The Journal. - How to Make a $12.98 T-Shirt... in the U.S.

Episode Date: January 3, 2025

After decades of manufacturing in the United States moving overseas, there are calls to bring it back. But doing that is not straightforward. WSJ’s Suzanne Kapner and the founder of American Giant explain how that company produced inexpensive T-shirts in the U.S. Further Reading: -How a $12.98 T-Shirt Is Made in America—at a Profit   Further Listening: -How One Business Owner Is Getting Ahead of Trump's Tariffs  -China, an Alabama Business and a 20-Year Battle  Learn more about your ad choices. Visit megaphone.fm/adchoices

My colleague Suzanne Kappner covers retail. And recently, she wrote about one particular shirt sold at Walmart. It showed up in stores last summer for the 4th of July. Can you describe the shirt? Sure. It's a 100% cotton t-shirt. It has the words American made on the front, and there's a little American flag patch near the hem on the bottom. At first glance, it looks like any other patriotic t-shirt. What stood out to Suzanne, though, were two things.

First, the shirt's price, $12.98. And second, its origins. What's remarkable is that it was entirely made in the United States. The cotton was grown here. It was ginned. It was dyed. It was sewn all in the U.S. Is that unusual to see an inexpensive item of clothing made in America? It is very unusual these days, yes. There's been a lot of talk about trying to move more manufacturing back to the U.S. President-elect Donald Trump has proposed sweeping policy changes to try to make that

happen. Everything from 25% tariffs on Mexico and Canada to upending trade deals. But getting more things made here can be complicated. and spending trade deals. But getting more things made here can be complicated. And no one knows that better than the guy who got that t-shirt on the rack in the first place. Did you think that you would make a t-shirt in America that sells for $13? If you'd asked me that a year and a half ago, I would have said no way. A year and a half ago, I would have said, no way. Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza.

It's Friday, January 3rd. Coming up on the show, how one company made an affordable t-shirt in the USA. The guy who made that shirt at Walmart is Bayard Winthrop. My name is Bayard Winthrop and I'm the founder of American Giant. What is American Giant? We are an entirely made in America clothing company that started about 12 years ago. We're primarily online that we've got six retail stores,

but primarily a direct-to-consumer e-commerce business. American Giant sells sweatshirts, sweatpants, and other basics, and they make them in the US using American cotton and American labor. You are wearing a sweatshirt right now. I am. Is that, by any chance, an American Giant sweatshirt?

Yeah, I'm typically dressed head-to-toe in American Giant, as I am today, except for my shoes and my underwear, so everything else I have on my body in American Giant as I am today, except for my shoes and my underwear. So everything else I have on my body is American Giant. Chances are, if you check out what you're wearing right now, it wasn't made in the U.S. My shirt was made in Indonesia and my pants were made in Vietnam. But that wasn't always the case.

According to one industry group, back in the 1960s, about 95% of the clothes Americans bought were American-made. The U.S. was a powerhouse when it came to knitwear, flannel, and of course, those iconic blue jeans. But it didn't stay that way. Here's Suzanne again. It started changing gradually in the 70s, 80s. You know, companies began outsourcing to places like China where the cost of manufacturing was much, much less expensive. And then we had other things like NAFTA, which opened the borders and allowed for, you know, free trade. And so manufacturing just began migrating to other countries outside the U.S. In 2023, less than 4% of the clothes Americans bought were made here. We had whole communities in the South, you know, Southeast especially, that were

manufacturing towns where generations of families worked at the same mills for decades. And these businesses have closed over the years and a lot of people found themselves unemployed. They had to maybe go work in fast food restaurants and other industries that didn't pay as much, didn't have regular hours. It kind of decimated a lot of these communities. Those job losses bothered Byard, the founder of American Giant. Before he started his business, Bayard worked

at sportswear and footwear companies that had outsourced production, and he felt like there had to be a better way. American Giant came out of what had become, I think, a growing frustration of mine, both in terms of my disconnection from the product that I was making and getting further and further away from the men and women that made it. But also just kind of a growing concern about the impact of that on America at large and just feeling like I was participating in the abandonment of our ability to make things. And so American Giant kind of came out of that, just sort of a desire to stand in defiance of that.

I'm curious though, like, why these clothes? Why sweatshirts, t-shirts, sweatpants? It's a good question. I mean the stuff that was made here that I would say the strongest piece of that capability was in knitwear. And knitwear or t-shirts and sweatshirts, fabric that has some mechanical stretch in it that just kind of gives it. Knits in the US have been traditionally very very strong. And so Bayer decided to start with a classic piece of American knitwear, the sweatshirt. Now if you want to make a sweatshirt in, say, China, it's relatively straightforward.

