WEBVTT - Bringing Back the American Hoodie 0:00:15.316 --> 0:00:25.756 Pushkin. Today's show is about some very big, very timely ideas, globalization, 0:00:25.996 --> 0:00:31.436 supply chains, the future of American manufacturing. Today's show is 0:00:31.476 --> 0:00:36.316 also about something very simple. A sweatshirt. A plain cotton 0:00:36.316 --> 0:00:38.916 sweatshirt with a zipper and a hood and a pocket 0:00:38.956 --> 0:00:41.476 to put your hands in when they get cold. The 0:00:41.516 --> 0:00:45.196 sweatshirt is made in America, it costs one hundred and 0:00:45.356 --> 0:00:53.796 thirty eight dollars, and it is wildly popular. I'm Jacob Goldstein, 0:00:53.876 --> 0:00:56.276 and this is what's your problem. My guest today is 0:00:56.356 --> 0:01:01.236 buyered Win, founder and CEO of American giant. Byron's problem 0:01:01.356 --> 0:01:04.396 is this, how do you make clothes in America and 0:01:04.556 --> 0:01:07.116 compete in a global economy. I grew up in the 0:01:07.116 --> 0:01:11.556 East Coast, and I grew up in a wealthy town 0:01:11.556 --> 0:01:14.436 in southern Connecticut where all the successful parents that I 0:01:14.516 --> 0:01:17.356 was around worked on, at least in my imagining of it, 0:01:17.396 --> 0:01:20.276 worked on Wall Street. And I got pretty fixated on 0:01:20.316 --> 0:01:22.436 that as a young kid and wanted to wanted to 0:01:22.916 --> 0:01:24.916 figure out a way to make money, I think, and 0:01:25.516 --> 0:01:27.356 kind of put my head down and did that for 0:01:27.956 --> 0:01:29.796 als of my college years and eventually got a job 0:01:29.836 --> 0:01:31.676 on Wall Street and realized pretty quickly that it was 0:01:31.716 --> 0:01:34.356 the wrong thing for me, and I had always grown 0:01:34.436 --> 0:01:38.316 up I always loved consumer products. I love clothing, and 0:01:38.476 --> 0:01:40.236 I have these very strong memories as a kid of 0:01:40.796 --> 0:01:43.716 my first pair of blue jeans and my first flannel shirt, 0:01:43.796 --> 0:01:46.036 my first Champion sweatshirt, all these things that these very 0:01:46.076 --> 0:01:49.676 sort of strong associated memories I was young, and I 0:01:49.756 --> 0:01:52.756 think that sort of informed for me an idea that 0:01:52.796 --> 0:01:55.836 I wanted to make something. So Bayard started working at 0:01:55.836 --> 0:01:59.396 companies that made stuff that sold physical products, and that 0:01:59.476 --> 0:02:02.316 was great for him, but those companies, like a lot 0:02:02.356 --> 0:02:06.356 of other American companies at the time, were moving production overseas, 0:02:06.916 --> 0:02:09.516 and that created a new problem for byired. The more 0:02:09.556 --> 0:02:12.356 I did that, the more I became really clear about 0:02:13.876 --> 0:02:17.636 both a disconnect from the product itself and there was 0:02:17.636 --> 0:02:19.196 a real loss attached to that, and a feeling that 0:02:19.276 --> 0:02:21.876 I couldn't control quality as well, and I didn't feel 0:02:21.876 --> 0:02:24.116 that sense of responsibility and stewardship over the stuff that 0:02:24.156 --> 0:02:26.636 I was making. And then there was also a human 0:02:26.676 --> 0:02:28.596 part of that that I felt that these people that 0:02:28.596 --> 0:02:31.316 had built relationships with that we were providing jobs for, 0:02:31.476 --> 0:02:33.796 that we were picking up and leaving. And as I 0:02:33.836 --> 0:02:35.836 got older, that really started to wear on me, and 0:02:36.156 --> 0:02:38.636 I began to contemplate the idea of American giant with 0:02:38.716 --> 0:02:41.036 a really simple idea, which was, I'd grown up around 0:02:41.076 --> 0:02:43.956 these great American brands Levies and Wrangler and wool Rich 0:02:44.036 --> 0:02:46.436 and all these amazing brands that had built very high 0:02:46.516 --> 0:02:48.716 quality products stood for something in my imagining of it, 0:02:49.436 --> 0:02:51.676 and I felt that the particularly an apparel, there were 0:02:51.676 --> 0:02:53.916 no brands like that left, and I wanted to do 0:02:53.956 --> 0:02:56.756 something different. I felt that not only could we make 0:02:56.876 --> 0:03:00.716 beautiful product here nearby, but also do it in a 0:03:00.756 --> 0:03:03.916 way that was consistent with our values, that respected environmental 0:03:03.956 --> 0:03:06.676 laws and human rights laws. And I thought the moment 0:03:06.756 --> 0:03:09.236 was right. E commerce was emerging, there was a bunch 0:03:09.276 --> 0:03:12.396 of advancement that happened in manufacturing and technology and data 0:03:12.476 --> 0:03:16.836 that I felt could build sort of a new American brand. 