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

Summary

Podcast Summary: The Journal – "How to Make a $12.98 T-Shirt... in the U.S."

Release Date: January 3, 2025

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Introduction

In this episode of The Journal, hosted by Jessica Mendoza alongside contributors Suzanne Kapner and guest Bayard Winthrop, the spotlight is on the remarkable journey of producing an affordable, American-made T-shirt sold at Walmart for just $12.98. This narrative delves into the intricacies of bringing manufacturing back to the United States, exploring both the challenges and triumphs involved.

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The $12.98 American-Made Shirt

The episode opens with Jessica Mendoza introducing a seemingly ordinary patriotic T-shirt found at Walmart, priced at an unexpected $12.98.

[00:05] Jessica Mendoza: "My colleague Suzanne Kapner covers retail, and recently she wrote about one particular shirt sold at Walmart."

[00:19] Suzanne Kapner: "It's a hundred percent 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."

Jessica emphasizes the shirt's affordability and its entirely American-made origins, highlighting two standout features: its low price and domestic production.

[00:45] Suzanne Kapner: "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."

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The Decline of American Manufacturing

The conversation shifts to the broader context of American manufacturing, tracing its decline from the 1960s to the present day.

[03:40] Jessica Mendoza: "Chances are, if you check out what you're wearing right now, it wasn't made in the US. My shirt was made in Indonesia, and my pants were made in Vietnam. But that wasn't always the case."

[04:07] Suzanne Kapner: "It started changing gradually in the 70s, 80s... companies began outsourcing to places like China where the cost of manufacturing was much, much less expensive."

Today, less than 4% of clothes Americans purchase are domestically made, a stark contrast to the 95% in the 1960s. This outsourcing has led to significant job losses and economic downturns in manufacturing communities.

[04:36] Suzanne Kapner: "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..."

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Bayard Winthrop and American Giant

Enter Bayard Winthrop, founder of American Giant, a company committed to reviving American-made apparel.

[02:53] Bayard Winthrop: "We are an entirely made in America clothing company that started about 12 years ago and we're primarily online though we've got six retail stores."

Bayard's personal commitment to American manufacturing stems from his frustration with the outsourcing prevalent in the apparel industry, aiming to create high-quality, affordable American-made clothing.

[05:08] Jessica Mendoza: "Those job losses bothered Bayard... And he felt like there had to be a better way. American Giant came."

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Building an American Supply Chain

Creating American-made apparel isn't straightforward due to the fragmented and diminished supply chains domestically. Bayard had to meticulously rebuild the supply chain from the ground up.

[06:09] Jessica Mendoza: "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."

[06:48] Bayard Winthrop: "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 ask."

Through persistent efforts, Bayard connected with key players like Carolina Cottonworks and Eagle Sportswear, essential for sourcing cotton, knitting, dyeing, and sewing domestically.

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Partnership with Walmart

A pivotal moment in American Giant's journey was securing a partnership with Walmart, which transformed the feasibility of producing affordable American-made T-shirts.

[10:27] Bayard Winthrop: "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 and maybe could."

Walmart's commitment to domestic production provided the necessary assurance for American Giant to scale operations.

[11:21] Jessica Mendoza: "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."

[11:35] Suzanne Kapner: "What Walmart did that was a game changer is they committed to ordering a certain number of T shirts over a certain time period."

This guaranteed order allowed American Giant to invest confidently in the supply chain, leading to significant operational enhancements.

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Innovations in Production and Cost Reduction

To achieve the $12.98 price point, American Giant implemented several strategic innovations:

1. Automated Production: Investing in automated label setting and screen printing machines reduced labor costs and increased efficiency.

   [12:39] Bayard Winthrop: "We spent a million dollars on machines to make production more efficient."

2. Design Efficiency: Utilizing tubular knitting eliminated the need for side seams, reducing both material and labor costs.

   [13:20] Bayard Winthrop: "That's called tubular knits. That's two operations that we've eliminated in the shirt because it's already done."

