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Some US clothing, footwear factories see more orders

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Labor cost, capacity limit US manufacturing potential

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LA footwear factory plans automation investments

By Arriana McLymore and Helen Reid

NEWARK, New Jersey, March 13 (Reuters) - President

Donald Trump's Made in America push is prompting some U.S.

clothing retailers to expand domestic production of everything

from T-shirts to coats and suits, several executives told

Reuters this week.

But limited capacity makes a large-scale shift to U.S.

production unlikely, and American-made clothing comes at higher

cost because of elevated labor expense and tariffs on materials,

the executives said.

In a meeting with American CEOs on Tuesday, including the

head of Walmart ( WMT ), Trump repeated his vow to cut the 21%

corporate tax rate to 15% for U.S. companies making products in

the U.S., according to a person familiar with his remarks. He

also defended his use of tariffs on imports and said they could

multiply.

"We are getting a ton of inquiries from (U.S. retail) brands

looking to reshore" by bringing production back to the U.S.,

said Mitch Gambert, owner and chief executive of Gambert

Shirtmakers, a manufacturer of men's dress shirts in Newark, New

Jersey.

His firm supplies woven cotton button-up shirts to three

Nordstrom ( JWN ) stores, and the department store chain has asked him

to boost that to 50 stores by the end of June, he said.

Nordstrom ( JWN ) did not reply to a request for comment.

At California-based privately-held retailer Reformation,

vice president of operations Kathleen Talbot said she is placing

more orders with its Los Angeles suppliers as the women's

clothing specialty chain adapts to Trump's tariffs, and may

consider other states like New York and Nevada. "I believe in

the spirit of trying to re-energize or invest in domestic

manufacturing, but that's going to take time," she said.

Talbot said Trump's planned tariffs on imports from Mexico,

due to take effect in April, left the retailer scrambling to

shift its supply chain. Reformation, which sells online and in

more than 50 stores in the U.S., UK and Canada, sources clothing

from six Mexican factories, all close enough to truck raw

materials and finished goods over the border to LA and back.

Joe Ferrara, CEO of New York-based Ferrara Manufacturing,

which makes clothing for Ralph Lauren ( RL ) and the U.S.

military, said more retailers have approached him to test

small-batch, quick-turnaround manufacturing of products such as

wool coats and blazers. Ralph Lauren ( RL ) did not immediately respond

to a request for comment.

Steve Lamar, president of the American Apparel and Footwear

Association, said the industry group expects to see a modest

increase in U.S. manufacturing.

"We don't have the labor, skill set, materials, and

infrastructure" to manufacture clothing and shoes on a large

scale, Lamar said.

CHEAP IMPORTS

Americans are accustomed to buying low-priced China- and

Asia-made clothing. About 97% of the clothes and shoes sold in

the U.S. are imported, according to Lamar's association. China

is the biggest source of U.S. apparel imports, though its share

has fallen over the past 15 years as clothing production in

Vietnam and Bangladesh grew.

The U.S. clothing manufacturing sector has shrunk since 1990

as brands and retailers shifted to sourcing from factories in

China, Vietnam, Bangladesh and other low-wage countries,

enabling them to keep costs and prices down, said Yao Jin,

associate professor of supply chain management at Miami

University of Ohio.

"For the apparel industry, very few jobs will come back to

the U.S. because our labor is not competitive," he said.

For Gambert, the potential additional orders for shirts

that sell for $300 to $500 represent a major increase for his

100-person factory.

They "would be a definite positive shot in the arm for my

business," he said.

He said about 90% of the 100 workers in his factory earn

more than New Jersey's $15.49 hourly minimum wage.

But Gambert Shirts' limited production capacity has forced

him to take a cautious approach to new retail clients.

"We certainly don't want to overload it and kick out the

existing customer base," he said. Gambert's main competitors are

shirt factories in China, Indonesia, Malaysia, Vietnam and

India.

Another problem is that materials such as buttons, cloth and

zippers are imported and subject to Trump's tariffs. China is

the biggest source of U.S. fabric imports.

Gambert's button costs have increased 18% because of U.S.

tariffs against China.

Alexander Zar, CEO of footwear and leather goods

manufacturer La La Land Production and Design in Los Angeles,

said he has received inquiries from sportswear brands interested

in producing sneakers and running shoes in the U.S. Zar aims to

raise $10 million from outside investors to buy new machinery

for his 60,000-square-foot (5,600-sq-m) factory and meet

increased demand.

In an investor presentation, La La Land markets U.S.

manufacturing as a way for brands to "avoid arbitrary tariffs

and unexpected supply-chain congestion affected by international

geopolitics."

"While traditional shoe manufacturing in the U.S. may not be

able to compete with global prices, localization offers

substantial advantages when approached with the right

technologies," Zar said in an interview.

Given that Los Angeles' $17.28 hourly minimum wage is among

the highest in the country, Zar plans to invest in 3D printing

and technology that could eliminate the need for stitching on

running shoes, reducing labor costs.

Still, Zar said most of the shoes his factory produces will

likely be higher-priced or limited edition.

Sportswear brand Adidas, which lists La La Land

as a supplier, has no plans to change its supply chain, a

spokesperson said when asked whether the company would buy more

U.S.-made products. La La Land will produce "a special edition

of shoes in very limited quantities" for Adidas, the

spokesperson said.

Kim Glas, president of the National Council of Textile

Organizations, favors Trump's additional tariffs on apparel

imports from China. But she said tariffs on Mexico and Canada

hurt the industry that relies on sending U.S. cotton and wool,

yarn, and fabric across borders for different stages of

manufacturing. Confusion over tariffs is also unhelpful, she

said.

"For U.S. domestic manufacturers to grow and invest, they

need long-term certainty."