0:03:16.876 --> 0:03:20.556 And so in two thousand and twelve, we launched with 0:03:20.596 --> 0:03:22.876 a single product, a sweatshirt, a full zip sweatshirt. I'm 0:03:22.876 --> 0:03:26.076 wearing it now actually, and that sweatshirt we kind of 0:03:26.196 --> 0:03:28.036 poured my life into. I sort of everybody I spoke 0:03:28.036 --> 0:03:29.196 to told me it could be done in the United 0:03:29.236 --> 0:03:32.596 States anymore, and we battled our way through that. In 0:03:32.716 --> 0:03:35.276 real partnership with a bunch of people that remain suppliers 0:03:35.276 --> 0:03:39.316 of ours today. And late that first year, Slate magazine 0:03:39.316 --> 0:03:41.996 wrote an article about that sweatshirt. They called it the 0:03:41.996 --> 0:03:45.396 greatest hoodie ever made, and that kind of changed everything 0:03:45.436 --> 0:03:47.876 for us. I looked up that Slate article. It was 0:03:47.916 --> 0:03:52.756 published on December fourth, twenty twelve, so pretty much exactly 0:03:52.836 --> 0:03:55.796 ten years ago. So I don't know. Congratulations your ten 0:03:55.836 --> 0:03:58.276 year anniversary of making it as a company. Thank you. 0:03:58.676 --> 0:04:01.396 We're gonna do We're gonna do something special for that anniversary, 0:04:01.436 --> 0:04:03.396 by the way, So I appreciate you noticing that. Okay, 0:04:04.356 --> 0:04:07.916 So like tell me about seeing that article, Like someday, 0:04:07.956 --> 0:04:09.916 what happened? You get up to somebody email it to you. 0:04:09.956 --> 0:04:12.916 What happened? Yeah, So the article hit and I got 0:04:12.956 --> 0:04:15.796 a phone call on the fourth at about five pm 0:04:16.476 --> 0:04:20.356 from the people that were managing our website and in 0:04:20.396 --> 0:04:23.596 a panic, and they said, you see what's happening here. 0:04:23.636 --> 0:04:24.836 I had no idea. I said, know what's going on? 0:04:24.876 --> 0:04:28.836 They said, we are getting orders now, we are getting 0:04:29.676 --> 0:04:32.196 hundreds of orders a minute. We would you get in 0:04:32.276 --> 0:04:35.676 a typical day, one hundred orders in a day? Probably 0:04:35.676 --> 0:04:39.196 not even actually back then, this is like a good 0:04:39.236 --> 0:04:42.316 news bad news situation. You're like, great, but oh my god, 0:04:42.356 --> 0:04:45.316 we don't have the sweatshirts. Well, so in the in 0:04:45.356 --> 0:04:48.076 the short time it was it was sort of unfettered 0:04:48.076 --> 0:04:51.676 great news. I mean, it was really what you hope 0:04:51.676 --> 0:04:54.236 for dream about as as an entrepreneur starting something. It 0:04:54.276 --> 0:04:56.996 really was wonderful. There was a there were tins of 0:04:57.196 --> 0:04:59.116 challenges like could we get the servers, could we get 0:04:59.156 --> 0:05:03.596 the site loaded the web? Yeah, yeah, so there's some 0:05:03.756 --> 0:05:06.596 short term crises, but but big picture it was really great. 