Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Welcome to our first ever sponsored edition, where politics meets business!
In the spirit of The Flip Side, we wanted to provide two different perspectives at the same time on a given topic. We were thrilled to have the opportunity to sit down with the founders of retail companies Stuart & Lau and Wool & Prince.
We discussed the nuances of manufacturing overseas vs. in the US, and how the recent trade war with China is impacting their operations – a timely topic as President Trump is considering imposing a 5 percent tariff on all Mexican imports and US-China tensions continue to escalate.
Without further ado, here’s a recap of our conversations.
What inspired you to start your own company?
My co-founder Jimmy and I were both living in cities that required a certain level of mobility. I was in Hong Kong and he was in New York – and we were fed up with the bags we were carrying.
The options at the time for quality men’s briefcases were either all leather, waxed canvas, or ballistic nylon. All of them were heavy and none were weatherproof. So as a passion project, we decided to make our own briefcase that mixed functionality (think umbrella holder) with a classic, effortless style.
So you had this idea to make men’s bags. Then what happened?
Jimmy worked on shapes and designs, and sketched things out. He’s very talented on the conceptual, drawing side, while I have a knack for knowing how to pull things together during the construction process. We made an all-star list of all the features we wanted in a bag, and began assessing how we could integrate them into a timeless, versatile design that truly transcends place and occasion.
Shortly before we launched our first briefcase, we realized how much we enjoyed the process of building products, so we both left our jobs to pursue this full time.
Walk us through your process of finding a factory. Where do you even begin?
Honestly, this is where a lot of startups have the most difficulty. Finding a factory is easy, but finding the right factory is hard.
We naturally looked to China, both because of our connections there and because it’s where the majority of bag production is done, everything from cheap mass-produced bags to those of the highest-quality construction.
There’s a network of sourcing agents who act as middlemen to help you find factories and other resources. The first factory we used was sourced through one agent, but ultimately it was not a good fit. So we kept searching for the right partner, and eventually found the factory we work with today. They’ve become a true member of the team, not just a supplier.
What sometimes gets lost in this debate is that only a handful of companies own the factories that make their products. Most do not, and instead work with the partners available to them.
For a whole host of reasons, we wish there were options in the US, but there weren’t many to be found and those we were able to find didn’t align with our needs. There are a few factories in the garment districts of New York and Los Angeles for example, but they’re geared toward small batch production for sample-making or fashion shows.
China, on the other hand, offers us a whole ecosystem of suppliers. It’s not just about finding one factory; it’s about the entire network that supports it. And our product category, that network unfortunately no longer exists in the US. Even after an extensive search, we couldn’t find a way to make it work here.
In your experience, what were the tradeoffs going with a factory in the US vs. abroad?
I have to travel to China every 5-6 weeks, so if we had production options locally that would definitely make things easier! Overseas production can also present problems around communication and lead times. But the system works and we’re able to deliver a competitive product at the highest possible quality, which we would not be able to do domestically because the skillset, technology, equipment and expertise no longer exists at scale in our product category.
Are you affected by the recent tariffs? If the trade war continues indefinitely, how would that affect your company?
We are. In the short-term, we have to eat the additional costs, but if the trade war goes on, we may have to think about other options. The manufacturing community in China is worried; there’s chatter among companies about moving production to Vietnam or Thailand or other developing countries. To my knowledge, no one is onshoring back to the US.
These tariffs also impact us and other smaller brands by thwarting our ability to grow and compete with larger companies. While a small brand may produce a similar product at the same factory with the same materials as a larger competitor, it often pays that factory a much higher price per unit because their volume is smaller. When the finished goods are imported, they’re declared at that higher price, and since tariffs are a percent of price, we end up paying much higher tariffs than larger competitors.
Using real numbers, tariffs are 17 percent for bags such as ours. Let’s assume a smaller brand might pay its factory $100 per bag, while a larger brand can pay $30 for essentially the same product. In this case, the small brand pays $17 and the larger brand pays $5 in tariffs for each piece they import. That’s already a significant spread, and that’s before we add the additional 25 percent tariff. Including this, a smaller brand would pay a total of $42, whereas the larger brand would pay a total of $12 in tariffs — thus widening the gap dramatically.
