On today's show, Pat and Stu are joined by Bayard Winthrop, CEO of American Giant, a clothing company that makes hoodies in America. They discuss Raphael Warnock's announcement that he's running for a U.S. Senate seat in the upcoming election, and why it's important to keep making things in the USA.
00:03:24.100And secondly, why did you think that was important?
00:03:26.800Well, you know, it's easy to forget now, but 40 years ago, about 95 percent, more than 95 percent of the clothes that we bought were made in America, which is hard to believe today because those numbers have almost flipped.
00:03:40.140And in some ways, as you're sort of mentioning, that's the trajectory of manufacturing generally, that we have deprioritized the making of things in the U.S. over the last 40 years.
00:03:49.600And I've been involved in manufacturing consumer products for most of my career.
00:03:54.440And if you spend enough time doing that, and I, too, sort of participated in a lot of the offshoring stuff, and you do it, and eventually, I think two things begin to become really clear.
00:04:03.900One is you get really disconnected from the product you make.
00:04:06.260And that, I think, particularly for me, translated into a lack of proximity to it, stewardship about it, intimacy about the product that we were making, and that was super important to me.
00:04:19.860But just as importantly, you see the factories and the towns that you're leaving.
00:04:25.500And my point of view is that that's happened too much over the last 40 years, that there's a lot of communities, urban and rural, that need good, viable, dignified jobs.
00:04:34.480And we've made a decision to shift too much of that stuff overseas.
00:04:38.020And I felt we could do something about it in apparel.
00:04:40.280It was a relatively easy thing to reshore and to make domestically.
00:04:45.760And so I decided it's something I wanted to do.
00:04:47.340I didn't know if it would be a big business or not, but I knew it was the kind of business that I wanted to run.
00:04:51.160So I made that decision about 10 years ago and started the company.
00:04:54.300It's interesting because I think over the last couple of years, we have learned way too much about your business.
00:04:58.560I don't want to know that much about your business.
00:05:02.940I've gotten enough to worry about in my life.
00:05:04.480But we've learned so much about supply chains.
00:05:06.660And somewhat infamously, I bought a car in August 2021 that just showed up a few weeks ago.
00:05:14.200It was over 14 months waiting for a car to show up.
00:05:19.500I think one of the interesting parts about trying to manufacture something here in America is not just what might happen to your employees.
00:05:30.120This sort of stuff affects people all over the country in all sorts of different lines of work.
00:05:36.660How do you, when you step back, how do you think about that?
00:05:40.300Well, what's interesting about what you just said is that I think as we've become disconnected from the people and the places that make things,
00:05:47.160you really do begin to take for granted all the skill and talent and complexity that goes into the making of the things that we consume.
00:05:55.040And my feeling is that we have gotten to a place where we order something online.
00:06:02.540It arrives on our doorstep a couple of days later.
00:06:04.920And when that breaks, that highly complicated supply chain breaks, bad things happen.
00:06:10.840And I think that there is, to me, there is a real importance with reconnecting us back to how we make things and what goes into making a car or a sweatshirt, for that matter.
00:06:23.420And the symphony of activity that has to come together to make that happen is remarkable.
00:06:28.720And to me, there's an importance of having a lot of that back and closer to consumers so they understand what goes into making those things
00:06:36.120and the position we've gotten ourselves in with this highly complicated, really fragile supply chain that's got us dependent on, you know, borders and tankers and oceans
00:06:45.800and international relationships that all get pretty difficult when things don't go precisely as planned.
00:06:52.280Yeah, you know, we were just talking about the Tuttle Twins books a second ago, and they have one about iPencil, the famous economic essay.
00:07:01.380And it's basically the story of how a pencil gets made.
00:07:05.040And it sounds like the most boring pencil, who cares?
00:07:07.860But so many people have to be able to do so many things to make that happen.
00:07:12.840The symphony is a really good word to describe it.
00:07:15.340Yeah, I mean, the pencil, the paint, the metal, the wood, the graphite,
00:07:20.700all the things that are required to go into that, right?
00:07:22.700And, you know, we've got a privilege as a company to be around that all the time.
00:07:28.240And it does, I don't know, I just, there's something very satisfying about, you know,
00:07:32.360reconnecting with the fact that the American workforce and capability is alive and well.
00:07:37.540We've just sort of abandoned it in a lot of ways by just chasing, you know, what we call internally cheap.
00:07:43.180And cheapest means of production, lowest regulations wherever we possibly can.
00:07:47.020And in some ways, that's the great irony, right, that we, as a country, we've put in place so many fantastic principles about human rights
00:07:54.640and worker safety and minimum wage laws and all these things that protect workers and celebrate workers.
00:08:00.900And yet we let our largest brands skirt those and go overseas and chase the cheapest means of production with the lowest regulations.
00:08:08.460And that's a, that's, that balance has got to get corrected, I think.
00:08:12.560And it not only affects Americans, it affects people overseas as well.
00:08:15.880I mean, China is a good example of this, right?
00:08:18.420We've seen, you know, from a geopolitical sense, all the effects that have gone on with China over the past few years.
00:08:25.300And, you know, with COVID and all of these other things that have gone on.