0:05:06.836 --> 0:05:08.996 But pretty soon what happened is, you know, by the 0:05:09.156 --> 0:05:11.676 next morning, we'd sold out of everything we had. We 0:05:11.836 --> 0:05:14.316 had a bunch of stuff that was in the supply 0:05:14.396 --> 0:05:17.716 chain coming, yarn and fabric coming that would carry us 0:05:17.716 --> 0:05:19.796 all the way through till about June. So six months 0:05:19.836 --> 0:05:22.676 ahead we said, boy, why don't we put up a 0:05:22.716 --> 0:05:25.996 blog post and say we're sold out. But you know, Jacob, 0:05:26.036 --> 0:05:27.756 if you want a sweatshirt, you can give us your name, 0:05:27.756 --> 0:05:29.596 in your size, and your preferred color and we'll ship 0:05:29.596 --> 0:05:30.876 one to you and it may not get there till 0:05:31.036 --> 0:05:34.516 May or June. And that blog we sold out of 0:05:34.716 --> 0:05:38.596 everything in the pipeline within a day. Or two. And 0:05:38.636 --> 0:05:40.876 so that's when things got really challenging. I mean, I 0:05:40.916 --> 0:05:42.996 think we then had to sit down. Here we were 0:05:43.036 --> 0:05:46.756 in December sixth or seventh. We thought, the article has 0:05:46.796 --> 0:05:49.276 just hit. It's Christmas. Everybody's in a kind of a 0:05:49.316 --> 0:05:52.276 holiday buying mood. We're not going to get back in 0:05:52.316 --> 0:05:56.476 stock at the earliest until July. Is anybody going to care? Then? 0:05:56.676 --> 0:05:59.756 Should we order a hundred sweatshirts or a thousand or 0:05:59.796 --> 0:06:02.596 ten thousand? I mean that was a fool's errand to 0:06:02.636 --> 0:06:04.716 try to predict that well, and we were no better 0:06:04.756 --> 0:06:06.516 about it than you know, you and I might be 0:06:06.556 --> 0:06:09.596 trying to predict the future. And so we made decisions, 0:06:09.596 --> 0:06:11.836 we said, and by the way, those were scary decisions, 0:06:11.836 --> 0:06:14.236 because if we decided to bring in ten thousand sweatshirts 0:06:14.476 --> 0:06:15.916 and we only sold a hundred, and we would have 0:06:15.956 --> 0:06:18.156 bankrupted the company. Right, You've got to you've got to 0:06:18.196 --> 0:06:20.316 pay for the materials. You've got to pay for the 0:06:20.356 --> 0:06:22.476 materials now, and you don't know if you're going to 0:06:22.556 --> 0:06:25.036 sell a thousand or ten thousand. Yeah, And going through 0:06:25.036 --> 0:06:27.596 our head was in July, it's going to be ninety 0:06:27.596 --> 0:06:29.436 five in New York City, and no one's going to 0:06:29.476 --> 0:06:31.476 be buying a sweatshirt and this article is going to 0:06:31.516 --> 0:06:34.956 be old news. And so just to wrap the story up, 0:06:34.996 --> 0:06:37.276 what happened was that demand kept going. And one of 0:06:37.316 --> 0:06:39.036 the things I think we did in retrospect that was 0:06:39.076 --> 0:06:41.636 smart is we reached out to our customers and and 0:06:41.676 --> 0:06:43.116 we sort of have been this since the beginning. We 0:06:43.116 --> 0:06:45.116 were just very honest with them and we said, look, 0:06:45.156 --> 0:06:47.236 this is what's going on, and this is one of 0:06:47.236 --> 0:06:49.796 the challenges about domestic supply, and this is the situation 0:06:49.796 --> 0:06:51.596 that ran and all of our I mean maybe not 0:06:51.636 --> 0:06:53.876 all of them, they seemed like all of them were 0:06:54.156 --> 0:06:57.756 like cheering us on, saying that is the best. I 0:06:57.796 --> 0:06:59.756 don't worry. As soon as you can. If it's a 0:06:59.836 --> 0:07:02.316 year from now, I don't care. And people sat in 0:07:02.476 --> 0:07:05.876 lists wait lists that lasted for months. And then here's 0:07:05.916 --> 0:07:08.476 the kicker. In June or July of that year, I 0:07:08.516 --> 0:07:11.236 don't remember when, and far How checked back in with 0:07:11.316 --> 0:07:13.516 the business. I don't even know if you talk to 0:07:13.556 --> 0:07:15.956 me about it. But he wrote a follow up article 0:07:16.116 --> 0:07:18.676 that was titled the only problem with the greatest hoodie 0:07:18.676 --> 0:07:20.636 in the World is you have to wait six months 0:07:20.636 --> 0:07:23.636 to get it, And that did it again. It like 0:07:23.716 --> 0:07:26.636 tipped us back into this chaos. And so anyway, we 0:07:26.796 --> 0:07:28.996 were in this rhythm of trying to predict the future, 0:07:29.716 --> 0:07:31.836 probably being conservatives, so we didn't get too far of 0:07:31.916 --> 0:07:35.116 our skis financially, and we were constantly trying to catch 0:07:35.156 --> 0:07:37.316 up with demand without over committing to inventory. And that 0:07:37.316 --> 0:07:41.036 went