Blog/News

Recycled Retail

By; Carli Valinoti, Express Trade Capital

One of the newest sustainability trends is making old garments new again. Evrnu, a Seattle-based textile-technology startup, is making old clothes and fabrics into new fibers that can be used for recyclable fashion.

Although their products are still being tested, Evrnu has just launched a limited run of recyclable unisex sweatshirts for Adidas by Stella McCartney, calling them “EVER-new.” The hoodies will not be available for the public until 2020 but will be given to athletes to promote the new sustainable line. “Right now, in the U.S., consumers dispose of about 80% of their textiles directly into their garbage can. That’s the behavior we’re really trying to tackle,” said Stacy Flynn, chief executive and co-founder of Evrnu. Recycled textiles can be made into premium fibers which can be dyed and woven into new fabrics made for all different types and styles of clothing. In 2016, Evrnu teamed up with Levi’s Jeans and launched a prototype of jeans made only from repurposed cotton T-shirts.

Consumers are becoming more aware of certain industries’ toll on the environment, including the fashion industry. Although creating new fibers still has some detrimental impact, the process uses a fraction of the amount of energy and chemicals used to make polyester clothing. These recycled garments may end up having a higher price-point, but as more people become aware of how sustainability can help the environment, people may be willing to pay more.

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Managing Director Mark Bienstock Talks Trade War with California Apparel News

Business owners who rely on China’s abundant manufacturing facilities and low production costs may be in for a massive challenge. The ongoing trade war the US government has waged with China may not end by March, meaning more potential tariffs that could disrupt the global economy.

ETC’s own Mark Bienstock and other industry experts spoke to California Apparel News this week about strategies to protect yourself and your business from the effects of this ongoing international conflict.

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Tackling Common Problems, Part 1

Sadie Keljikian, Express Trade Capital

Running a wholesale business is financially and logistically complex. There’s a lot to monitor and numerous variables can force you, the business owner, to think and act quickly to effectively manage unforeseen difficulties. Fortunately, most of these difficulties fall into a few categories of common problems that come up for small to mid-sized businesses.

Since these issues are common, solutions are readily available, though perhaps not obvious to less experienced business owners. Addressing them is just a matter of having enough experience to know how best to do it. Here are a few examples of common hiccups for which new businesses might not be prepared and what to do if they come up:

  • Problem: you’re a clothing designer and you decide to start producing and selling your designs independently. You have your designs and samples ready, you’ve sold some pieces direct to customers online, and you’ve even had promising discussions with local boutiques that would like to sell your pieces. There’s just one problem: you’re running this business by yourself and there’s no way you can produce the quantities the boutiques want in the given time frame. How can you get your business off the ground and establish a sustainable production structure?

Designers and inventors consistently run into the same problem: how can I produce the required amount of my product by the time my customer needs it without overextending my resources? There are a few ways to handle this. One is to simply turn down orders you can’t reasonably fulfill using your current production processes, but that means you’d miss out on opportunities for growth.

Another approach is to hire a team to manufacture your products on-site. This is an expensive option since it involves hiring new employees and acquiring new equipment, but it allows you to control product quality and directly and provides a foundation for increased output. As long as the business doesn’t grow more quickly than your overhead can accommodate, manufacturing on-site is a perfectly viable option.

Alternately, many designers and inventors choose to outsource their manufacturing processes, which removes the need for additional employees and specialized facilities. Some creators aren’t comfortable handing their designs over entirely, usually because they worry that their design will be plagiarized or that product quality will suffer. While quality and security concerns are valid, sufficient research and vetting will indicate whether a production facility is trustworthy. As long as you do your homework, outsourcing is an effective and efficient way to increase production.

  • Problem: a buyer at a big-box retailer contacts you to place a huge order. Your production line is ready, but you soon realize that the cost of fulfilling such a big order will leave your operational funds severely depleted. You don’t want to pass up the opportunity to gain bigger customers and expand your business, so how can you fulfill the order without dipping into funds you need to run your business?

