Suzanne Kapner of The Wall Street Journal reports by automating production and leveraging Walmart’s commitment to large orders, American Giant was able to sell a $12.98 shirt. This partnership shows how Walmart’s initiative to support U.S. manufacturing can help revive domestic production, though consumer demand for U.S.-made goods remains uncertain. Kapner writes:
Walmart aisles are piled high with goods this holiday season, but one item sticks out: cotton T-shirts that were made in America and cost $12.98.
The U.S. is awash in a sea of cheap imports that has destroyed much of the domestic apparel industry. In 2023, less than 4% of the apparel purchased in America was made here.
Seeking to turn the tide, Donald Trump imposed tariffs in 2018 on Chinese imports during his first term as president and has proposed additional tariffs on all imports in his second term, including items from neighboring Canada and Mexico.
But it wasn’t tariffs that made the $12.98 shirt economically feasible, says Bayard Winthrop, the chief executive and founder of American Giant, the U.S. apparel company producing them. It was Walmart’s heft—and guaranteed orders. […]
How did it get the price down? By automating parts of the process to keep labor costs low, American Giant was able to compete with countries such as Vietnam and China where workers are paid a fraction of the U.S. minimum wage.
“You can make almost anything here, as long as it doesn’t require lots of labor,” Winthrop said. […]
To arrive at the $12.98 price, American Giant sifted through data provided by Walmart that forecast how many shirts it could expect to sell at various prices. “We could then go to our partners and say, ‘Depending on pricing, we’re either going to sell 10 T-shirts or 10,000 or a million,’” Winthrop said. […]
Winthrop said he is starting to get more inquiries from big brands—that are drawing up battle plans in case the new round of tariffs goes into effect—asking, “Can you make this for us?”
Still, he has plenty of meetings like his recent one with an executive for a large American retailer, who couldn’t name a single U.S. factory or vendor.
“If little old me can spin up a big program for Walmart,” he said, “a big brand with all of its muscle should be able to do something similar.”
Read more here.
