For aspiring entrepreneurs who have retail products to sell, the hurdle of finding a manufacturer is typically one of the most significant obstacles you face when trying to get your business off the ground. Depending on the product, the cost of manufacturing will be one of your largest expenditures, which will make a difference in how quickly you can go to market and what your profit margin will be.
When we began the process of manufacturing the first run of our patented-technology, sweat-proof Thompson Tees, we had a lot of options. Many investors and advisors pushed us to consider outsourcing our manufacturing overseas in order to keep our costs down. We knew that might save us some costs, but there were going to be downsides. For one, we really wanted to support the U.S. economy with our business rather than send those opportunities overseas. For another, the idea of traveling out of the country as often as I would need to in order to have the kind of oversight I wanted was not appealing at all, especially with a growing family.
Manufacturing is an extremely valuable driver of the power of the U.S. economy. Not only does it comprise of about half of our country’s exports, it also supports growth in other sectors like retail, transportation, marketing and services. According to the National Association of Manufacturers, for every dollar spent in manufacturing, another $1.89 goes to growth in those sectors. Further, the U.S. has 12.75 million manufacturing jobs, accounting for 8.5 percent of the workforce according to the Bureau of Labor Statistics.
It meant a lot to us to be part of that growth, to support American jobs and also to be part of the revitalization of the garment industry overall. The industry has seen a sort of race to the bottom in recent years. It has become a rat race to find the cheapest way to get things made, which is typically overseas as domestic manufacturers can’t compete with the low cost of labor and lack of regulation.
Of course, as many of us know, that sometimes leads to poor working and living conditions in countries with lax labor laws, not to mention the detrimental effects on the environment without those regulations. Working with international manufacturers means you have less oversight into their practices and conditions, and there is no certainty that that country’s laws will keep everything above board. If you’re not onsite, it also becomes difficult to ensure the quality of the product remains up to par.
Ultimately, we knew it was important to us to uphold quality standards—for the product itself and the people who made it—for Thompson Tees, so we decided to maintain 100 percent of our production in the U.S., even going so far as to turn down any investment offers that required us to take manufacturing out of the country.
It was difficult at first to find garment manufacturers in the U.S. because nearly all of that production moved overseas over the last few decades—that race to the bottom. But my co-founder Randy Choi was able to use his connections, built over 20 years in domestic garment production, to secure U.S. based manufacturers for every link of our supply chain.
We handled the initial cost of 100 percent domestic manufacturing by starting with shorter product runs, which we were able to do in part because we didn’t have to account for international shipping and supply chain costs and delays. We were able to make smaller, more incremental investments in manufacturing while we built our business and expanded our product line. And we didn’t have to sacrifice any standards of quality—not labor, product or environmental—to get it done.
The great news for anyone looking to build a business with any manufactured product is, U.S. manufacturing is growing, and that means overall costs are coming down. In 2018, manufacturing accounted for $2.33 trillion, or 11.6 percent of U.S. GDP, according to the Bureau of Economic Analysis.
That has led to a reduction in overall labor costs, as well as a shift in perception about U.S. vs. international manufacturing. It used to be a given that it will always cost more to have your products made in America, but that’s not necessarily true anymore, and brands and manufacturers are getting back on board with the Made in the USA label. According to a 2015 survey from AlixPartners, 37 percent of manufacturers said they would prefer to locate in the United States. As costs keep dropping, that rate is likely to go up.
Keeping 100 percent of your manufacturing domestic can also be a good sales and marketing asset. Many consumers make a specific point to support as many U.S.-based companies and brands as possible to stimulate our economy. Those consumers will not only choose your American-made product over your overseas-manufactured competitor, they will also specifically search for that term online, making it easier for them to find you.
The big takeaway from this for me was that it was possible to build a $10 million garment company without exploiting anyone or harming the planet. Profit margins are certainly one consideration but they’re not the only thing, or even the most important thing. The integrity with which we’ve built and grown Thompson Tees has been just as gratifying and fulfilling as the company’s financial success.
We got into this business to help people suffering from an uncomfortable and embarrassing condition—axillary hyperhidrosis—and we did not want to, even indirectly, contribute to anyone else’s suffering, whether that’s the seamstress in the factory or the kids 20 years from now who need drinking water free from pollutants. Your company’s mission doesn’t have to be altruistic, this is business after all, but there is no reason that companies of any size have to abandon ethics in favor of profit. If our startup company could find a way to make patented-technology garments with the utmost environmental and labor standards, while running a business and filling orders from our garage, yours can too. Made in the USA isn’t just a label; it signifies a brand that cares about people all over the world.