Many flourishing wholesalers lose traction because they pass on big orders from influential retailers out of fear that they’ll lose equity or acquire unmanageable debt. What a lot of new business owners don’t realize is that there are ways to supplement business-related costs that don’t involve expensive traditional-style loans.

One way to approach the issue is to apply for a line of credit with a bank or private financial institution. Just like a credit card, a line of credit allows you to defer expenses that might be prohibitive. As long as you and/or your business is creditworthy and you are able to pay on time, there is very little downside to securing a line of credit on behalf of your business.

Another option is to use alternative lending (or “alt lending”). Alt lending is a growing and thriving field in which lenders use creative financing methods, meaning that you don’t necessarily need perfect credit to receive funding. Private financial institutions who offer alt lending solutions can offer funding against purchase orders, invoices, equipment, and even unsold inventory. Most importantly, this method allows you to borrow small amounts as needed, rather than borrowing a lump sum and worrying that you’ll accrue excessive interest.

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Unclouding the Future of Manufacturing

Sadie Keljikian, Express Trade Capital

Job creation, especially in the manufacturing industry, is a hot topic in the US right now. Since last year’s presidential campaign, there’s been an ongoing debate among politicians, business owners, and news outlets about the future of domestic manufacturing. President Trump has blamed the uptick in outsourced labor and consequent job losses on NAFTA, calling it the “worst trade deal” in American history. However, numerous sources argue that technology and automation are the real culprits.

Several sources claim that machines (not outsourcing) are responsible for about 85% of US manufacturing jobs lost since 2000. Even so, many American-run companies are bringing domestic manufacturing back in anticipation of potential legal and regulatory changes emanating from the tumultuous Trump administration, like the proposed border adjustment tax. With advances in automation spanning every industry, even farming, and robotic technology becoming more affordable, it is hard to imagine that there are as many potential jobs in domestic manufacturing as voters have been led to believe. It’s easier for candidates to make vague promises than to explain the more complex and subtle truth. Thus, politicians have been stoking voters with pledges to bring back a golden age of employment that no longer exits and is no longer feasible.

Businesses are taking different approaches in their attempts to create jobs. Some are bringing manufacturing back to the US, banking on the cache of goods labeled “made in the USA” and on US consumers to support domestic businesses by purchasing them, even at a premium compared to their imported counterparts. However, since automation has taken over so many manufacturing processes, it is unclear whether it is a viable long-term solution for employment. Others are attempting to create new jobs by consolidating the retail experience. With recent difficulty in the retail industry, particularly among stores commonly found in malls, some retailers, like Walmart, are creating a mall-like experience within their stores. Many Walmart locations now include services like eye care, dining, and salons, which keep customers in the store by providing them with services they already need.

Other sources claim that there is a serious opportunity for job creation inherent in the current rise of e-commerce. As online shopping continues to grow in popularity, retailers who focus on e-commerce are hiring new sales staff at impressive rates. What’s more, comparable jobs in e-commerce have better salaries, paid leave, stock benefits, and insurance than similar positions in their brick and mortar counterparts. Unfortunately, however, these jobs are highly concentrated in major metropolitan areas, so they don’t reach most of the geographical US.

Some experts are still holding out hope for traditional US manufacturing jobs, just not in mass-produced products. In recent years, the US has seen a rise in domestic manufacturing of custom or handmade products. While these products will never reach mass-production volumes, they appeal to the conscientious shopper who is less concerned with cost than they are with knowing where their money is going. These businesses usually use eco-friendly, fairly traded raw materials and typically work on a much smaller scale, in terms of both space and workforce. Since the products are more expensive to make, they naturally cost more for consumers. However, marketing and sales of such products typically target consumers who are willing to pay the extra cost of purchasing ethically sourced goods, so low volumes aren’t as much of a hindrance to the success of smaller scale, eco-friendly, domestic manufacturers.

