--:-- [Theme music fades out]
--:-- Jessica Mendoza: Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Friday, January 3rd.
--:-- Jessica Mendoza: My colleague Suzanne Kappner covers retail, and recently she wrote about one particular shirt sold at Walmart that showed up in stores last summer for the 4th of July. Can you describe the shirt?
--:-- Suzanne Kappner: It's a 100% cotton t-shirt. It has the words American made on the front, and there's a little American flag patch near the hem on the bottom. At first glance, it looks like any other patriotic t-shirt.
--:-- Jessica Mendoza: What stood out to Suzanne, though, were two things. First, the shirt's price, $12.98. And second, its origins. What's remarkable is that it was entirely made in the United States. The cotton was grown here. It was ginned. It was dyed. It was sewn all in the U.S.
--:-- Suzanne Kappner: Is that unusual to see an inexpensive item of clothing made in America? It is very unusual these days, yes.
--:-- Jessica Mendoza: There's been a lot of talk about trying to move more manufacturing back to the U.S. President-elect Donald Trump has proposed sweeping policy changes to try to make that happen. Everything from 25 percent tariffs on Mexico and Canada to upending trade deals.
--:-- Jessica Mendoza: But getting more things made here can be complicated. And no one knows that better than the guy who got that t-shirt on the rack in the first place. Did you think that you would make a t-shirt in America that sells for $13?
--:-- Bayard Winthrop: If you asked me that a year and a half ago, I would have said no way.
--:-- Jessica Mendoza: Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza.
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--:-- Jessica Mendoza: The guy who made that shirt at Walmart is Bayard Winthrop.
--:-- Bayard Winthrop: My name is Bayard Winthrop, and I'm the founder of American Giant. And what is American Giant?
--:-- Jessica Mendoza: We are an entirely made-in-America clothing company that started about 12 years ago. And we're primarily online, though we've got six retail stores, but primarily a direct-to-consumer e-commerce business.
--:-- Bayard Winthrop: American Giant sells sweatshirts, sweatpants, and other basics. And they make them in the U.S. using American cotton and American labor.
--:-- Jessica Mendoza: You are wearing a sweatshirt right now. I am. Is that, by any chance, an American Giant sweatshirt?
--:-- Bayard Winthrop: I'm typically dressed head to toe in American Giant as I am today, except for my shoes and my underwear. So everything else I have on my body is American Giant.
--:-- Jessica Mendoza: Chances are, if you check out what you're wearing right now, it wasn't made in the U.S.
--:-- Suzanne Kappner: According to one industry group, back in the 1960s, about 95% of the clothes Americans bought were American-made. The U.S. was a powerhouse when it came to knitwear, flannel, and of course, those iconic blue jeans.
--:-- Suzanne Kappner: But it didn't stay that way. It started changing gradually in the 70s 80s You know companies began outsourcing to places like China where the cost of manufacturing was much much less expensive And then we had other things like NAFTA, which opened the borders and allowed for, you know, free trade.
--:-- Suzanne Kappner: And so manufacturing just began migrating to other countries outside the U.S. In 2023, less than 4 percent of the clothes Americans bought were made here.
--:-- Bayard Winthrop: Before he started his business, Bayard worked at sportswear and footwear companies that had outsourced production. And he felt like there had to be a better way.
--:-- Bayard Winthrop: American Giant came out of what had become, I think, a growing frustration of mine, both in terms of my disconnection from the product that I was making and getting further and further away from the men and women that made it, But also just kind of a growing concern about the impact of that on America at large and just feeling like I was participating in the abandonment of our ability to make things.
--:-- Bayard Winthrop: I'm curious, though, like why these clothes? Why sweatshirts, T-shirts, sweatpants?
--:-- Bayard Winthrop: Yeah, it's a good question. I mean, the stuff that was made here, I would say the strongest piece of that capability was in knitwear. And knitwear are T-shirts and sweatshirts, fabric that has some mechanical stretch in it that just kind of gives.
--:-- Bayard Winthrop: Knits in the U.S. have been traditionally very, very strong. And so Bayer decided to start with a classic piece of American knitwear, the sweatshirt.
--:-- Bayard Winthrop: Now, if you want to make a sweatshirt in, say, China, it's relatively straightforward. There are cities there that specialize in certain products, like socks or t-shirts, with manufacturers and supply chains built up to deliver those clothes efficiently and cheaply.
--:-- Bayard Winthrop: Show up with the design, and they'll handle the entire production process for you, soup to nuts. But in the U.S., so many factories and suppliers have shuttered that strong textile supply chains are a lot harder to come by.
--:-- Bayard Winthrop: To make his sweatshirt, Bayard would have to cobble together his own supply chain. I knew nothing to start, and that really isn't an overstatement. I knew nothing. I didn't know who to talk to. I didn't know who to ask.
