Column: Fashion industry meets Rust Belt
The retail fashion industry is experiencing a global seismic shift, ushering in opportunity to bring jobs back to the United States and tap into the tremendous talent and entrepreneurial spirit tucked in places like Detroit, Flint, Grand Rapids and Lansing.
Project I, a $5 million venture capital fund, has a mission to partner with early-stage companies in both Michigan and New York that fill a niche in the apparel or accessories market, have a disruptive business model, and are poised to thrive in the emerging retail landscape. These brands carry with them the grit, authenticity and high quality today’s consumers expect from apparel and fashion companies.
With investments in Detroit, Flint, Grand Rapids and Lansing, Project I sees Michigan as a great place to develop apparel companies focused on the emerging e-commerce retail scene. Business innovation, high-tech products and manufacturing are part of Michigan’s DNA making it a prime place to locate the support jobs and domestic manufacturing necessary for cutting-edge companies to thrive.
The American Apparel & Footwear Association (AAFA) reports that over 90 percent of apparel and shoes sold in the U.S. are made overseas, compared to 95 percent of apparel was made domestically in the 1950s. In addition, America has lost one-third of its manufacturing jobs in the past two decades.
According to a 2016 report issued by the Congressional Joint Economic Committee, there’s a new dawn breaking for American manufacturing. The report found consumers are willing to pay more for a piece of clothing if it is made in the United States. Furthermore, drastic changes in overseas manufacturing centers like China and Turkey have upended the conventional wisdom that manufacturing is cheaper overseas.
Though China produces roughly one-third of the garments sold in the U.S. today, its growing middle class is pushing up production costs and is unable to compete in terms of quality. At the same time, political instability in Turkey, the world’s garment center, has driven away retail customers, putting them on the lookout for more reliable producers.
Some large apparel companies, like Brooks Brothers, are early responders to these shifts and are beginning to move their manufacturing back to the United States. Domestic manufacturing allows companies to better keep with the latest trends by completing orders faster through shortened supply chains. It also enables companies to order garments in small batches, producing the quality consumers crave.
Despite these early adaptations, we believe large retail companies are battleships: powerful, yet too large to pivot swiftly enough to master today’s marketplace.
Instead, the necessary innovation is coming from fresh, new designers and entrepreneurs who focus on direct-to-consumer sales and products with an innovative design or high-tech twist. The fashion industry has already begun to diffuse beyond NYC and LA’s city limits in pursuit of new ideas. Hubs are popping up across the United States in the Carolinas, Georgia and Indiana. Next stop: Michigan.
The economic benefits of a fashion and apparel industry would benefit local education centers, workers’ wages and other, indirectly related industries. We are already beginning to see the benefits of a fashion industry sector in Michigan, with emerging fashion programs at the state’s colleges and universities and through the establishment of fashion incubators, like Lansing’s The Runway incubator.
At Project I, we want to be the “tip-of-the-spear” in rebuilding the U.S. fashion industry. Project I has already partnered with Flint-based eyewear brand, Article One. Article One frames are crafted in Italy at a small, family-owned factory and sold in boutique shops around the United States, but the company plans to bring that artisanal technology here to Michigan.
In today’s retail fashion industry, there is enormous uncertainty as well as tremendous opportunity for brands to rethink, redefine and redirect the future of the industry. Project I is eager to be working on the leading edge of this seismic shift. Today the U.S. fashion industry is centered on two major cities, New York City and Los Angeles — but it won’t be for long.
Jon Lewis is chairman of Project I, and John Elmuccio is its CEO.