In contrast with all the above perspectives, some still say that domestic manufacturing employment is already far more prosperous than most of us realize. A recent paper from the Center for Opportunity Urbanism indicates that 52 of the country’s 70 largest metropolitan locations have actually seen an increase in industrial employment since 2011. Forbes agrees and both say that while manufacturing is unlikely to disappear altogether, the issue is not that the industry is disappearing, but rather that it peaked in the 1950s and will likely never reach or surpass those levels again. Both sources blame automation for the sea change in the industry.

Whatever the case going forward, several of the country’s most prosperous industries are changing the way they do business. Many companies employ technology to cut costs and increase efficiency, often at the expense of jobs. Others simply outsource their production to countries with substantially cheaper labor costs. Might this mean that the end of significant employment in the US manufacturing sector? Possibly. The shifting landscape indicates that the new challenge for governments, manufacturers, and especially for retailers, is creating new jobs. So far, that’s job we cannot automate or replace with technology. Either way, it seems clear that, as technology continues to advance, creative destruction will continue to bedevil any semblance of a stable labor market.

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US Manufacturing Come-Back

Sadie Keljikian, Express Trade Capital

American companies are bringing manufacturing back to the US.

2017 has thus far proved complicated for retailers and US-based wholesalers and manufacturers. Retail shopping has hit a record low and the future of global trade is uncertain at best. President Trump is planning to enact a border adjustment tax as a financial slap on the wrist to companies who continue to outsource their manufacturing. US businesses, however, seem to be adjusting their practices ahead of the legal ramifications.

Businesses and local government officials across the country are watching the current administration closely. With so many proposed changes, several of which are quite drastic, Americans are concerned about if and how the changes will affect them personally and financially. In some cases, this means that companies are boycotting brands owned by the first family due to concerns of conflict of interest. In the case of manufacturing, however, US businesses seem to have no qualms about preemptively bringing their facilities back home.

Interestingly, the move to bring manufacturing jobs back to the US began before the election. In the last few years, businesses like GE and Ford have brought a significant portion of their production facilities back. It was a welcome reprieve for American manufacturing workers who have struggled since the turn of the millennium to find jobs.

Sources claim that companies were too focused on manufacturing costs in their efforts to offshore production in the 1990s and early 2000s. In fact, many report that domestic manufacturing is cheaper regardless of higher wages because businesses didn’t factor in freight costs, duties, and carrying costs of inventory. As it happens, these aspects usually make far more difference than manufacturing wages in total operational costs.

The movement to expand domestic manufacturing is not limited to central states, where American manufacturing was most active in the 20th century. The New York City Economic Development Corporation (NYCEDC), the Council of Fashion Designers of America (CFDA), and the Garment District Alliance have announced that they will collectively invest a $51.3 million package in the garment manufacturing industry in New York City. Mayor De Blasio has also made plans to expand manufacturing with a new complex, which is currently under construction in Sunset Park, Brooklyn.

The shift in priorities requires realistic and careful thought about how to reestablish a domestic manufacturing industry that provides quality jobs and affordable products. A lot of businesses are focusing their domestic manufacturing efforts on luxury goods and items that require specialized equipment. 3D print manufacturing is a perfect example of manufacturing that requires specialized skills and equipment, and thus could provide innovative products and specialized employment for domestic manufacturing workers.

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Made in NY: Brooklyn Campus Announced

Sadie Keljikian, Express Trade Capital

Last month, Mayor De Blasio announced that the city will open a new design campus and manufacturing space for apparel, film and television in Sunset Park, Brooklyn. The Council of Fashion Designers of America is also involved in the development. The new space will be the latest addition to the city of New York’s Made in NY campaign.

New York City has a long and vibrant history in the garment manufacturing industry. Local manufacturing in the Garment District began more than 200 years ago, and was a massive source of employment for European immigrants beginning in the late nineteenth century. Production in the district peaked in 1950, when New York City apparel manufacturers employed 323,669 New Yorkers. However, in recent years, garments made in New York City are much harder to come by.

The industry began to shrink when sales of ready-made garments took favor over custom pieces, beginning in the mid-20th century. This combined with outsourced manufacturing jobs and exorbitant rent hikes in the Garment District (rent in the neighborhood has reportedly risen 38 percent since 2013) have meant that a number of businesses have had to find alternate accommodations.