00:08:31.100But the manufacturing piece of this is really important, right?
00:08:33.840We, we are sending almost all of our manufacturing to China and India, and they don't have standards for their workers.
00:08:40.980We see how they treat their own people.
00:08:45.020Is there a part that we should really be rethinking here, not even just from a global competition sense, but just from a humanitarian sense?
00:08:53.120It kind of comes down to, you know, whether we believe our values are truly universal values or not.
00:08:58.220And I think there is an inconsistency with holding domestic manufacturing businesses to very high standards, but then allowing all the, the work for those factories chase the means of production elsewhere.
00:09:09.280And, you know, I think, you know, the, the, the, the case, the case for globalization is a pretty obvious and elegant one.
00:09:17.040If your optimization is around growing shareholder value and hitting quarterly earnings reports, it's a lot less clear if you think about constituents beyond just your, your quarterly earnings statements.
00:09:27.100And if you think about brands that live through their values, that, that employ Americans, that transfer good skills down throughout their, their workforce.
00:09:35.860So I think there's a big conversation to have there.
00:09:38.320I think that we, you know, there's a fascinating thing happening now with textiles in Xinjiang, which is the far western province in China that grows almost all of the Chinese cotton.
00:09:46.820There's awful things going on there with minority Muslims and forced labor.
00:09:49.580And, and it's just a good example of apples in the middle of this where they're, where they're the things that are going on with Foxconn, that a good example of businesses that are trying to strike this uncomfortable balance with what they're Instagramming about versus the way that they're actually making the things that they sell.
00:10:05.480And I think those, you know, that's, that's, that's an, that is an uncomfortable place to be.
00:10:09.960And I think that we've all got a role to play, right?
00:10:11.320I mean, consumers have a role to play, brands have a role to play, policymakers have a role to play, but I do think we need to come together a little bit and have the conversation around what do we care about?
00:10:19.960And to, to the extent that we care about it a lot, do we want to apply those standards universally, both to the, you know, our supply chain decisions, our, our trade agreements, our, our, what our consumers have access to and understand.
00:10:30.940So I do think it's something that we need to start to think about more thoroughly.
00:10:35.300We are sort of told that this supply chain thing is not over, that we're going to be facing delays and this is just kind of our new normal.
00:10:43.060This is how we're going, this is how it's going to be in America.
00:10:45.380Now, maybe we should learn to be more like Europe and just expect delays all the time.
00:10:50.040First of all, I mean, is that what you're seeing out there?
00:10:52.520And is that the right way to look at this?
00:10:53.880Should we just be accepting this new normal?
00:11:07.220We make blue jeans, we make flannel shirts, make other things.
00:11:10.020Almost all of that comes through a southeastern supply chain, Carolinas and that, that area from cotton all the way through.
00:11:16.520So for almost all of the pandemic, we've been able to navigate our supply chain stuff without a hitch.
00:11:20.600And that's not just proximity and not having to deal with challenges of overseas COVID restrictions and other things.
00:11:26.920It's also that we've got deep relationships with the supply chain that we work with.
00:11:30.720And so we were able to work in real concert with our yarn providers and our knitters and our spinners and our dyers.
00:11:38.340And so it's been, you know, I think that's a good example of some of the importance of having a onshore capability across the manufacturing sector.
00:11:45.320So that you're not so exposed internationally to the breaks that are inevitably going to continue to come, in my opinion.
00:11:54.760And I think there's a, there's that weird line that I think we all have to walk here.
00:11:58.680Because, you know, look, I have some sympathy for these companies when they say, hey, like, we can't pay American workers what, you know, what the new, you know, minimum wages, even here in the United States.
00:12:51.500We all want people to be living good, dignified lives with good incomes.
00:12:54.980But if at one point we are enacting minimum wage laws and raising minimum wages at the same time that we're saying let's all the manufacturers, the customers of that manufacturing jobs, go overseas and avoid those minimum wage jobs.
00:13:06.400All we're doing is penalizing the domestic workforce ultimately.
00:13:10.320And so I think the way you do it is that you begin to think about trading partners through the lens of people that share our values.
00:13:16.760You know, there's the current administration is talking a little bit about this concept of friend shoring, which is in some ways a carry forward from the Trump administration about doing business with countries that share our values and not doing businesses with countries that don't.
00:13:28.700And, you know, if you think about the American marketplace, it's the most – it's the biggest, most valuable marketplace on earth.
00:13:34.860And yet the cost of entry to it is basically zero.
00:13:36.900We allow everybody to participate in our marketplace.
00:13:39.980And I think that we ought to ask the question whether that's the right thing to do.
00:13:41.920And if you make it so that it is a bit more difficult to avoid what I think are basic American values in your manufacturing choices, you're going to encourage reshoring in a way that is going to address the labor question that you're getting at, I think, really effectively.
00:13:57.880Talking to Bayard Winthrop, he is the – he's the big wig.
00:14:00.900What's your official title over there?
00:14:07.460The – of American Giant, a great clothing company if you don't know them, if you've never had one of them.
00:14:11.940I mean, look, it's around Christmas, a great time to pick up something from American Giant.
