Competing Against Low-Wage Countries and Winning

I was in a meeting recently with "Greg," the CEO of a successful printing company. The company has about ninety employees and specializes in high-quality, quick turn-around printing. (By the way, for this reason the business is untouched by competition from low-wage countries). Greg is a natty dresser and I complemented him on the shirt he was wearing. "Where did you find it?" I asked, and he mentioned a well-known retail chain whose name I won't disclose. Then he said something totally unexpected. "I'm thinking about how I could get into the garment business."

His motivation, it turned out, was an experience he had had with the department store where he bought the shirt that started the whole conversation. He had bought their private label brand of casual pants for years, but recently had become disappointed with the quality. "My last pair wore out in a few months," he said. "Finally, I looked at the label and guess where they were made? [Expletive deleted] China!"

I sympathized with his point of view, but as gently as I could suggested that he ought to seriously rethink this idea, and related a story of a successful Silicon Valley entrepreneur I knew who had lost her shirt (no pun intended) in the garment business. With today's global marketplace, how could he possibly hope to compete with the low-wage countries, like China, that now dominate the clothing industry.

He replied that he was only half-serious, but felt there was a market for quality. "I couldn't sell to people on minimum wage. But I think there's a market for people like us," he said, gesturing to the other managers at the table. After that, we got down to business and nothing more was said on the subject.

That evening, my daughter dropped by for an unexpected visit. She's in the restaurant business and makes nowhere near the money of the participants in my morning meeting. But when I told her I was doing research for a book about successful U.S. manufacturing companies, she told me in no uncertain terms that I had to look into American Apparel. "I'd I’d rather pay twelve dollars for a pair of American Apparel briefs, even though I could get a three-pack for twelve dollars from somebody else. They’re thirty percent more stylish, and sweat-shop free."

I Googled. American Apparel after she left. The company is a huge success -  and manufactures exclusively in the U.S.

Greg was right. It can be done.

The moral of this story, if there is one, is that some crazy ideas aren't  crazy at all, and that quality can win in a marketplace that seems driven solely by price.