--:-- Bayard Winthrop: And then I, so I began to, you know, do Google searches. And then I started traveling. One day I found myself in a, in a place called Carolina Cotton Works that is in Gaffney, South Carolina, run by a man named Paige Ashby.
--:-- Bayard Winthrop: And I'll never forget it. We had, we'd almost given up on the process and Paige said, I'll, I'll get this figured out for you. And he began to introduce us to the right knitters and the right places that can sew.
--:-- Bayard Winthrop: We got turned down by a bunch, but some of them agreed to try. And once that momentum began to build, then it became a function of just lining up the steps. And there are a lot of steps.
--:-- Bayard Winthrop: Bayard and his team had to find the farmers who'd grow the cotton for their sweatshirts, the cotton gins to gin that cotton, the mills that would take that cotton and convert it into yarn, the knitters who would turn it into cloth, and the dyers who would color and finish their fabric.
--:-- Bayard Winthrop: And then finally places that cut and sew that product, places like Eagle Sportswear in Middlesex, North Carolina, that actually bring it finally to life.
--:-- Bayard Winthrop: Each of those companies along the supply chain needed to be paid. And those costs were baked into Bayard's sweatshirt. The company also wanted its sweatshirt to be a high-quality product, long-lasting and well-made.
--:-- Bayard Winthrop: Those choices were reflected in the sales price, too. American Giant's classic sweatshirt costs $138. dollars.
--:-- Bayard Winthrop: As the company has expanded into tees, sweatpants, dresses, and socks, its prices have remained on the higher end. Bayard was making clothes in America, but they weren't affordable for every American.
--:-- Bayard Winthrop: As I began to get into the business, part of my hope was that, you know, when I was a kid, you could get American-made products at places like Caldor And you know working families families that were throughout the economic spectrum could afford really good made well American made sweatshirt or American made t t or American blue jeans That not available today anymore You really can
--:-- Bayard Winthrop: And in our case I hoped that I was going to change that with American Giant But eight, nine years in, I began to realize, like, you know what, as hard as I've tried, my cheapest t-shirt is $30, $35. And that's out of reach for a whole swath of Americans.
--:-- Bayard Winthrop: And that was hard for me to swallow because it was a big part of what I was trying to do as a business. And then one day, about two years ago, Bayard got a phone call that would change that.
--:-- Jessica Mendoza: This is the battle for the next big idea. This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best idea win!
--:-- Jessica Mendoza: On Brand with Jimmy Fallon. Series premiere Tuesday on NBC.
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--:-- Jessica Mendoza: In February of 2023, Bayard was on a podcast. He was talking about American Giant when he went on a bit of a tangent about Walmart. Walmart is the country's largest importer of consumer goods, so the opposite of what Bayard was trying to do.
--:-- Bayard Winthrop: You know, everyone likes to pound on Walmart, but Walmart has actually taken a stand on this issue, and they've made a real commitment to domestic production.
--:-- Jessica Mendoza: The stand Bayard was referring to was a pledge Walmart made in 2013 to buy more products made, grown, or assembled in the U.S. In 2021, the company doubled down on that pledge.
--:-- Jessica Mendoza: You might think on the face of it that I would be an anti-Walmart person, but boy, do I value a company like that that is taking a stand.
--:-- Bayard Winthrop: Bayard didn't know it at the time, but that podcast episode made the rounds at Walmart. And it wasn't long before Bayard got an unexpected call from the company.
--:-- Bayard Winthrop: They reached out and said, would you fly out to Bentonville and talk to us? We're having a hard time on the textile side of things. We'd love to, you clearly have figured something out. We'd love to learn from you.
--:-- Bayard Winthrop: And so I went and we had this conversation that began, you know, what ended up being a year and a half long process.
--:-- Jessica Mendoza: One of the things to come out of that process was an order, a big one, for American Giant to make those American-made tees for Walmart.
--:-- Suzanne Kappner: What Walmart did that was a game changer is they committed to ordering a certain number of T-shirts over a certain time period.
--:-- Suzanne Kappner: And that gave American Giant and its suppliers the confidence to invest. You know, they had to put in a lot of money to make this work. And they weren't going to do that unless they knew that they had these guaranteed orders.
--:-- Suzanne Kappner: You know, retailers can cancel orders. You can put in all that work and all that investment and then the retailer could turn around and say, yeah, we're going to cancel the order. But Walmart didn't do that.
--:-- Bayard Winthrop: It was like a non-cancellable order that they committed to. And that changed the conversation fundamentally.
--:-- Bayard Winthrop: Because of Walmart's big commitment, American Giant and its suppliers felt comfortable making investments they wouldn't have otherwise.
