquiries from big brandsâwho are drawing up battle plans in case the new round of tariffs go into effectâasking, âCan you make this for us?â
Still, he has plenty of meetings like his recent one with an executive for a large American retailer, who couldnât name a single U.S. factory or vendor.
âIf little old me can spin up a big program for Walmart,â he said, âa big brand with all of its muscle should be able to do something similar.â
https://archive.is/ZMPqc#selection-6083.0-6095.143