on for long time and actually outship our capacity 0:07:41.036 --> 0:07:42.756 of our facility that we were making the sweatshirts in 0:07:42.796 --> 0:07:45.036 at that time, which was out here in California. We 0:07:45.196 --> 0:07:48.916 purchased a facility in North Carolina and had to scramble 0:07:48.916 --> 0:07:50.196 to get that up and running. So it was a 0:07:50.276 --> 0:07:54.556 chaotic time, but incredibly grateful for it because I don't 0:07:54.556 --> 0:07:56.556 think we'd be here today without without that, you know, 0:07:56.596 --> 0:08:00.396 that year of insanity and then all the demand that followed. 0:08:00.716 --> 0:08:03.956 And so when you're in that position of being essentially 0:08:04.836 --> 0:08:10.436 having demand massively outstrip your supply, you have some set 0:08:10.476 --> 0:08:15.436 of choices. Don't sell a sweatshirt to everybody who wants one, 0:08:15.756 --> 0:08:17.476 Tell people they're gonna have to wait a long time, 0:08:17.996 --> 0:08:21.396 raise the price would be a classic response to that. 0:08:21.556 --> 0:08:24.076 I mean, which of those do you wind up doing 0:08:24.076 --> 0:08:26.156 over the course of that year or so well, we 0:08:26.276 --> 0:08:28.276 talked about all of them. I'm talking about all of them. 0:08:28.276 --> 0:08:29.836 I mean, yeah, there were people that were saying, like, 0:08:30.276 --> 0:08:33.076 go to China, Like what are you doing? Like go 0:08:33.076 --> 0:08:35.316 go get on the phone and have the switcher made overseas. 0:08:35.556 --> 0:08:37.236 There was every option you could think. I was on 0:08:37.276 --> 0:08:39.436 the table and and but to your question, I think 0:08:39.476 --> 0:08:41.356 we put a couple of stakes in the ground. We haven't. 0:08:41.356 --> 0:08:43.436 We did this with the pandemic too. It's always clarifying 0:08:43.476 --> 0:08:45.716 to me to figure out, what do you what are 0:08:45.716 --> 0:08:48.116 your core principles, what do you believe in One was 0:08:48.196 --> 0:08:51.236 that we were not gonna we won't go sacrifice quality, 0:08:51.876 --> 0:08:53.916 We weren't going to change our philosophy about how we 0:08:53.956 --> 0:08:56.476 made things, and we were gonna be honest with our customers. 0:08:56.596 --> 0:08:59.796 And and that looked like big, big delays. And you know, 0:08:59.796 --> 0:09:01.076 people ask me a lot like co did you do 0:09:01.156 --> 0:09:02.796 that on purpose? And boy, it's great to be backward 0:09:02.836 --> 0:09:07.236 And I'll tell you that um with the business was great. 0:09:07.356 --> 0:09:09.596 But but but having customers have to wait for that long, 0:09:09.636 --> 0:09:12.196 he is asking an awful lot of customers And that 0:09:12.316 --> 0:09:15.796 was not Uh. I wouldn't want to repeat that again, 0:09:16.116 --> 0:09:19.756 but that's the route. And it was just to sell sweatshirt, said, 0:09:19.756 --> 0:09:22.076 you can't swell all the sweatshirts people want. It's got 0:09:22.156 --> 0:09:25.316 to be a very mixed kind of blessing. Well, there's that, 0:09:25.356 --> 0:09:27.476 and there's the there's just the reality of the deep 0:09:27.676 --> 0:09:29.316 sense of trust that a customer puts in you and 0:09:29.356 --> 0:09:31.476 they decided to spend their money on something you make. 0:09:31.556 --> 0:09:33.596 And when you do that and you can't fulfill it 0:09:33.596 --> 0:09:34.996 and you're asking them to wait and it's gonna be 0:09:34.996 --> 0:09:36.836 another month, and this just changed it. Just you don't 0:09:36.836 --> 0:09:38.876 want to be in that situation. So it was a 0:09:38.956 --> 0:09:40.436 it was a it restored a lot of my faith 0:09:40.476 --> 0:09:43.036 in humanity and um and as I said earlier, I 0:09:43.036 --> 0:09:44.756 think we were totally honest about the whole process and 0:09:44.796 --> 0:09:46.516 that helped. But it was a it was a rocky 0:09:46.596 --> 0:09:49.076 couple of years there, for sure. So okay, so that's 0:09:49.116 --> 0:09:53.636 the that's the dramatic beginning. UM I wanted to talk 0:09:53.676 --> 0:09:57.036 about the present now. I would imagine in the long run, 0:09:57.916 --> 0:10:03.076 to make clothes for any significant market in the US, 0:10:04.236 --> 0:10:07.196 you have to do a lot of innovating, right Like 0:10:07.236 --> 0:10:09.196 you have to figure out how to be efficient, how 0:10:09.276 --> 0:10:12.196 to use technology. And so I'm curious what you have 0:10:12.356 --> 0:10:14.276 learned yeah, I mean, I think it just if I 0:10:14.356 --> 0:10:16.036 may just to kind of frame it up a little bit, 0:10:16.036 --> 0:10:18.236 because I think it's important to kind of contextualize it somewhat. 