Polo Club decides to move manufacturing to L.A.

Polo Club decides to move manufacturing to L.A.

Finding it cheaper and faster to make clothes locally than overseas, garment manufacturer Beverly Hills Polo Club has joined other ragmakers in moving its production - about $20 million worth - to Los Angeles from the Far East.

"The retail climate has changed, time is so much more of the essence," said Stephen Wessler, 50, president and founder of the eight-year-old Beverly Hills Polo Club. "We used to work with 90 days turnaround, or 120 days turnaround, but now we work on 45 days turnaround from order to delivery."

With the U.S. dollar a perennial weakling in exchange circles, price-wise it has become feasible to make clothes stateside to meet the demand of retailers for quickly filled orders, said Wessler. "Not only are the currencies of Taiwan, Hong Kong and (South) Korea very strong, at the same time their labor rates have gone way up. The edge is no longer in the Far East in prices," he added.

Labor rates are soaring in the Far East: From 1987 to 1989, hourly compensation in apparel industries, measured in U.S. dollars, rose 87.2 percent to $2.19 an hour from $1.17 an hour in South Korea; 47 percent to $2.66 from $1.81 an hour in Taiwan; and 29 percent to $2.69 from $2.08 an hour in Hong Kong, according to John Rhee, economist with the Federal Bureau of Labor Statistics in Washington, D.C.

Wages are higher in Los Angeles' garment district than in the Far East, but not prohibitively so. Most local contractors find all the labor they need at $5 an hour.

Additionally, in Los Angeles, much sewing work is done for cash-pay, off-the-books, meaning no additional costs for workers' compensation and other expenses, said Roger Miller, regional manager for the Bureau of Field Enforcement for the state Department of Industrial Relations.

Some manufacturers are going even further afield than the Far East in search of cheap labor, but Third World problems often outweigh savings, said Wessler. "You hear of some people chasing that (cheap) labor, going to Vietnam or Africa, the real Third World stuff. But problems emerge in the quality of the work. Phones don't work. It isn't worth it," said Wessler.

Too, finance problems can become complicated by overseas deal-making, said industry experts. "The factors (specialty banks) are getting more nervous about financing a foreign letter of credit," said Harvey Bookstein, nameplate partner at the West Los Angeles-based CPA firm Roth Bookstein & Zaslow. "When a domestic company produces, say in Korea, they usually subcontract with a Korean manufacturer to do the actual production. That manufacturer will usually draw upon a letter of credit issued by a domestic factor."

But today stateside factors are leary of financing overseas production - which takes longer than domestic production - given current, tight credit conditions, said Bookstein.

Currency fluctuations also make overseas production more risky, added Bookstein. "When the yen goes to 120 from 140, you get an idea of how your estimated costs of production can fluctuate."

Still, not all ragmakers are returning to the United States. "There are people going over, and people coming back," said Wessler. "It depends on the type of clothes you make. If you have an extensive amount of quality hand stitching on your clothes, you may still have to get it made in Hong Kong, where they can do that kind of work."

For bigger production runs of cotton clothes, of the type Beverly Hills Polo Club make, domestic production makes more sense, said Wessler.

While some garment makers are returning to Los Angeles, the region is not exactly swelling with new manufacturing work. At latest count, in September, there were about 100,000 textile and apparel manufacturing employees in Los Angeles County, virtually unchanged from a year ago, according to the state Employment Development Department.

However, the whole apparel industry is in a slowdown nationwide, meaning that the steadiness in employment in Los Angeles could signal this region's increasing attractiveness to clothing manufacturers.