Last night I had a heated, but friendly, discussion with my Uncle Tony Greco about our national economy. Tony turned 89 last July and like his parents and brother, my father Domenick, grew up in and established careers in the apparel industry, then known as the clothing business. Tony was a manufacturer of boys’ jeans in the 50s and 60s in Philadelphia with a NY showroom. He recalled selling denim jeans at $15.98 per dozen, including fabric, and made .05 per pair on 3,000 dozen per week.
In 1969 he closed his business and blamed very low price competition coming from Hong Kong. Previously he had been able to have his union shop be efficient enough to compete with non-union labor from southern factories. But the Far East was just too much. Tony continued as a jean contractor into the 70s and closed and retired after a few years when demand dried up. At the same time, I ran a sport coat factory on the same loft floor in North Philadelphia. I had 60 people employed during what became my first recession of 1973 to 1975. We made a few lots of Nehru jackets and then closed that factory. I had decided to continue in the business and due to a shortage of sewing machine operators was then drawn in 1985 to starting production in the Dominican Republic under the Caribbean Basin Initiative.
Since that time I have increased the sourcing capability in both breadth and depth by manufacturing a variety of products from headwear to footwear along with uniforms and career apparel. We source in various countries including the USA, Dominican Republic, Haiti, Nicaragua and China. Back to the discussion between Tony and me, with Tony contending that the ruination of the US economy was solely from imports: While from his perspective, his business did decline due to foreign competition, he had not taken steps to transition his manufacturing experience to other realms.
I stated my point of view that apparel manufacturing has always been an easy entry level business, which is why my grandfather had a pants shop in the 1920s after he had immigrated to Philadelphia from Calabria, Italy. I advised my uncle that a significant percentage of the types of jobs currently in America did not even exist in 1969 when his business closed. Further, that it was my belief that the current and severe recession was not a result of lower priced imports but rather the effect of typical human behavior- greed. This on the part of home owners speculating on potentially ever increasing home values and huge mortgages, and the investment bankers who created and promoted collateralized debt obligations or mortgage packages. Here’s a quote that summarizes the situation from Andy Rappaport writing in the Harvard Business Review:
“While global competition is increasing our need to invest in new industries and technologies, the strategy of financial institutions is to risk increasing amounts of capital on derivative investments that have no clear industrial benefit or economic value. This is crowding out our collective ability to take risks on enterprises that could have clear impact on our national competitiveness and standard of living in the future.”
I further enlightened my uncle to the recent retail environment that has changed drastically since the one he knew in the 1960s: Today’s climate is driven by fewer and larger retailers who call the shots by demanding markdown money; advertising dollars and lower prices each year regardless of commodity costs; high fuel prices, and the burden of health care upon businesses. This was not the first time we had this discussion but it was the first time in twenty-four years he ventured a thought. Maybe he should have given the jeans production to me to source in the Caribbean or Central America.
Let me state that I love my uncle and am very proud of him, particularly in light of Veteran’s Day just passed. He is an apparel industry veteran he also served 34 months in combat during WWII with the 36th Texas Division. Fighting in North Africa, Italy, France and Germany, he was highly decorated for valor with two Silver Stars, one Bronze Star and the Purple Heart. In addition he and his squad liberated the concentration camp at Landesburg, Germany. He had successfully fought the Germans, but lost his business battle to the world economy and imports.