The Economics of "Buy American"
Ray Hughes, distributor relations for American Apparel, Los Angeles, explained that one of American Apparel's main competitive advantages has been its ability to be a fashion leader in the wholesale apparel industry, consistently providing new and appealing designs that buyers cannot get elsewhere. David Morrison, president of Bruce Fox Inc., New Albany, Ind., expressed a similar sentiment. "We work very hard at being competitive and outdoing our competition based on our designs and quality," he said.
Creative advantage can extend past appearance alone. American manufacturers like Vonco Products and Finn Graphics have designed either new (such as Vonco's Thundersticks, the now-popular noisemaker sticks) or innovative (such as Finn's adhesive calendars or pinless noteboards) items not immediately available elsewhere and therefore give a similar competitive advantage immune to the weight of outsourcing.
Lesson Learned: Exclusivity can defy even the strongest and most persistent market pressures. Providing new or the most compelling products may be helpful in overturning a client's budget limitations.
The Other Side Of Margins
Creativity can be a competitive tool enough, but it can offer an additional advantage: High margins per item. Foreign labor can undercut and otherwise steamroll American manufacturing, especially at high volumes, but the opposite is also true: High-quality, creative pieces can leave importers with no ability to compete. This creative strength is particularly relevant on items that would that would be considered prestige or art pieces: something like a custom-designed crystal award, a jewelry piece or high-fashion apparel.
High-quality "art" pieces make margins work for American manufacturers by letting them be tilted in their favor. "By creating a product that is actually a higher value, a higher quality product, it allows us to sell a product that is much higher priced," said Hughes. He explained that this higher margin per item allows American Apparel and its distributor partners to make more per shirt, making the company an appealing choice as an apparel source (because of American Apparel's careful branding and reputation for quality, as well as their retail presence where many basics are sold for $15 to $20, there is a lot of room for end-buyer markup on a $5 shirt).