0:10:18.236 --> 0:10:21.716 I think if you, as a framing principle, say we 0:10:21.796 --> 0:10:24.476 are going to make things in the United States, Let's say, 0:10:24.516 --> 0:10:26.676 as a country, you make that decision, we're gonna we're 0:10:26.676 --> 0:10:28.596 gonna make We're gonna be a bit more protectionist in 0:10:28.596 --> 0:10:31.876 our leanings. And I would suggest that company countries like Japan, 0:10:32.196 --> 0:10:37.996 South Korea, Germany, Switzerland have adopted slightly more protectionist policies 0:10:38.236 --> 0:10:40.476 than the United States have, and as a result, they 0:10:40.516 --> 0:10:42.276 have to turn inwards to say, how do we remain 0:10:42.316 --> 0:10:44.956 competitive in a highly competitive world. The United States, on 0:10:44.996 --> 0:10:47.916 the other hand, largest marketplace in the world. The cost 0:10:47.956 --> 0:10:50.956 of entire United States is very very low. We've we've 0:10:50.956 --> 0:10:53.636 made a decision to have trade barriers be very low. 0:10:53.796 --> 0:10:56.836 And the result is is that there's overstating this. To 0:10:56.836 --> 0:11:00.636 make the point, there's less incentive to invest in capabilities 0:11:00.636 --> 0:11:03.036 domestically if there's an alternative right around the corner for 0:11:03.036 --> 0:11:06.716 apparel companies, let's say to say, why don't I go overseas? Sure? Well, 0:11:06.756 --> 0:11:09.516 I mean it's also the case though, if you look 0:11:09.556 --> 0:11:13.116 at Germany or South Korea, basically other rich countries that 0:11:13.156 --> 0:11:15.756 are more protectionists and have manufacturing, they're not making a 0:11:15.796 --> 0:11:20.156 lot of clothes, right like those companies. They're making high 0:11:20.196 --> 0:11:24.036 tech things where you have highly skilled workers using fancy equipment. 0:11:24.076 --> 0:11:27.356 They're using their sort of natural international advantage, right, and 0:11:27.396 --> 0:11:31.036 so clothes seem particularly hard. Tell me how you do it, like, so, 0:11:31.036 --> 0:11:33.436 I'll give you a couple of examples and maybe want 0:11:33.436 --> 0:11:35.876 to go a little bit deeper on. In a typical 0:11:36.196 --> 0:11:40.276 apparel manufacturing facility, what you'll see is what it's called 0:11:40.276 --> 0:11:42.876 batch sewing. So you'll see a line of operators made 0:11:42.876 --> 0:11:45.596 five operators in a line, and they'll be sewing a 0:11:45.636 --> 0:11:49.076 sweatsher and each operator will have a single task. It 0:11:49.156 --> 0:11:53.156 might be Jacob's task to sew a sleeve onto a body, 0:11:53.476 --> 0:11:55.516 it might be mine to attach a hood to a body. 0:11:55.556 --> 0:11:57.316 And the next person's going to attach the zippers, and 0:11:57.356 --> 0:11:59.556 the final person's going to attach the labels. There's a 0:11:59.556 --> 0:12:02.156 bunch of ancillary problems with that. One is is that 0:12:02.436 --> 0:12:04.596 you've got a massive amount of inventory tied up and 0:12:05.036 --> 0:12:07.956 in working process, and so you are you're the amount 0:12:07.996 --> 0:12:10.236 of inventory that's sitting on the floor is huge. You've 0:12:10.236 --> 0:12:12.556 got quality control problems. So let's say Jacob had a 0:12:12.556 --> 0:12:14.996 long land out in the town last night and he's 0:12:15.036 --> 0:12:19.116 attaching sleeves to bodies. He's doing incorrectly. Catching that qualities 0:12:19.116 --> 0:12:22.756 problem oftentimes takes hours, might take the next operator after 0:12:22.836 --> 0:12:24.596 a thousand units have moved down the line to him 0:12:24.676 --> 0:12:26.836 or her where they get caught. So there's a whole 0:12:26.836 --> 0:12:29.036 bunch of things there that are maybe a bit harder 0:12:29.076 --> 0:12:31.676 to see. I call them soft costs or hidden costs. 