--:-- Bayard Winthrop: They hired 75 people to staff a sewing facility in L.A. And they spent a million dollars on machines to make production more efficient.
--:-- Bayard Winthrop: Things like automated label-setting machines, buying screen printing machines so we could bring that in-house and have that piece of the business verticalized.
--:-- Bayard Winthrop: Things like that that allowed us to be more cost-efficient faster. And that was only possible because of Walmart's commitment. 100%. Yep.
--:-- Bayard Winthrop: All these investments and efficiencies helped drive the price of American Giants t down So did a bunch of decisions the company made when it came to the t design.
--:-- Bayard Winthrop: For one thing they used cheaper rougher cotton yarn. They also used a different technique to put the t-shirt together.
--:-- Bayard Winthrop: The body of the shirt is made with one piece of fabric instead of two that need to be sewn together. When cloth is knitted, it's typically knitted as like a flat bit of cloth, or you can knit it in a tube.
--:-- Bayard Winthrop: That's called tubular nets. It eliminates the sewing steps that are required, like side seam sewing on the side of your garment.
--:-- Bayard Winthrop: The shirt that you're wearing likely, if you run your hand down, your armpit down to your waist, you'll feel a sewed seam there. And those are two operations that we've eliminated in the shirt because it's already done.
--:-- Jessica Mendoza: In the end American Giant was able to make a t-shirt that they could sell for just $12.98.
--:-- Bayard Winthrop: You know on the one hand it seems like your story shows that it is possible to make affordable clothes in America on the other it also sounds like you wouldn't have been able to do this without Walmart or a Walmart so is this a story about how easy or how hard it is to make stuff in America.
--:-- Bayard Winthrop: I mean, I think making stuff in America is really hard. I mean, it's hard because I think that in textiles, the supply chain has become so disaggregated and atomized.
--:-- Bayard Winthrop: On the other hand, I think when you have a framework that provides some consistency of demand and time, it's not so hard. I mean, it's like, it is hard. It is possible. It's hard, but possible.
--:-- Bayard Winthrop: And I think it really comes down to, I think I can't stand this question about, I hear, oh, you can't make that in America anymore. It's like, what are you talking about? I hear that all the time, Jess.
--:-- Jessica Mendoza: I hear it on every category. It's like, that's just horseshit. Like, get out into some factories, talk to some people and find out.
--:-- Bayard Winthrop: Now, whether you can make it for the same price you can make it in China, that's a different conversation. But can you do it here? Of course you can. Of course you can.
--:-- Jessica Mendoza: American Giant now has plans for other collaborations with Walmart, like a hoodie that'll sell for $38.98.
--:-- Suzanne Kappner: But in the context of how much we import, these t-shirts and hoodies are still drops in the bucket.
--:-- Suzanne Kappner: And Suzanne says it's not clear other companies will follow suit. Could other companies do what American Giant is doing? Absolutely. Yes, they could. But it's not easy.
--:-- Suzanne Kappner: And as far as I can tell, it's not really happening yet at any kind of scale. It's still sort of these one-off small companies trying to make this work.
--:-- Suzanne Kappner: Why is that? I think it's just difficult for like a large American clothing company who has, you know, their supply chain overseas to make these changes.
--:-- Suzanne Kappner: We don't really have the factories in the U.S. to make at that kind of scale. I mean, it's happening slowly and it may, you know, the momentum may continue to increase under the new administration, but this is like a nascent thing and it's kind of one step at a time.
--:-- Suzanne Kappner: You know, even though companies like American Giant and others are trying and working really hard to keep the American manufacturing industry alive, something like 23 textile mills closed in the past 18 months, even with the tariffs that Trump put in place and that Biden kept during his term, you know, this is an uphill battle.
--:-- Jessica Mendoza: That's all for today, Friday, January 3rd. The Journal is a co-production of Spotify and The Wall Street Journal.
--:-- Jessica Mendoza: The show is made by Catherine Brewer, Pia Gadkari, Rachel Humphreys, Ryan Knudsen, Matt Kuang, Kate Linebaugh, Annie Minoff, Laura Morris, Enrique Perez de la Rosa, Sarah Platt, Alessandra Rizzo, Alan Rodriguez Espinosa, Heather Rogers, Pierce Singhi, Jivika Verma, Lisa Wang, Catherine Whalen, Tatiana Zamis, and me, Jessica Mendoza, with help from Trina Menino.
--:-- Jessica Mendoza: Our engineers are Griffin Tanner, Nathan Singapok, and Peter Leonard. Our theme music is by So Wiley. Additional music this week from Griffin Tanner, Nathan Singapok, Peter Leonard, Bobby Lord, and Blue Dot Sessions.
--:-- Jessica Mendoza: Fact-checking by Mary Mathis. Thanks for listening. See you on Monday.
