Tag: American Giant

OM in the News: The U.S. Made T-Shirt

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, reports The Wall Street Journal (Dec. 31, 2024).  Then, there is Walmart, whose 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 Walmart T-Shirt

It wasn’t tariffs that made the $12.98 shirt economically feasible, says the CEO of American Giant, the U.S. apparel company producing them. It was Walmart’s heft—and guaranteed orders. The country’s biggest retailer—and importer of consumer goods—pledged 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.

American Giant said that without Walmart acting as a backstop by committing to buy a predetermined number of shirts over time, American Giant’s suppliers wouldn’t have had the confidence to make the investments in automation and other upgrades that drove down production costs. 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 cutting and sewing facilities in N. Carolina and Los Angeles.

How did American Giant get the price down from the $40-$60 it usually charges for a T-Shirt? By automating parts of the process to keep labor costs low, it was able to compete with countries such as Vietnam and China where workers are paid a fraction of the U.S. minimum wage.

“You can make almost anything here, as long as it doesn’t require lots of labor,” says the CEO. To fulfill Walmart’s order for hundreds of thousands of shirts, the company tweaked the design and then spent $1 million on machinery designed to make production faster and more efficient.

The T-shirts arrived in 1,700 Walmart stores and were up against other 100% cotton T-shirts selling for half as much. But those shirts didn’t have any American emblems. Walmart bars suppliers from using the term “American Made” or the American flag on products that aren’t made in the U.S. Despite the success of American Giant and a handful of other apparel companies that have figured out how to produce domestically, it is unclear how much Americans care about buying products made in the U.S.

Classroom discussion questions:

  1. Could American Giant have reshored without Walmart?
  2. What are the key OM decisions that were made?

OM in the News: Reengineering Apparel Production in the U.S.

180 miles: Most of American Giant’s production process—harvesting the cotton, then knitting, dyeing, napping, rolling, cutting, and sewing it—takes place within a few hours’ drive in North and South Carolina.
180 miles: Most of American Giant’s production process—harvesting the cotton, then knitting, dyeing, napping, rolling, cutting, and sewing it—takes place within a few hours’ drive in North and South Carolina.

American Giant is not yet a household name in the apparel market, like Levi’s or Gap, but it is proving that American manufacturing can be profitable again, reversing a devastating economic trend. No U.S. manufacturing industry has suffered more from outsourcing than textiles and apparel: The domestic workforce has shrunk by 3/4 since the 1990s.

American Giant is an e-commerce phenomenon: its clothes, sold only via the web, are comfortable, flattering, durable, and popular with a fanatical fan base. The company’s products routinely sell out and can be back-ordered for weeks. Located in the Carolinas, American Giant is also reengineering apparel production. Fast Company (March, 2015) rates the firm as one of the 50 most innovative in the U.S.

Traditional garment manufacturing works like this: A worker sits at a sewing machine all day long, making the same seam over and over. When she fills up a bin, someone comes along and moves the batch to the next seamstress, who adds on her piece, a process that continues until the garments are complete. Because some operations take more time than others—and people work at different paces—garments naturally tend to pile up. Seamstresses spend roughly 80% of their time performing tasks other than stitching.

In American Giant’s “Team Sew” approach, adapted from Toyota’s manufacturing process, the seamstresses work on their feet, performing multiple operations and collaborating on the fly.  They move along a horseshoe-shaped bank of workstations, seemingly in constant motion. When one falls behind on an operation, a teammate comes over to help her catch up. Above the team, a scoreboard displays how many items they complete and how that compares to efficiency targets. They are paid just over $13 an hour, almost twice North Carolina’s minimum wage of $7.25.

Classroom discussion questions:

1. What are the advantages and disadvantages of the “Team Sew” approach?

2. Why is it so hard for companies to manufacturing clothing in the U.S.?