0:12:32.316 --> 0:12:34.596 And so one response that we've done there is we've 0:12:34.636 --> 0:12:37.876 moved that batch approach to sewing into what we call 0:12:37.956 --> 0:12:40.996 module or sew or bump. So and that is getting 0:12:41.036 --> 0:12:44.756 those same operators. First, they've got to stand up. That's 0:12:44.756 --> 0:12:46.676 a big, big change. To get operators to get out 0:12:46.716 --> 0:12:48.916 of their seats and stand all day, that's a big ask. 0:12:49.276 --> 0:12:53.116 And then have operators to cross trains, so that Jacob 0:12:53.156 --> 0:12:55.796 doesn't only know how to attach sleeves to bodies, but 0:12:55.876 --> 0:12:58.516 he now knows how to attach sippers and hoods and labels. 0:12:58.516 --> 0:13:00.596 He can do every function. One thing that that does 0:13:01.396 --> 0:13:05.036 is it eliminates a vast amount of your working process 0:13:05.236 --> 0:13:09.036 that's a big deal. It implements quality control that every step. 0:13:09.396 --> 0:13:11.516 That's a big deal, so you catch quality cotrol issues 0:13:11.516 --> 0:13:13.796 the minute they happen. The other thing is if you 0:13:13.836 --> 0:13:16.916 are productive as a team, which most of our teams are, 0:13:17.356 --> 0:13:20.836 and you beat your expected output, you get bonused for 0:13:20.956 --> 0:13:23.916 every additional unit you make in a given day. They're 0:13:23.956 --> 0:13:26.836 they're making more money, they're learning more, they're not just 0:13:26.876 --> 0:13:29.076 doing a single operation that's kind of a deadening on 0:13:29.076 --> 0:13:31.956 one thing all day, every day. So that that's an 0:13:31.996 --> 0:13:34.916 example of one of the changes that we've made. The 0:13:34.956 --> 0:13:37.276 reason why you don't see that more in the US 0:13:37.436 --> 0:13:40.316 is that the capital investments big. You've got to you've 0:13:40.316 --> 0:13:41.956 got to invest in the equipment. Number one, the stand 0:13:41.996 --> 0:13:44.196 up couldn't cost a lot of money. Number two, you've 0:13:44.196 --> 0:13:46.396 got to train your operators, cross train all your operators. 0:13:46.476 --> 0:13:49.116 That takes time. So let me ask you this, I mean, 0:13:49.716 --> 0:13:53.476 why couldn't someone at a factory in Asia do that? 0:13:53.796 --> 0:13:56.636 Or could theyre they you could? You could, yeah, and 0:13:56.676 --> 0:13:58.796 you and you do see that sometimes in Asia. The 0:13:58.836 --> 0:14:02.436 paradox is that there isn't a ton of an incentive 0:14:02.476 --> 0:14:03.876 to do it. But you do see it. You see 0:14:03.876 --> 0:14:05.996 it domestically too. You see it in Asia. You see 0:14:06.396 --> 0:14:10.356 some of the some of the facilities in Asia modernizing 0:14:10.356 --> 0:14:13.556 and using TOTA systems. I'm not sure I'm right about this. 0:14:13.596 --> 0:14:15.076 I think there's less of the sentive to do it 0:14:15.196 --> 0:14:18.396 in textiles because you can throw cheap labor at the problem. 0:14:18.676 --> 0:14:21.116 In place like that, there's less of the capital equipment. 0:14:21.156 --> 0:14:23.276 I guess part of what I'm looking for is, like, 0:14:23.996 --> 0:14:27.116 you know, besides sort of branding and price, which are 0:14:27.116 --> 0:14:30.756 clearly important, like what advantages do you get out of 0:14:30.796 --> 0:14:33.036 being in the US, And maybe one of them is, 0:14:33.556 --> 0:14:36.596 you know, more access to capital so that you can 0:14:37.596 --> 0:14:41.116 buy the fancier machines and a more highly skilled perhaps 0:14:41.196 --> 0:14:44.116 workforce that can you know, respond to this innovation. I 0:14:44.116 --> 0:14:46.116 don't know. I think that's I think it's one. I 0:14:46.156 --> 0:14:50.396 think I think the more profound ones are proximity to market, right, So, 0:14:50.436 --> 0:14:52.676 I think I think that you when you're close by 0:14:53.236 --> 0:14:56.236 from a manufacturing standpoint, your ability and my judgment to 0:14:56.836 --> 0:14:59.876 have higher quality control standards, closer relationships with your suppliers 0:14:59.956 --> 0:15:02.196 and is enhanced. So having spent a lot of time 0:15:02.196 --> 0:15:04.156 manufacturing things overseas, I can just tell you when you're 0:15:04.796 --> 0:15:07.476 five time zones away and a language barrier in between. 