The new, 300,000-square-foot space (equipped to host 25-35 tenants from the fashion industry alone) will be at Bush Terminal. Construction will cost approximately $136 million, according to De Blasio’s announcement. In conjunction with the new complex, the city also plans to expand the nearby Brooklyn Army Terminal Building. The terminal’s additional 500,000 square feet will be available this September.

Elected representatives in Sunset Park have some doubts about the plan. Brooklyn Borough President Eric Adams, along with City Council member Carlos Menchaca and Congress people Nydia Velasquez and Jerrold Nadler have reached out to the mayor. They ask that he is conscientious of the effects gentrification may have on the Sunset Park area, expressing concerns that long-term residents will be displaced by rent hikes brought on by the project.

De Blasio was able to subdue concerns to a degree with the promise that the campus will eventually create 1,500 permanent jobs. Construction on the buildings will take a few years and, according to sources, will employ more than 800 construction workers.

Local designers and manufacturers are eager to take advantage of the massive new space, which will provide cheaper rent than the Garment District can currently offer as well as state of the art technology. The space is set to open in 2020.

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Big Brands Boycott Dhaka Apparel Summit

Sadie Keljikian, Express Trade Capital

Recent ethical difficulties in the Bangladesh garment manufacturing sector are discouraging global brands.

Bangladeshi garment manufacturers have been eagerly anticipating the second annual Dhaka Apparel Summit this Saturday. The event will be hosted by the
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and was set to host representatives from numerous domestic and global brands. Bangladesh has been rapidly growing as a sourcing hub for several years and currently represents nearly 6% of the $450 billion global garment trade.

The summit was planned to demonstrate continuing growth in the Bangladeshi manufacturing sector, which has been a topic of heated debate since the infamous collapse of Rana Plaza in 2013. Unfortunately, difficulties in the sector continue to mount. Since December, garment factory workers in Bangladesh have been striking and demonstrating in Ashulia to demand a raise in the minimum wage, which currently stands at approximately $67 USD per month.

Response to the strikes is adding to the controversy, with reports of police and government officials harassing and suppressing unionized workers. Based on these reports, it seems that the efforts of the Bangladeshi government are in service of stifling manufacturing workers, rather than negotiating the union’s demands. As a result, numerous big-box retailers have backed out of the summit, fearing scrutiny from their customers. Companies that have chosen to skip the summit include H&M, Gap, Inditex (parent company of Zara), Tchibo, Next, C&A and VF Corporation.

The Ethical Trading Initiative is also boycotting the event. ETI’s Peter McAllister gave a statement, saying “ETI recognizes the importance of the Apparel Summit to the future of the ready-made garment sector in Bangladesh. Unfortunately, the current intimidation of workers and their representatives is at odds with a progressive industry looking to secure the sustainable development of the sector.”

Although McAllister isn’t planning on attending the summit this weekend, he plans to meet with stakeholders in Bangladesh to discuss improvements at a later date. The hope is that the collective financial impact of the boycott on the event and its contributors will encourage the Bangladeshi government and industry leaders to address the concerns of factory workers, rather than suppress them.

Across the board, businesses are feeling compelled to express their opinions through boycotts and donations in accordance with their mission. Boycotts in the apparel and service industry have become extraordinarily common, both on individual and corporate scales. In one such instance, activewear retailers including Patagonia and Polartec chose not to participate in Salt Lake City’s Outdoor Retailer trade show due to controversy surrounding the Bears Ears National Monument.

The summit will go ahead as planned, but eyes are on Bangladesh and their future action with regard to treatment of their employees.

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Trump’s Victory Raises Trade Concerns Abroad

Sadie Keljikian, Express Trade Capital

Donald Trump’s presidential victory has raised concerns about the future of international trade.