There are cities there that specialize in certain products, like socks or t-shirts, with manufacturers and supply chains built up to deliver those clothes efficiently and cheaply. Show up with a design, and they'll handle the entire production process for you, soup to nuts. But in the US, so many factories and suppliers have shuttered that strong textile supply chains are a lot harder to come by.

To make his sweatshirt, Bayard would have to cobble together his own supply chain. I knew nothing to start, and that really isn't an overstatement. I knew nothing. I didn't know who to talk to. I didn't know who to talk to. I didn't know who to ask.

And then I began to do Google searches, and then I started traveling. One day I found myself in a place called Carolina Cottonworks that is in Gaffney, South Carolina, run by a man named Paige Ashby. And I'll never forget it. We had almost given up on the process, and Paige said, I'll get this figured out for you. And he began to introduce us to the right knitters and the right places that can sew, and we got turned down by a bunch,

but some of them agreed to try. And once that momentum began to build, then it became a function of just lining up the steps. And there are a lot of steps. Byard and his team had to find the farmers who'd grow the cotton for their sweatshirts, the cotton gins to gin that cotton, the mills that would take that cotton and convert it into yarn, the knitters who would turn it into cloth, and the dyers who would color and finish their fabric.

And then finally places the cut and sew of that product, places like Eagle Sportswear, Middlesex, North Carolina, that actually bring it finally to life. Each of those companies along the supply chain needed to be paid. And those costs were baked into Byrd's sweatshirt. The company also wanted its sweatshirt to be a high-quality product, long-lasting, and well-made. Those choices were reflected in the sales price too. American Giants Classic Sweatshirt costs $138. As the company has expanded into tees, sweatpants, dresses, and socks, its prices have remained on the higher end.

Bayard was making clothes in America, but they weren't affordable for every American. As I began to get into the business, part of my hope was that when I was a kid, you could get American-made products at places like Caldors. And working-class families, families that were throughout the economic spectrum could afford really good-made, well-made

American-made sweatshirt or American-made t-shirt or American-made blue jeans. That's not available today anymore. You really can't. And in our case, I hoped that I was gonna change that with American Giant, but eight, nine years in, American-made t-shirt or American-made blue jeans. That's not available today anymore. You really can't. And in our case, I hoped that I was gonna change that with American Giant, but eight, nine years in, I began to realize like, you know what?

As hard as I've tried, my cheapest t-shirt is 30 bucks, 35 bucks, and that's out of reach for a whole swath of Americans. And that was hard for me to swallow because it was a big part of what I was trying to do as a business. And then one day, about two years ago, Bayard got a phone call that would change that.

That's after the break. In February of 2023, Bayard was on a podcast. He was talking about American giant when he went on a bit of a tangent about Walmart. Walmart is the country's largest importer of consumer goods. So the opposite of what Bayard was trying to do. But there he was actually defending the company. Here he is on that podcast. You know, everyone likes to pound on Walmart,

but Walmart has actually taken a stand on this issue and they've made a real commitment to domestic production. That stand, Bayard was referring to, was a pledge Walmart made in 2013 to buy more products made, grown, or assembled in the US. In 2021, the company doubled down on that pledge. You might think on the face of it that I would be an anti Walmart person, but boy do I

value a company like that that is taking a stand. Bayer didn't know it at the time, but that podcast episode made the rounds at Walmart. It wasn't long before Bayer got an unexpected call from the company. They reached out and said, would you fly out to Bentonville and talk to us? We were having a hard time in the textile side of things.

We'd love to, you clearly have figured something out. We'd love to learn from you. And so I went and we had this conversation that began, you know, ended up being a year and a half long process. One of the things to come out of that process was an order, a big one, for American giant to make those American-made tees for Walmart. My colleague Suzanne says the size of Walmart's order was critical. What Walmart did that was a game-changer is they committed to ordering a certain

number of t-shirts over a certain time period and that gave American Giant and its suppliers the confidence to invest. You know, they had to put in a lot of money to make this work and they weren't going to do that unless they knew that they had these guaranteed orders. You know, retailers can cancel orders. You can put in all that work and all that investment and then the retailer could turn around and say, yeah, we're going to cancel the order.