0:15:07.636 --> 0:15:10.076 It's much harder to on top of quality. I don't 0:15:10.076 --> 0:15:12.036 care what anybody says, it's just hard. You spend a 0:15:12.036 --> 0:15:14.076 lot of time on planes and trying to figure out 0:15:14.396 --> 0:15:16.676 what's going on, and oftentimes you find stuff when you know, 0:15:16.756 --> 0:15:18.476 too late, when it's on a truck or on a boat, 0:15:18.516 --> 0:15:21.036 and you're you know, you've got quality failures on their 0:15:21.036 --> 0:15:23.236 way to you. But look, Jake, the bottom line is 0:15:23.356 --> 0:15:25.676 it costs more money to make stuff. Here's what's sort 0:15:25.676 --> 0:15:28.676 of the frontier now, like on the manufacturing side, Like, 0:15:28.716 --> 0:15:31.516 what's the kind of frontier problem you're trying to solve now? 0:15:32.036 --> 0:15:35.156 So we are working really hard now to take some 0:15:35.196 --> 0:15:37.676 of our learnings and pushing them up stream into our 0:15:37.676 --> 0:15:40.156 fabric providers and our dyers and our finishers and stuff, 0:15:40.156 --> 0:15:42.796 and getting them to work with us in inventory and responsiveness. 0:15:43.236 --> 0:15:45.956 So for example, you know, using working with let's say 0:15:45.956 --> 0:15:48.316 Carolina Cotton Works, one of our key suppliers in Gaffey, 0:15:48.316 --> 0:15:51.116 South Carolina, so that we can when we need another 0:15:51.476 --> 0:15:54.396 six thousand yards, we can let them know, pick them 0:15:54.476 --> 0:15:56.076 up a day or two later, and move them up 0:15:56.116 --> 0:15:57.716 the road by you know, in a few hours and 0:15:57.756 --> 0:16:00.956 be going again and constantly trying to lower work in 0:16:01.036 --> 0:16:03.476 process and increase response times that we can be into 0:16:03.516 --> 0:16:05.916 market much faster. So that is a game of increments. 0:16:06.036 --> 0:16:07.756 That really is a game of increments. And it seems 0:16:07.796 --> 0:16:12.756 like that's sort of abstractly how you get manufacturing clusters, right, 0:16:12.836 --> 0:16:14.836 you have these related businesses. I mean, if you go 0:16:14.916 --> 0:16:17.436 to lots of places in Asia where they make everything, 0:16:17.516 --> 0:16:20.116 there's like a million different companies that do each other 0:16:20.156 --> 0:16:21.756 stage and they all work with each other. I mean 0:16:21.756 --> 0:16:24.036 it seems like that's what you're trying to build at 0:16:24.036 --> 0:16:27.676 a regional level, basically in the southeast US. Yeah. Yeah, 0:16:27.796 --> 0:16:29.756 if you begin to build a let's say a fabric 0:16:29.756 --> 0:16:33.356 supply capability that is supplying American giant quickly high quality, 0:16:33.676 --> 0:16:36.596 they can pivot that and look at a poulstry for furniture. 0:16:36.676 --> 0:16:38.996 They can pivot that and look at a poultry for automobiles. 0:16:39.356 --> 0:16:41.636 And so there is this spidering out that happens, is 0:16:41.676 --> 0:16:45.036 that capability develops. It really does build, to your point 0:16:45.116 --> 0:16:47.836 a network of suppliers and capability regionally. So if you 0:16:47.876 --> 0:16:50.756 look like places like Gaffe, South Carolina or Spartanburg, South Carolina, 0:16:50.796 --> 0:16:54.276 they are becoming manufacturing centers. Gaffney place where we get 0:16:54.316 --> 0:16:55.636 a lot of our yarn out of Gaffey, we get 0:16:55.636 --> 0:16:57.476 a lot of our fabric out of Gaffney. Gaffey has 0:16:57.476 --> 0:17:00.356 got a really vital and vibrant little manufacturing textile industry 0:17:00.396 --> 0:17:02.996 that's growing. And the more people that work there, the 0:17:03.276 --> 0:17:05.796 better they get, the more customers they attract, them where 0:17:05.836 --> 0:17:10.196 they can expand outside of specific industries. So that's absolutely right. 