A significant part of Trump’s platform has been a push to raise tariffs on exports from other countries to the US in an attempt to revive the US manufacturing industry and create jobs. Specifically, Trump has said that China absolutely must reform their trade practices. He’s promised to impose a 45% tariff and officially accuse China of currency manipulation, should current patterns continue. The Trade Facilitation and Trade Enforcement Act of 2015, signed by President Obama, addressed this issue. Trump, however, insists that the US needs to rebuild domestic manufacturing and condition trade with China carefully.

Trump’s plan doesn’t end with China; the president elect intends to discourage importing and outsourced manufacturing globally. The plan leaves European, Asian and Mexican manufacturers concerned with the possibility of an end to trade with the US, home to the world’s largest trading economy.

Concerns for the future of the global economy have been SAMSUNG CAMERA PICTUREScirculating since the United Kingdom notoriously voted to leave the European Union this year. Voters in the UK and US have demonstrated a focus on internal economic development. This would mean step back from participation in the global economy. The shift concerns industry leaders in other parts of Europe, as well as Asia and Central/South America, as both countries are powerful international traders.

Volkswagen Chief Executive Matthias Mueller and VDA, the German auto industry association, expressed particular concern. The industry has already been in a state of panic since the Brexit vote went through. Now, they are concerned that the US will take a page from China’s book. VDA said today, “It is to be feared that the United States under a new President, just like China, will mainly focus on their own economies, at the expense of international trade flows and relationships.”

The election result has added to uncertainty about global economy in other respects as well. Overnight following the election, global securities dropped abruptly. S&P 500 futures fell approximately 5%, its limit. The Nikkei stock index in Japan fell about 5% as well and the Mexican peso fell to a record low. Most of the immediate effects wore off by Wednesday morning. However, concerns continue to grow about the future of international trade under Trump’s administration.

It is currently impossible to tell if Trump will follow through with these specific plans, but presidents hold a surprising amount of power over trade policy, even without congressional approval. Trump intends to halt any existing international trade agreements, including NAFTA and the recent Trans-Pacific Partnership. A recent study by the Peterson Institute warned that China and Mexico may retaliate in response to high tariffs. They even suggest that the potential response could cause another U.S. recession and cost 5 million jobs. Again, it is impossible to predict how or if these eventualities will play out, but the potential disturbance in the global market has certainly raised questions and concerns on an international scale.

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Performance Sports Group Ltd. Enters Chapter 11

Sadie Keljikian, Express Trade Capital

Performance Sports Group Ltd. has filed for bankruptcy protection in the US and Canada. The company announced that it was facilitating a restructuring and sale of nearly all of its assets on Monday morning.

Performance, maker of Bauer ice hockey gear, announced that it would auction its assets to reconcile its debt. The announcement, however, came after Performance had a deal to sell a majority of its assets to Brookfield Asset Management for just over $575 million. Brookfield, an investor group, is led by Sagard Capital and Fairfax Financial Holdings Ltd. Former Chairman of Performance Graeme Roustan said in August that he was working with investment banks to find a bid. On Friday, Reuters clarified by reporting that Performance would enter bankruptcy protection with a buyer in hand and would seek out higher bids.

It is important to note that Performance’s difficulties demonstrate a wider national trend. Recently, increased competition in North American sporting goods manufacturing presents numerous challenges to all domestically based members of the industry. Due to the industry’s recent turmoil, Sports Authority Holdings Inc. have taken some financial hits in recent months as well. The retailer filed for bankruptcy in March, triggering a $90 million loss of Performance Sports inventory, according to Wall Street Journal.

Performance listed both its assets and liabilities in the range of $500 million to $1 billion. The company listed both amounts in its voluntary petition filed under Chapter 11 in Delaware.

Despite the numerous complexities of this case, Performance claims that operations will continue as usual during the bankruptcy process. Brookfield and existing lenders will provide $386 million debtor-in-possession financing. Performance also announced management changes, President Amir Rosenthal and Executive Vice President Todd Harmon left on Friday. Furthermore, Dan Sills was named executive vice president of hockey, Mike Thorne is now executive vice president of baseball and softball, and Jennifer Hughey was named senior vice president in charge of supply chain management.

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