Behind the Seams: Licensing & the American Fashion Industry

by Caroline Thompson

Would you be willing to spend four times the current price for your every day purchases? Despite being used to the high prices of Manhattan, most would resoundingly say “No!” without a second thought. Yes, New York City is already expensive enough. But without licensing, sourcing, and offshore manufacturing a quadrupled price tag would be featured on store shelves. Moreover, Consumers must be forced to ask themselves, at what cost do these less expensive products and services reach the shelves?

New York City is home to millions of people who work in various industries, live in different boroughs, and spend leisure time in different ways. Despite those differences, one thing New Yorkers often have in common is putting themselves and their city at the center of the world. That self-centered outlook undoubtedly extends to the fashion industry.

The Garment District of Manhattan extends from 34^th to 40^th Street between Broadway and Ninth Avenue. In 1995, that small area was home to over 16,000 manufacturing jobs. Today there are only 9,000 jobs there. Manufacturing is not the only sector of the industry whose employees are diminishing: wholesale and design jobs were also lost. The migration of the industry online, and the moving of jobs overseas are the main factors that opened the eyes of New York fashion employers, and forced them to widen their view Manhattan-centric geographical view.

Fashion has always been about appearances, which has ironically blinded a part of its vision of about keeping up the appearance of a healthy domestic industry. But the blindness to the downside of outsourcing and making price the crucial factor in business is not confined to fashion: electronics, accessories, and footwear are also often outsourced and manufactured abroad. Yet whatever the industry or brand, licensing to sub-par secondary sources of products, or the use of child labor, can tarnish a company. Therefore, brands keep licensing and manufacturing practices as quiet as possible. Couture designers, in addition to others, license their names and brands to various apparel lines, accessories, beauty products, and even home décor companies. The goal is to extend the brand, but often with a hands-off approach that reaps profits and brand exposure, but avoids the hefty time, effort and expense of a solid investment of money and monitoring procedures.

Fashion licensing is made to be invisible to the consumer by companies and designers. If invisible, retailers can charge prices equivalent to that of the designer’s other products. Couture designers may embrace a hands-on approach to the quality of haute couture items but leave alone the quality of their mass-market perfumes have never been touched. Sometimes entire high-end brands are mass produced and licensed to third parties, providing designers with unearned profit. Yet licensing does not have to been done so negatively either domestically and abroad. Responsible oversight of licensed partners can be achieved. Unionized companies and those with production in the United States can use fair-labor practices, and the employees, economy, and companies can all remain competitive, if not as profitable as they would be if they cut corners.

Consumers’ perceptions of offshore production can also sometimes be unfair. China’s late development as an industrial powerhouse has led to well-reported lapses in product safety and quality. However, China has been making progress on both fronts, and headlines about child labor, low wages, and contaminants in the manufacturing process can be deceptive. Moreover, workers within developing countries may be receiving the equivalent of our minimum wage within their country, excited to be employed at all, or happy to have businesses growing in their country.

Chinese production does not necessarily mean the product will be of poor quality. Yet in cases where that is so, more than one party is responsible. Americans seeking the lowest possible price provide an incentive for offshore manufacturers to skimp on materials and pay low wages. If that situation is to be reversed, that task is enormous. According to the Ethical Fashion Forum, “More than a quarter of the world’s production of clothing and textiles is in China, which has a fast growing internal market and the largest share of world trade.”

It is unlikely that American manufacture of apparel will rebound to compete effectively with such a market share, and perhaps the best that can be done is to encourage the highest craftsmanship and ethical standards for Chinese-made goods in our consumer choices (and to support U.S. government policy that is fair to our workers here and insists on fair trade agreements). The decline of New York’s Garment District is an opportunity for U.S. consumers to widen their outlook on global business not just to fully branded companies but to the secondary licensing and other agreements those companies practice. Consumers need to look deeply into the truth behind their favorite brands.