Saitex USA, L.A. factory
The discussion about reshoring apparel manufacturing from outsourced factories in Asia, back to Europe and the US, has heated up during the pandemic. As online apparel shopping surges, brands’ inability to respond to fast-changing consumer demands due to painfully slow design, sampling, and production have left them vulnerable to overstock and high-level discounting. It has also wiped out several brands and retailers unable to adapt.
In a recent conversation with Achim Berg, Senior Partner at McKinsey & Company and Leader of their global Apparel, Fashion & Luxury Group, the barriers to reshoring, and nearshoring, were made clear. The CAPEX required is significant, and no one has wanted to foot the bill—until now, it seems. Sanjeev Bahl, the founder of Saitex International denim manufacturer, headquartered in Dong Nai, Vietnam, has established the first integrated mass-manufacturing facility in L.A., leveraging the existing local denim industry expertise, but underpinned by cutting-edge technology.
Saitex strategy for tackling overstock and sustainability
Why L.A? What does this mean for reshoring of apparel manufacturing around the globe? And how does such a facility shift the needle in terms of production-on-demand, elimination of overstock, and social and environmental sustainability? I dug into these facets of Saitex’s new U.S-based business during an interview with Sanjeev Bahl to understand where global apparel manufacturing and reshoring may be heading post-pandemic.
It would be a mistake to think that Saitex USA’s L.A. factory emerged from the wreckage of recent global and fashion industry events. It has been 20 years in the making, according to Bahl, and a facet of a strategy he and his team have created to ensure long-term profitability and simultaneous sustainability. To be in a position to fund an industry 4.0 factory in L.A., Bahl has had to operate strategically across numerous businesses and accept lower profitability than comparable apparel operations in neighboring countries, by his own admission.
In deciding on how to operate as an apparel manufacturer, he explains there are two facets of Saitex’s relationships with brands and retailers—strategic and transactional. “With every step that we take, we continue to enforce (the) strategic relationship (rather) than our transactional relationship.” The success of Saitex, which manufactures 6 million garments a year for brands including Everlane and Calvin Klein, is grounded in the symbiosis this creates with brands and retailers, and an ability to add value by solving problems that ensure long-term, secure business partnerships. The L.A. factory looks to be their latest example of this.
Saitex USA, jeans factory.
Automation is essential to economic viability
The L.A. facility provides mass-manufacturing capability but with a minimum unit order of 1 piece, because the process of cutting and making remains the same, regardless of quantity. This is unheard of with manufacturers in Asia (and beyond) as it decimates efficiency by disrupting production lines, requiring separate manual processes from cutting to construction, and making reproducibility and accurate costing extremely difficult. Saitex USA has built a semi-automated factory and installed “two gigantic lasers, the only two of these in the world, which cut one piece at a time and also do the dry process.”
As a result, Bahl explains that “in a day you can have three thousand different (garment) patterns coming out of (the laser cutter) and then you just have to sew it up and wash it. This was the game-changer for us.” Elaborating further on what this means for brands and retailers, he said: “We can make one hundred pieces today and it will be out the door in 48 hours to 72 hours, and into the (retail) store” where the product can be tested. “And then we could come back and make 5000 (units) of it, depending on the demand.” Saitex USA is also able to ship directly from the factory to the end customer if the client requires it.
Automation has long been the touted solution for driving costs down and increasing accuracy and repeatability, making reshoring an economically viable option. In their L.A. factory, Bahl explains that they have established a manufacturing team of the future, with very different roles and expertise than traditional factories. They have far fewer staff, with the two laser cutters previously mentioned reducing headcount by “ 40 to 50 people,” according to Bahl. On the washing and denim finishing side, multiple machines have been integrated into single units that perform various functions, further reducing headcount. Also, the spraying process—usually done by humans, resulting in the ingestion of fumes—is done by robots. Four robots can spray three thousand pairs of jeans a day; this would normally be the work of 25 people, says Bahl.
Saitex factory automation
Balancing human benefits with automation
Where the human element remains most dominant is in the quality control and sewing department, which is only partially automated. The factory workforce has a larger than typical design and industrial engineering team, and overall, 40 to 50% of the factory operations are automated. Bahl describes this as a “very smart hybrid manufacturing system”. On the subject of job losses due to automation, he counters those losses with the creation of new, highly-skilled, and desirable jobs rooted in exciting technologies that will lure the next generation of workers, who he says are not interested in today’s repetitive, manual tasks. This follows the maturity of some countries in Asia where rates of education are increasing and leading to an increased transition from manual work to service work, for example.
Bahl also highlights Saitex’s Rekut program, which trains less-able workers to operate machinery, offering employment opportunities that simply were not available to people with physical limitations or learning difficulties, but are possible with these newer semi-automated machines. “These machines are being specifically retrofitted so that a person with different abilities can manage them,” he explained. Full automation without human involvement is “still a little far away’ he says.
Being from a technology background, and having founded an IT company 10 years ago, he has built a separate business that “focuses on e-commerce platform builds for artificial intelligence, predictive analytics (and) automated marketing.” These learnings are being applied to his new apparel operations, in a proprietary SaaS platform called STM, designed to integrate all the software solutions used by apparel brands and retailers. The aim? To solve communication problems with apparel suppliers in an age where virtual fittings have replaced in-person ones, and to facilitate speedy and accurate communication, sampling, approval, and production progress tracking. By digitalizing the apparel processes from design to delivery of goods a tremendous amount of data is captured to enable smart development of the Saitex USA operations, enhancing responsiveness to the consumer market in which they operate.
L.A. factory blueprint for automated factories of the West
Will this L.A. factory blueprint be rolled out to other global locations? “Yes” is Bahl’s answer. The question is where, and how? “Should we just make a massive monolithic factory in L.A. or should we make one small one in Detroit and give people different opportunities there?” Bahl asks.
On the subject of Europe, he says “maybe one (facility) in Germany, maybe one in the U.K. Who knows?” These decisions will depend on the learnings from L.A. and the overarching strategy of the company, which as a registered B Corp, is required to balance its social, environmental, and economic impacts. What he does say about this first ‘reshored’ factory is that it seeks to be a blueprint for the future of apparel manufacturing, and was “built to solve (apparel industry) problems in the western world”. Philosophically, it arises from Saitex’s primary aim to be “a catalyst and collaborator.”
The data gathered from the operations will surely enable accurate impact analysis, especially alongside Saitex’s next venture— full vertical integration of cotton production and a mill via partnerships with cotton farmers in Australia, the US, and India. The true end-to-end nature of the business paves the way for accurate environmental, social and economic impact analyses, informing the evolution of sustainable, global apparel manufacturing infrastructure.
