Are we seeing a resurgence of American manufacturing from the DTC world?
Since the Chinese tariffs hit, American companies have been scrambling to move manufacturing to a place with lower tariffs. On top of the tariffs, Chinese worker salaries have been increasing for years, so it was no longer the cheapest place to produce. And the tariffs made that worse.
However, most of the manufacturing transition went to countries like Vietnam or India as opposed to the U.S. And it's been tough to call the tariffs a success: no country has the parts manufacturing capabilities of China, so when you move manufacturing to Vietnam you are still reliant on Chinese supply chains to get the pieces necessary for most manufacturing.
But I'm seeing some interesting changes.
DTC Brands are manufacturing more in the U.S.
And the changes are showing up in direct to consumer brands. These brands have the margin to help offset expensive American employment costs. There are several that impress me lately.
w.kleinberg is an American made belt and accessories manufacturer.
Smith & Bradley watches is building in the U.S.
zkano is making high end socks in America
These are just three that I've recently come across. I love this collection because it's all very different from complex to manual to knitting. And all three seem to be doing very well in their niche.
The argument has always been that consumers want "made in the USA" products, but they don't want to pay the extra costs of that process. True DTC companies are knocking out the middlemen in the process which enables a little more room for manufacturing costs. Will it work?
If a recession does hit, we'll get the true impact. In tough times, can these companies continue charging a price that allows American made manufacturing? I think the jury is still out. But I love the attempt and I wish the best for them.
Who else is doing something interesting with manufacturing in the US?