0:17:12.396 --> 0:17:14.356 In a minute, Bayern and I will talk about the 0:17:14.396 --> 0:17:17.596 costs and benefits of free trade. We'll also talk about 0:17:17.596 --> 0:17:20.756 why the cost of his American Giant Classic hoodie went 0:17:20.836 --> 0:17:23.836 from seventy nine dollars to one hundred and thirty eight dollars. 0:17:31.636 --> 0:17:34.236 Now back to the show, I think it's worth talking 0:17:34.276 --> 0:17:38.756 about cost and price for a minute. In that article 0:17:38.836 --> 0:17:43.716 ten years ago, it said your classic hoodie was seventy 0:17:43.796 --> 0:17:46.716 nine dollars, which adjusted for inflation, is right around one 0:17:46.756 --> 0:17:50.596 hundred dollars today. The Classic hoodie costs one hundred and 0:17:50.676 --> 0:17:54.836 thirty eight dollars today, so it's a lot more expensive 0:17:54.876 --> 0:17:59.596 even adjusting for inflation. Tell me about tell me about 0:17:59.596 --> 0:18:02.156 the price, Like, how do you how do you arrive 0:18:02.196 --> 0:18:04.636 at that price? So I think a few things. I 0:18:04.676 --> 0:18:08.076 think for starters, you know, one of the things is, 0:18:08.236 --> 0:18:10.316 as when you start off a company and you have 0:18:10.356 --> 0:18:12.556 an idea you probably can relate to this is that 0:18:13.316 --> 0:18:15.996 you make a product, you pour your soul into it, 0:18:16.196 --> 0:18:20.956 and there's an inherent insecurity about gosh, is it really 0:18:20.956 --> 0:18:24.236 worth what we're investing in this thing? And will customers 0:18:24.236 --> 0:18:26.836 pay for it? And so we had underpriced the garment 0:18:26.876 --> 0:18:28.236 in the beginning, and I think a lot of that 0:18:28.276 --> 0:18:30.516 was frankly just insecurity. In my part, I just feeling like, 0:18:31.116 --> 0:18:32.436 you know, maybe we don't need to make much of 0:18:32.436 --> 0:18:34.716 a margin here, because if we charge, you know, one 0:18:34.796 --> 0:18:37.236 hundred and nine dollars for this thing, will people ever 0:18:37.236 --> 0:18:39.316 pay for that? And I think that was my reference 0:18:39.356 --> 0:18:41.636 about the Slate article in the beginning, about really kind 0:18:41.676 --> 0:18:46.236 of taking me to give me a boost a confidence 0:18:46.236 --> 0:18:48.076 that I feel like you needed. Now. At the same time, 0:18:48.916 --> 0:18:51.476 one of my board members said to me, congratulations, you've 0:18:51.516 --> 0:18:53.556 just sold a bunch of under margin products a bunch 0:18:53.556 --> 0:18:56.116 of people and so and so he was, in a 0:18:56.716 --> 0:19:00.076 not very subtle way saying, you think that you're what 0:19:00.116 --> 0:19:03.156 you're standing for that supporting US jobs and US communities 0:19:03.156 --> 0:19:05.836 and that level of quality is worth something. Prove it 0:19:05.916 --> 0:19:08.036 whether your customers will pay for it. It's a good question, 0:19:08.116 --> 0:19:11.516 good point, good challenge. So that's part of the answer. 0:19:11.836 --> 0:19:13.836 Part of the answer to is that is that over 0:19:13.876 --> 0:19:16.916 the last couple of years, cotton, our inputs have increased 0:19:16.916 --> 0:19:19.236 a lot. Really, two things have increased. The cost of 0:19:19.316 --> 0:19:22.316 cotton got very, very expensive over the last couple of years, 0:19:23.116 --> 0:19:25.196 number one, and the cost of domestic labor got a 0:19:25.196 --> 0:19:26.916 lot of expensive. We couldn't get people to work in 0:19:26.916 --> 0:19:30.756 the supply chain, and so those two inputs drove our 0:19:30.876 --> 0:19:34.476 costs up a ton, and cottons come down a bit, 0:19:34.556 --> 0:19:37.596 labor is not. So it's accombination of all those things. 0:19:37.636 --> 0:19:39.716