3. Cost-Effective Materials: Opting for cheaper, rougher cotton yarn lowered material expenses without compromising the shirt's integrity.

These measures collectively allowed American Giant to offer high-quality, durable shirts at an accessible price.

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Challenges and the Future of American Clothing Manufacturing

Despite the success with Walmart, American Giant's journey underscores the complexities of reshoring manufacturing:

[14:19] Bayard Winthrop: "Making stuff in America is really hard. I think in textiles the supply chains become so disaggregated and atomized."

While American Giant proves that affordable American-made clothing is attainable, scalability remains a significant hurdle for larger companies lacking established domestic supply chains.

[15:40] Suzanne Kapner: "I think it's just difficult for like a large American clothing company who has... their supply chain overseas to make these changes."

The episode concludes on a reflective note, acknowledging that while the movement towards American manufacturing is growing, it remains nascent and faces substantial obstacles, including the closure of textile mills and the complexities of modern supply chains.

[15:42] Suzanne Kapner: "It's happening slowly and it may... but this is like a nascent thing, and it's kind of one step at a time."

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Conclusion

This episode of The Journal offers an insightful exploration into the challenges and possibilities of American manufacturing in the apparel industry. Through Bayard Winthrop's endeavors with American Giant and the pivotal support from Walmart, the narrative illustrates that while making affordable, high-quality American-made clothing is possible, it requires substantial dedication, innovation, and strategic partnerships. The journey underscores a broader conversation about the future of manufacturing in the U.S., highlighting both the potential for resurgence and the significant barriers that remain.

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Transcript

[Jessica Mendoza]

My colleague Suzanne Kapner covers retail, and recently she wrote about one particular shirt sold at Walmart. It showed up in stores last summer for the Fourth of July. Can you describe the shirt?

[Suzanne Kapner]

Sure. It's a hundred percent 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.

[Jessica Mendoza]

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.

[Suzanne Kapner]

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.

[Jessica Mendoza]

To see an inexpensive item of clothing made in America?

[Suzanne Kapner]

It is very unusual these days, yes.

[Jessica Mendoza]

There's been a lot of talk about trying to move more manufacturing back to the US 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 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?

[Bayard Winthrop]

If you asked me that a year and a half ago, I would have said no way.

[Jessica Mendoza]

Welcome to the Journal, our show about money, business and power. I'm Jessica Mendoza. It's Friday, January. Coming up on the show, how one company made an affordable T shirt in the usa.

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[Jessica Mendoza]

The guy who made that shirt at Walmart is Bayard Winthrop.

[Bayard Winthrop]

My name is Bayard Winthrop and I'm the founder of American Giant.

[Jessica Mendoza]

And what is American Giant?

[Bayard Winthrop]

We are an entirely made in America clothing company that started about 12 years ago and we're primarily online though we've got six retail stores, but primarily a direct to consumer e commerce business.

[Jessica Mendoza]

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?

[Bayard Winthrop]

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 is American Giant.

[Jessica Mendoza]

Chances are, if you check out what you're wearing right now, it wasn't made in the US 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 US 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.

[Suzanne Kapner]

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 US in 2023.

[Jessica Mendoza]

Less than 4% of the clothes Americans bought were made here.

[Suzanne Kapner]

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.

[Jessica Mendoza]

Those job losses bothered Bayard, the founder of American Giant. Before he started his business, Bayard worked at sportswear and footwear companies that had outsourced production and. And he felt like there had to be a better way American Giant came.

[Bayard Winthrop]

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. To stand in defiance of that.

[Jessica Mendoza]

I'm curious, though, like, why these clothes? Why sweatshirts, T shirts, sweatpants?

[Bayard Winthrop]

Yeah, it's a good question. I mean, the stuff that was made here, 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 knits in the US have been traditionally very, very strong.

[Jessica Mendoza]

And so Byer 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.

[Bayard Winthrop]

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 ask. And so 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'd 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.

