Koos Manufacturing Inc. illustrates what has gone wrong for U.S. clothing manufacturers -- and what can, sometimes, go right.
A couple of years ago, the Southgate company's factory was cranking out 200,000 pairs of private-label jeans a week for some of the largest apparel chains in the country.
For The Record
Los Angeles Times Thursday January 20, 2005 Home Edition Main News Part A Page 2 National Desk 1 inches; 30 words Type of Material: Correction
Textile quotas -- An article in Sunday's Business section about Los Angeles-area clothing companies misspelled the location of Koos Manufacturing Inc.'s headquarters as Southgate. The company is in South Gate.
But profit margins were for the most part thin. Owner Yul Ku said retailers pressed him for lower and lower prices until he refused to budge, and they took their orders elsewhere.
Today, Koos Manufacturing's weekly output is down to about 35,000 pairs -- of expensive, fashionable jeans that sell for as much as $170. And though the factory's assembly line is a lot smaller than it was in 2003, business is healthy enough that Ku plans to begin making two more lines of denim next month, one that will command as much as $250 a pair.
Even now, as the clothing and textile industry is roiled by the end of 30 years of import quotas, "there will be survivors," Ku said. "We're one of them."
Across Los Angeles County, clothing companies are expecting to hang on -- or do better -- as the global apparel trade becomes more competitive than ever.
These companies have carved out niches in high- fashion and specialized production, with an emphasis on fast turnarounds, that could keep them in the international game.
Factories and sewing shops can crank out, within weeks of a designer's vision, cutting-edge fashions for teenage girls and young women. Workers in cities such as Vernon, Commerce and Gardena turn out the vast majority of the nation's trendiest high-end jeans, including 7 for All Mankind, Citizens of Humanity and Paper Denim & Cloth.
The pressure on the local industry, though, can't be denied. The expiration of the import quotas Jan. 1 has empowered some cut-rate producers, principally China, and prodded others, notably the tiny island of Mauritius, to tweak their manufacturing strategies to remain competitive -- possibly at L.A. County's expense.
So far, China is primarily focused on the mass production of moderately priced items. But some people in the industry believe it won't be long before Chinese factories will be able to make it all, including $300 jeans.
"If they want to," said Joe Rodriguez, executive director of the Garment Contractors Assn. of Southern California, "they could wipe out the whole industry."
Los Angeles County -- the largest clothing manufacturing hub in the nation -- is no stranger to the tumultuous forces of globalization.
For decades, U.S. retailers have been chasing lower-cost suppliers around the world. The loss of apparel jobs accelerated after 1994, when production moved south of the border after passage of the North American Free Trade Agreement.
L.A. County's apparel manufacturing base has shriveled to 61,400 jobs, 41% fewer than in 1996, according to the Los Angeles County Economic Development Corp. Now, with the quotas' expiration, many predict that the job losses will accelerate, though there are widely differing opinions about how swiftly and to what extent.
To be sure, Los Angeles isn't as vulnerable as the Southern U.S. Textile manufacturers there spent the most political capital trying to persuade Washington to maintain some forms of protection against economical, efficient factories in China, Bangladesh, Honduras and other developing countries. Factory workers in the Carolinas are expected to take the biggest hit from the competition unleashed by the end of the quotas.
The quotas had limited the amount of apparel and textile products that could be imported into North America and Europe from any one country, forcing buyers to distribute their orders around the globe. Without restrictions, buyers can more easily shift their production to the cheapest supplier -- which certainly isn't Los Angeles.
In Los Angeles County, a woman who stitches a skirt earns as much as $15 an hour, and even an undocumented worker employed by an unlicensed contractor can make $7. In China, her counterpart pulls in 68 cents to 88 cents.
But as superior as her pay might be to the going rate in the manufacturing Goliaths of China and India, a seamstress in Los Angeles is on one of the lowest rungs of the economic ladder, without health benefits and probably not unionized.
The end of the quotas that gave developing nations a leg up -- and that gave apparel workers in the United States some shield from the competitiveness of the international economy -- may well mean that "the poorest of the poor are going to be left with an even more difficult struggle for survival," said Edna Bonacich, a UC Riverside professor and coauthor of the book "Behind the Label: Inequality in the Los Angeles Apparel Industry."
"The more manufacturing we lose," she said, "the more destitute people we have."
Even the thriving denim business is a fraction of what it was in the early 1980s. As it is, premium denim represents a small portion of the $11-billion U.S. jeans market, and a lot of that market is supplied by foreign factories.
