US Economy

For American Giant, 'made in the USA' is more than just a catchphrase


Bayard Winthrop got his inspiration from Silicon Valley. If the U.S. could put a touch-screen computer in the palm of everyone's hand, why couldn't we actually make the next great American clothing brand … in America?

So five years ago, Winthrop shipped his first American Giant sweatshirt, made in the U.S.A. from domestic cotton. Now he's producing thousands of shirts, sweatshirts, jackets, and sweatpants for men and women every month.

And it's not all lounge gear: he's just introduced the brand's first cotton dress.

These days, there's a lot of talk about bringing manufacturing jobs back to America, but American Giant is actually doing it, and doing it the hard way. The company owns its factories in North Carolina, where Winthrop employs hundreds of workers sewing clothes.

Winthrop has a distance to travel to achieve his goal of becoming an iconic American brand, but he seems to have touched a nerve at this unique cultural moment. Here are some lessons from how he's built American Giant into a contender:

People, Not Robots

Before he founded American Giant, Winthrop ran other companies that used offshore labor. He knew that to make this brand work, he would have to deliver a different level of quality.

To keep product quality on the path where he wants it, over the past year and a half Winthrop has changed the way his workers make clothes. Rather than do things assembly-line style, with one person specializing in a narrow piece of a garment – say, the sleeve – he is moving to a "team sew" model where each worker is more broadly responsible for product quality.

"Our perspective is, it is all good. It means that an operator can make more money because they have control over their own throughput," he told Fortt Knox in a recent interview.

"One of the best parts for me, just personally, is being able to walk into a factory in Middlesex, N.C. and talk to men and women that have jobs now, that are working," he said. "To be able to talk to women that have been sewing for 30 years, and walk me through changes to a sweatshirt that are going to make it better because of the knowledge that she has."

The moment of clarity came when Winthrop explained that he got better-quality clothes more efficiently when people acted more like old-fashioned craftsmen, and less like robots.

A robot might be pretty good at laying down the same stitch over and over again to sew on a sleeve. However, it's not so good at making sure each garment is put together exactly the way it should be in every proportion— and at figuring out ways to do it better.

A New Kind of Retail

Winthrop knew that if he was going to make clothes in America, he would have to approach the business differently. Worker salaries would cost more, so he would have to save money by doing away with splashy marketing.

"There's a really fundamental shift going on in the marketplace, driven by consumers – there's this increasing awareness among consumers, and a desire to support brands that have values that they share, that reflect their own values," he said. If you can tap into that, "you're less reliant on massive marketing budgets, huge store roll outs."

Know How to Leave

Winthrop learned plenty along the way about management – of the business, and of himself. One key lesson was how to leave one job to start another.

"The guy who got me the job at the bank – my first summer job – he gave me two pieces of advice that I've kept with me my whole life," Winthrop told CNBC.

The first? Winthrop's first boss was a former Marine, tough guy. The first thing his boss would say to him every day was, "Hey: Go get me a coffee and a bagel."

Eventually, the routine bothered Winthrop so much that he complained to his mentor about it. "Make it the best cup of coffee he's ever had," was his mentor's advice.

The second? "When I decided to leave, he said to me, 'Good endings, good beginnings.'"

Whether you're quitting to start the next great American brand, or just getting a promotion to another department, it's sound advice.

Fortt Knox is a weekly podcast from CNBC anchor Jon Fortt. Previous episodes of the program can be found here.