[Jessica Mendoza]

And there are a lot of steps. Bayard 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.

[Bayard Winthrop]

And then finally, places that cut and sew of that product, places like Eagle Sportswear in Middlesex, North Carolina, that actually bring it finally to life.

[Jessica Mendoza]

Each of those companies along the supply chain needed to be paid, and those costs were baked into Bayard'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 Giant's classic sweatshirt cost $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 affordable for every American.

[Bayard Winthrop]

As I began to get into the business, part of my hope was that, you know, when I was a kid, you could get American made products at places like Caldor's and You know, 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 going to 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.

[Jessica Mendoza]

And then one day about two years ago, Bayard got a phone call that would change that. That's after the break.

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[Bayard Winthrop]

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[Jessica Mendoza]

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[Jessica Mendoza]

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.

[Bayard Winthrop]

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.

[Jessica Mendoza]

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.

[Bayard Winthrop]

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 and maybe could.

[Jessica Mendoza]

Bayard didn't know it at the time, but that podcast episode made the rounds at Walmart. And it wasn't long before Bayard got an unexpected call from the company.

[Bayard Winthrop]

They reached out and said, would you fly out to Bentonville and talk to us? We were having a hard time on 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 what ended up being a year and a half long process.

[Jessica Mendoza]

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.

[Suzanne Kapner]

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, 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 cancelable order that they committed to.

[Bayard Winthrop]

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 is, this isn't just words, this is real. And that changed the conversation fundamentally.

[Jessica Mendoza]

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 LA and they spent a million dollars on machines to make production more efficient.

[Bayard Winthrop]

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.

[Jessica Mendoza]

And that was only possible because of Walmart's commitment 100%.

[Bayard Winthrop]

Yep.

[Jessica Mendoza]

All these investments and efficiencies helped drive the price of American Giant's 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. 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.

[Bayard Winthrop]

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 knits. 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.

[Jessica Mendoza]

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 good. In the end, American Giant was able to make a T shirt that they could sell for just 12.98. You know, 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?

[Bayard Winthrop]

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 in textiles the supply chains become so disaggregated and atomized. On the other hand, I think when you have a framework that provides some consistency of demand and time, it's not so hard.

[Jessica Mendoza]

I mean, it's like it is hard. It is possible.

[Bayard Winthrop]

It's hard, but possible. And I think it really comes down to, I think I can't stand this question about, I hear, oh, you can't make that in America anymore. It's like, what are you talking about? I hear that all the time, Jess. I hear on every category. It's like, that's just horse. Get out into some factories, talk to some people and find out now whether you can make it for the same price you can make it in China. That's a different conversation. But can you do it here? Of course you can. Of course you can.

[Jessica Mendoza]

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?

[Suzanne Kapner]

Absolutely. Yes, they could, but it's not easy. And as far as I can tell, it's not really happening at any kind of scale. It's still sort of these one off small companies trying to make this work.

[Jessica Mendoza]

Why is that?

[Suzanne Kapner]

I think it's just difficult for like a large American clothing company who has, you know, their supply chain overseas to make these changes. We don't really have the factories in the US to make it that kind of scale. I mean, it's happening slowly and it may, you know, the momentum may continue to increase under the new administration, but this is like a nascent thing, and it's kind of one step at a time. You know, 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 and it's not an easy thing to accomplish.

[Jessica Mendoza]

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 Kathryn Brewer, Pia Gadkari, Rachel Humphries, Ryan Knudson, Matt Kwong, Kate Linebaugh, Annie Minoff, Laura Morris, Enrique Perez de la Rosa, Sarah Platt, Alessandra Rizzo, Alan Rodriguez Espinosa, Heather Rogers, Pierce Singhi, Jeevika Verma, Lisa Wang, Catherine Whelan, Tatiana Zemis, and me, Jessica Mendoza, with help from Trina Menino. Our engineers are Griffin Tanner, Nathan Singapak 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.