Tariff Talk 2.0: Domestic Manufacturing

As mentioned in my first post on tariffs, we sell yarns made in Turkey, Italy, Peru, and Ireland under our brand and through our distribution partners. We also have a line of US sourced and spun yarns under the Germantown name. Our commitment to domestic manufacturing goes back over 7 years, but as we are not an entirely US-based brand, I asked our friend Jill Draper from Jill Draper Makes Stuff to help with some of the numbers and details in regards to US manufacturing. Her experience working directly with farmers and mills spans over a dozen years and her additional perspective is an invaluable contribution. (Thanks, Jill!)
Wm. H. Horstmann & Sons, Phila., Pa, Exhibit of Germantown Yarns in the 1876 World’s Fair in Philadelphia. #711, Main Exhibition Building, Bldg. #1. / Free Library of Philadelphia / 1876, Centennial Photographic Co.

A Brief (and far from complete) History

Textile manufacturing in the US goes back more than 300 years, and New England and Philadelphia were known to be hubs throughout the 19th and early 20th centuries. Many families from New England, including my own, marvel at the variety of mill jobs their ancestors performed during this time.
My great grandmother, Ella Mae Grimshaw (18) highlighted yellow in this 1910 Massachusetts census, was a Jute Mill piecer at Ludlow Mills who worked alongside her brother, Fred (17), a Reel Boy, and sisters, Julia (22) and Victoria (20), spinners, highlighted blue. She and the rest of her family, highlighted green, lived on Wilbraham Road in Wilbraham, and most of their neighbors also worked in the mill as well.

Philadelphia, where we’re based, was a thriving textile town as early as 1775. During the height of manufacturing in 1882, there were over 60,000 textile workers spread throughout the region making up about 7.5% of the population. Our Germantown yarn, named after the neighborhood in Philadelphia where it was first produced, became ubiquitous at this time. While many mills moved south in the early 20th century in response to growing labor and production costs, manufacturing in Philadelphia continued to grow. Northern mills continued to decline significantly after World War 2, but held steady throughout the south until the mid 1980s when a variety of factors, many directly related to production costs, caused manufacturing to rapidly move out of the US. From 1997-2009, over 650 textile facilities—dye houses, spinners, finishers, and weavers—moved overseas. Coincidentally, this time period directly parallels with my undergraduate degree in textiles, graduate degree in industrial weaving, and our founding of Kelbourne Woolens—it’s a wonder we’ve made it this far! It is also worth noting that while we directly benefitted from NAFTA throughout the first decade of our business, global trade policies of the 1980s and 1990s directly contributed to continued domestic decline.

While I could easily go on a very long tangent about what was happening throughout the US during the initial textile boom in the 1800s, and labor issues that permeated manufacturing throughout the centuries, the timeline is what matters most in this particular context. Like all history, textile manufacturing is complex and nuanced and many, many factors contributed to its rise and subsequent decline. (That said, if you’re interested in learning more, start by watching the American Experience series on the Triangle Shirtwaist Factory Fire. And then donate to PBS while you’re at it.)

Present Day

While the textile industry in the US is nothing like it once was, there are still about 55 active spinning mills throughout the country. This number does not count dyeing/carding/scouring companies and self-operating mini-mills like our friends at Spincycle or Junction Fiber Mill. While many small mills like Green Mountain Spinnery (a favorite of mine and Jill’s for decades, and one she uses for her yarns), and Harrisville (makers of an eponymous line of yarn as well as the new owners of Peace Fleece) provide production services, a handful of the 55 are at the scale and size of the mill that makes Germantown. Additionally mills like Zeilinger, Jagger, and Kraemer have all closed in the last 5 years, so up until very recently there was even more potential supply than demand. This supply vs demand discrepancy will continue to be the case as long as the manufacturing that exists continues to lose support.

The industry here is small but mighty, and there are a variety of companies like Jill Draper Makes Stuff that have wholeheartedly supported US wool farmers and manufacturing for over a decade. There seems to be a firm belief amongst crafters that US manufacturing and wool production is limited to hobby farms and micro-mills, and this is far from the case.

From Jill: “This is the part of the discussion that is so disheartening! You can make yarn here and there are multiple companies that do. Not all yarn spun in the States was grown here but much is. Which is not to say that I think any of us are benefitting from the tariffs; like all consumers we are seeing the same price increases on many daily needs." 