00:14:16.100And I think as you kind of hear as we talk, you have a different perspective on the country than I think a lot of these big companies do.
00:14:25.220Is it – how much of this has to be – because I am – we come in here every day and we talk about issues and things that really matter to us.
00:14:33.260And what I think a lot of people engage with is, you know, you have these beliefs about the country, the foundations, the – that this is a special place.
00:14:46.540But putting that into practice, really living that life is really hard.
00:14:52.800What do you say to a company that's on the fence here that's thinking like, hey, maybe I'll pull some of my manufacturing back to the United States?
00:14:59.900What – going – you're the one who's experienced this.
00:15:03.580So I think a couple of sort of just sort of framing reactions to that.
00:15:07.940One is for public companies, it's really hard because public companies are in the cycle, like a lot of our elected officials, where they're thinking very short term.
00:15:15.020They're thinking quarter to quarter to quarter.
00:15:16.660And quarter to quarter to quarter, increases in labor rates or the cost of thread matters a ton.
00:15:22.680And so it's a tall ask for public companies.
00:15:25.540Private companies, it's a different matter.
00:15:26.760And I think to those companies, I think to the extent that they can start and begin to use American labor for small parts of their offerings across the manufacturing sector, it has a huge impact.
00:15:40.620We had the benefit in some ways that 10 years ago when I started American Giant, I made a decision that we were going to make it all domestically.
00:15:48.400And that was kind of – that was the framework that I lived within.
00:15:51.480And so that made every decision that followed pretty easy.
00:15:53.720It became about how do we do that as well and as effectively as we can.
00:15:57.120For companies that have – that used to be domestically made, like basically all apparel companies and that now have offshore, to reshore again, I think there's a perception that the American workforce and manufacturing capability is not there.
00:16:11.180There's a tremendous amount, even in textiles, which has been hit the hardest about offshoring, there's a tremendous amount of viability within textiles.
00:16:18.960And it's a big part of what that industry is lacking are customers that commit to it.
00:16:23.700And so if you had big brands that said, look, we're going to be here.
00:16:25.740We're going to order our line of T-shirts or our line of V-neck T-shirts, some small piece, but we're going to stick to it for a while, that would be a huge boon to manufacturing because these businesses need that reliability.
00:16:36.340So I think that that's what I would say is try it.
00:16:47.720But it's a more complicated question for the public companies, I think.
00:16:50.700And that's not to say that I think a lot of them are interested in being a force for good, but it's just we've created a system that makes it harder to do that.
00:16:57.880And so I think we've got to look at other ways to create space for those businesses to make better decisions.
00:17:04.760We've got about a minute and a half left here.
00:17:06.960What's your level of optimism for America?
00:17:16.780I think that there is a growing sense among just the average Americans that are feeling frustrated with what's going on in D.C.
00:17:24.760I feel like they're frustrated with what's going on with tech.
00:17:26.820They're frustrated with what's going on with a lot of the big, in our case, big apparel brands that are making decisions that seem to be self-serving and that are less about the country and less about the average Americans.
00:17:34.740And I think as people gather their voice and they make decisions about directing their dollars towards things they care about, they get more active during the election cycles, I think you're going to see a change.
00:17:42.720And I share some of your pessimism, but it's short-term pessimism for me.
00:17:46.460I just believe in the country and I believe in our ability when we're seeing something that we think is nonsense, we eventually throw it out and start fresh.
00:17:53.120And so I think it's going to take a bit of patience, but I'm feeling optimistic about it.
00:17:57.080You know, I think, you know, when I really think about it from a grand scheme here, like I think at the end of the day, it's a great country.
00:18:06.380It's still a lot of the great things happen.
00:18:09.100We've, you know, changed the world, right?
00:18:32.140I think there's just increasing activity going on that I'm excited about.
00:18:36.160And I think in a weird way, COVID has kind of jarred us all out of our slumber a little bit and got us thinking about more complex issues that are relevant to Americans.
00:18:43.580And I think people are getting conscious about it.
00:36:14.540And then the media not only takes Greta Thunberg and, and takes her claims seriously, but promotes her so that she is influencing generations of other kids to be terrified.
00:42:35.200And depending on, you know, there's a bunch of different variables he outlines.
00:42:39.100But it's something like over 100,000 miles of driving an electric car before you even break even.
00:42:43.700And that's if you have, if you're fine driving an electric car that only goes, you know, 120 miles, which most people aren't.
00:42:52.980I mean, most people don't want, they want a longer range one, like some of the cool cars that Elon Musk has built can go a lot farther than that.
00:43:41.240And if you believe this, seriously, they've been telling us it's the most important thing in the world for decades.
00:43:49.300And the guy comes along with his own money and builds a company that, that does 30, 40 years of advancement in this field without them really having to touch it other than some generous government subsidies that were involved.
00:44:04.300If we should know, but still, he did most of the, most of this work himself.
00:44:07.940And the, he said, I want to keep my company open during COVID and I don't really like masks.
00:44:15.160And they're like, holy crap, this guy's Satan.
00:44:17.200We should, we should excommunicate him from society.