Maybe this is just the nature of the beast, but the impact of tariffs on small businesses is exponentially larger for this reason and acts as a major headwind for our business moving forward.
*Note: Wool & Prince’s main line is made globally. The following perspective is focused on their experience with their Made in USA line.
*Note: Wool & Prince’s main line is made globally. The following perspective is focused on their experience with their Made in USA line.
What inspired you to start your own company?
I had just graduated from college and was working at Unilever. Everyone in the office wore the traditional Brooks Brothers or J. Crew shirts. But you can only wear those once or twice before they have to be washed. Being a cheap recent college grad, I was looking to get around the dry cleaning bills, so I started wearing a vintage wool shirt to the office. My family owns a woolen mill, so I’ve known the benefits of wool for a long time – like the fact that it’s wrinkle and odor resistant.
It then occurred to me that there must be others like me who are looking for an alternative to the traditional cotton button-down, so I decided to leave Unilever and take a crack at modernizing the wool shirt for the workplace.
So you had this idea to make wool shirts. Then what happened?
I talked with a buddy of mine from Portland, Oregon, who does graphic design and branding. We worked together on the name, color scheme, and logo. I had another friend who does apparel design and sourcing, and she came up with the initial patterns.
Five months after leaving Unilever, I launched a Kickstarter campaign with a video of myself wearing the same shirt for 100 days without washing it, and it went absolutely viral. We sold 3,000 shirts in 10 days. It was the golden era of Kickstarter.
Jay Leno and David Letterman had a couple of jokes about us. We were featured on the Today Show, CNN, and the Huffington Post.
Walk us through your process of finding a factory. Where do you even begin?
When you’re pretty small like we were, it’s advantageous to go with a factory you trust. So we started with who we knew from my family’s wool business.
We have two supply chains: one for our globally sourced products which is our main line, and one for our Made in USA line.
The Made in USA line is a passion project of mine, with a smaller selection compared to the main line. My goal was to make a wool shirt that was 100% sourced domestically. That meant:
I was lucky to be able to source the wool from my family’s business, but the rest was hard to piece together. It was a ton of Googling, sending cold emails, and getting on the phone to figure out where a supplier’s operations actually are.
A lot of vendors say they’re 'Made in the USA,' but when you get into the details, you find that’s not actually the case. I would ask for photos of the manufacturing process and some vendors wouldn’t answer.
As an aside, did you know that the military has policies about where they can source their clothing and materials? The military is a crucial customer and supporter of domestic. apparel manufacturing.
In your experience, what were the tradeoffs going with a factory in the US vs. abroad?
The profit margins are much smaller for our Made in USA line. The reality is that costs are simply higher in the US compared to overseas.
But the hard work pays off in other ways – between Oregon, Washington, Texas, North Carolina, and Florida – we can trace all of the materials and hard work that go into making these shirts.
I encourage local supply chains as much as possible. It cuts down on the carbon footprint. It means less money spent on transportation. There’s also something to be said for knowing where the things you own come from. I think people have a greater appreciation for something if it’s made locally, since they feel a connection to it.
I do think the business case is there, but only if we can scale it up. For now, we’ll continue our small collection and look for ways to create efficiencies.
Are you affected by the recent tariffs? If the trade war continues indefinitely, how would that affect your company?
We are. I love our Made in USA line, but the reality is that most of our product is sourced from Asia, with about half coming from South Korea and the other half coming from China.
With shirts coming from China, we already pay a 17 percent tariff, so if something costs $100, we pay a total of $117. With the additional tariffs, it’ll come out to about $142 total for $100 worth of goods. In the immediate term, we’ll try to negotiate with the factories. They’re of course watching the trade negotiations closely, and doing their best to make things work.
If the tariffs continue indefinitely, we’re discussing several other options, including trimming our product lines, raising prices, and finding a factory in Vietnam or elsewhere.
Thanks so much for reading this special edition. If you know of any retail companies whose supply chain is operating at scale in the US, give us a shout — we’d love to talk to them!
In the meantime, PLEASE check out Stuart & Lau and Wool & Prince’s amazing products – the Cary briefcase and lightweight wool polos make great Father’s Day gifts! (< 2 weeks out – don’t say we didn’t warn you!)