But Walmart didn't do that. It was like a non-cancellable order that they committed to. What they did is they said, listen, we're going to have purchase orders that you can count on. And you can take those purchase orders down into your supply chain and talk to your suppliers that this isn't just words, this is real. And that changed the conversation fundamentally. Because of Walmart's big commitment, American Giant and its suppliers felt comfortable making investments they wouldn't have otherwise. They hired 75 people to staff a sewing facility in L.A. And they spent a million dollars on machines to make production more efficient.

Things like automated label setting machines, buying screen printing machines so we could bring that in-house and have that piece of the business verticalized. Things like that that allowed us to be more cost efficient faster. And that was only possible because of Walmart's commitment? 100%. Yep. All these investments and efficiencies helped drive the price of American Giants T-shirt down. So did a bunch of decisions the company made when it came to the T-shirt's design.

For one thing, they used cheaper, rougher cotton yarn. So did a bunch of decisions the company made when it came to the t-shirt's design. For one thing, they used cheaper, rougher cotton yarn. They also used a different technique to put the t-shirt together. The body of the shirt is made with one piece of fabric instead of two that need to be sewn together. When cloth is knitted, it's typically knitted as like a flat bit of cloth, or you can knit it in a tube. That's called tubular nets.

But it eliminates the sewing steps that are required like side seam sewing on the side of your garment. The shirt that you're wearing likely, if you run your hand down, your armpit down to your waist, you'll feel a sewed seam there. And those are two operations that we've eliminated in the shirt because it's already done. You're going to make me look at my t-shirt.

I want to like go to my closet and start examining the seams of my t-shirt. Good. In the end, American Giant was able to make a t-shirt that they could sell for just $12.98. On the one hand, it seems like your story shows that it is possible to make affordable clothes in America. On the other, it also sounds like you wouldn't have been able to do this without Walmart or a Walmart. So is this a story about how easy or how hard it is to make stuff in America?

Well, it's a great question. I mean, I think making stuff in America is really hard. I mean, it's hard because I think that in textiles, the supply chain has become so disaggregated and anonymized. On the other hand, I think when you have a framework that provides some consistency of demand and time, it's not so hard. I mean, it's like, it is hard. It is possible.

It's hard but possible. And I think it really comes down to, you know, I think I can't stand this question about, you know, I hear, oh, you can't make that in America anymore. It's like, what are you talking about? Like, I hear that all the time, Jess. I hear it on every category. It's like, that's just horse sh**. Like, get out into some factories,

talk to some people and find out. Now, whether you can make it for the same price you make it in China, that's a different conversation. But can you do it here? Of course, of course you can. Of course you can. American Giant now has plans for other collaborations with Walmart,

like a hoodie that'll sell for $38.98. But in the context of how much we import, these t-shirts and hoodies are still drops in the bucket. And Suzanne says it's not clear other companies will follow suit. Could other companies do what American Giant is doing? Absolutely. Yes, they could, but it's not easy. And as far as I can tell, it's not really happening yet at any kind of scale. It's still sort of these one-off small companies

trying to make this work. Why is that? I think it's just difficult for like a large American clothing company who has their supply chain overseas to make these changes, we don't really have the factories in the U.S. to make it that kind of scale. It's happening slowly and the momentum may continue to increase under the new administration, but this is a nascent thing and it's one step at a time.

Even though companies like American Giant and others are trying and working really hard to keep the American manufacturing industry alive, something like 23 textile mills closed in the past 18 months, even with the tariffs that Trump put in place and that Biden kept during his term, you know, this is an uphill battle. It's not an easy thing to accomplish. That's all for today, Friday, January 3rd. The Journal is a co-production of Spotify and The Wall Street Journal.

The show is made by Catherine Brewer, Piyad Ghatkari, Rachel Humphreys, Brian Knutson, Matt Kwong, Kate Linebaugh, Annie Minoff, Laura Morris, Enrique Perez de la Rosa, Sarah Platt, Alessandra Rizzo, Alan Rodriguez-Espinosa, Heather Rogers, Pierce Singie, Jeevika Verma, Lisa Wang, Katherine Whalen, Tatiana Zemmese, and me, Jessica Mendoza, with help from Trina Menino. Our engineers are Griffin Tanner, Nathan Singapok, and Peter Leonard. Our theme music is by So Wiley. Additional music this week from Griffin Tanner, Nathan Singapok, Peter Leonard, Bobby Lord, and Blue Dot Sessions.

Fact-checking by Mary Mathis. Thanks for listening. See you on Monday.