While yes, the US cannot exclusively meet the manufacturing demand of the entire world, no country can, even mega producers like Peru and China. Continued support of the brands and mills that do still exist in the US is vital for their future survival.

Germantown Yarns

When Kelbourne Woolens set out to recreate Germantown, finding a mill that could manufacture at the commercial scale we and our customers expected was key. In other words, making a viable product meant we needed bagged tagged skeins of yarn delivered to our door that had been manufactured in one mill (in lieu of traveling to multiple locations throughout the process). While the mill we found does this beautifully, we work with limitations not experienced with our international mills: the individual color minimums are 3.5-40 (yes, forty) times higher, the lead times are 3-6 months longer, and the pricing is notably higher as well. The benefit is that we can easily maintain entirely US sourced and spun ready to ship inventory at a large scale. As of this writing, we currently hold over 5 tons of Germantown inventory in the warehouse. That is a….lot…of yarn.

Could we make a basic 4 ply 100% wool yarn for half the cost overseas? Yep. But that isn’t the point. Our commitment to our US mill and domestic manufacturing is strong.

As a US sourced and spun yarn, the blend of wool used in Germantown is made from territory wool, which is a slightly archaic name for fiber that comes from the former US Territories. In the case of Germantown, the wool is mostly from Montana, Idaho, and Wyoming and the most prevalent breeds are Rambouillet, Targhee, Columbia, and Polypay. Unlike Jill’s process, where she personally sources the fiber for her yarns herself, our mill uses a broker to purchase the fiber we need. The broker model allows for greater volume and better pricing, but also means the wool may be used in other products besides ours. Last year, the wool came from the more than 22.5 million pounds produced throughout the US. Not all of the wool stays in the here, though: in 2019 (the last time data wasn’t yet affected by Covid), the US exported 64% of our domestic wool overseas.

Tariffs and Domestic Manufacturing

Like textile manufacturing in the US, the history of tariffs is complicated, nuanced, and long. I do not have a degree in economics or Ancient Greek history (where Wikipedia tells me the first tariffs were levied), so our knowledge is specific to our experiences as a yarn company over the last 17 years.

Regardless of the role trade agreements like NAFTA played in the continued move of manufacturing overseas, it was not the sole reason for this move, and thus its reversal (one could even go as far as to say, overcorrection) will not solve the problem. We cannot see how the current situation will do anything to increase domestic textile manufacturing in any way. Asking mills to expand production requires more labor, and more equipment. Currently equipment must be purchased—you guessed it—overseas, thus costing the company more money. If a yarn is spun domestically but uses imported materials, it now costs more to produce. Technically all these rising costs are the point of tariffs, but increased cost seems to be their only effect. As a brand actively involved in domestic manufacturing, we have not benefitted from any policies or practices over the last 6 months that have helped increase our manufacturing here versus overseas.

As a bit of an aside, it is also worth noting that there are yarns that cannot, and frankly, should not, be made in the US: to call a yarn “Donegal Tweed”, like our Cricket and Lucky, it has to be made in Donegal, Ireland, and trying to make those yarns here would be disingenuous. (I don’t know about you, but I’m not going to pick a sparkling wine when given the option to drink Champagne.) There are other yarns, like Manos del Uruguay Wool Clasica, made in a certified fair trade cooperative in Uruguay, that cannot—and again, should not—be made in the US. So while we are huge supporters of domestic manufacturing and people like Jill who work so hard to keep it going, there is also great value in other yarns made elsewhere.

Bottom line, the tariffs as they stand are akin to putting on hat and then walking outside in the snow thinking it’s going to keep your bare feet warm.

I hope this helps shed more light as to the current situation and the effect it is having on our business. For those of you who have asked, unfortunately part of the uncertainty we’re facing is that we cannot say how much, when, or if, prices will increase. We have 5 POs expected in the next 3 months, but with ongoing proceedings on the legality of the tariffs in general we just do not know what the coming months will bring. This is honestly the crux of it all: the sheer lack of knowing is entirely unsustainable.

Questions? Comments? Concerns? Let us know!

Data sources:
https://philadelphiaencyclopedia.org/
https://textileheritagemuseum.org/
https://www.sheepusa.org/