Los Angeles firms bring apparel jobs home on cost concerns

By Mary Slosson

LOS ANGELES (Reuters) - The apparel industry in Los Angeles, California is riding a small but growing wave of "insourcing" as costs in China and India rise and the city's factories cater to demand for high-quality garb and fast-turn fashion.

One company bucking the offshoring trend by bringing jobs back home is Los Angeles-based Karen Kane, which sells women's clothing -- primarily dresses -- in department stores like Nordstrom and Dillard's.

The privately held company is shifting 80 percent of its production to Southern California from China as manufacturers take a second look at the true costs and complications related to traditionally low-cost foreign labor markets.

"The attitude toward American production has changed," said Michael Kane, director of marketing and eldest son of the company's namesake. "We looked at the cost of doing manufacturing here domestically, and the cost is not that different."

Kane cited declining production quality, increasingly unreliable shipping times and higher fabric prices that seem to have affected China "much more greatly" as additional factors influencing the company's decision.

"The quality of goods made overseas, and in China specifically, is not as high as the standards of the past," Kane said.

While it makes sense to shift the production of more generic goods like T-shirts and tennis shoes from China to cheaper labor countries like Vietnam, there are some niches where the United States is regaining an advantage.

High-end fashions that depend on top-quality fabric and finishes are a good match for U.S. manufacturers, as are super trendy clothes that come and go in the blink of an eye.

Los Angeles-based designer Leon Max Inc has shifted some manufacturing jobs back to the Southern California area from China in response to higher prices and a need for a high attention to detail, according to the company. The dresses designed by Max range from $99 to $798.

For popular, mass-production fashion companies like Los Angeles-based Forever 21, the goal is to keep customers coming back to the store every few weeks by offering a completely new line of clothing, said Ilse Metchek, president of the California Fashion Association.

"Fashion changes every 10 weeks," said Metchek. "You cannot keep up with that if you are producing ten of thousands of units in China. Therefore companies look to domestic sourcing."

SEWING 'STYLISH GOODS'

Los Angeles has the biggest design industry workforce of any American city and is at the forefront of the increase in apparel manufacturing jobs, said Nancy Sidhu, chief economist at the Kyser Center for Economic Research, which analyzes Southern California's industries.

The reason for that, says Randy Youngblood, a labor consultant in the apparel industry, is a combination of skill and business savvy.

"In Los Angeles, contractors are very adept at selling more stylish goods," he said. "That's made the basic apparel market pretty viable."

Youngblood noted that the number of contractor garment licenses issued by the state of California has increased over the past year.

Employment in Los Angeles' apparel manufacturing industry rose 6.5 percent from a year earlier to 52,100 in May 2011.

"While that's only 3,200 more jobs, in this industry, that's a victory," Sidhu said.

The same can't yet be said nationwide, as the industry only managed to add 300 new jobs in the same period to a total of 157,500.

"I think (the trend) could very well continue," said Sidhu. "Wage increases in China seem like a permanent change."

However, not everyone is convinced that the industry is experiencing a revival and data suggests the opposite.

The U.S. Bureau of Labor Statistics projected a precipitous drop in domestic manufacturing jobs during the 10-year period from 2008 to 2018 in its most recent figures, with the 198,400 apparel manufacturing jobs dropping to a projected 88,400.

But for the people watching the bottom line (and the quality of the seams), there is no denying the comfort of the home market.

"Given the way things are right now in China and overseas, it seems like a smart decision for companies," said Kane. "I hope it will keep growing in the weeks, months, and years to come."

(Editing by Lisa Baertlein, Mary Milliken and Bernard Orr)