About Me

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Los Angeles, CA
Ilse Metchek, the President of the California Fashion association (CFA), created the organization in 1994, with assistance from the major financial and manufacturing participants of the region’s apparel industry. The CFA provides leaders of the Southern California’s manufacturing and textile community with the opportunity to share information about the business of conducting business in the current global economy.

Thursday, July 30, 2009


America’s recent fashion history has seen a relentless tilt to the west – of people, ideas, commerce, and even trend power. New York and Los Angeles are the twin poles of U.S. fashion, but very different ones. For most of the last twenty years, L.A. has been the brainier, sexier, trendier of the two: its entrepreneurs and its innovations, its fads and foibles, its marvelous clutter of jeans, activewear, swimwear, surfwear, jeans, etc have spread around the world. New York, still the bastion and darling of the fashion press, has trailed behind in the world of innovation; its cliché has been a conservative applause to the same small group of ‘elite’ names. But twins can change places. Is that happening now?

It is easy to find evidence that California style is in a funk. The banks have stopped funding creativity; they certainly are not taking any chances in this squirrelly economy – and the buyers, from the large retailers and specialty store chains alike, cannot afford to place their bets with new resources that might not be able to deliver when promised. The retailers’ lines of credit depend on-time delivery, complete, saleable damage-free shipments, with accurate documents now demanded by technical and governmental requirements.

Back in the golden age of the 1960s and 70s, our community offered those ‘up-and-comers’ a shot at the American dream – not just for the mouth-y high-fliers who gave great parties. There was a complete cross section of an industry cluster; with an enviable infrastructure. These days, more than 87% of the $39 billion shipped, in apparel and textile finished products, are made elsewhere. Every year, more companies leave the business than enter it.

Not only that, but most analysts and poll-takers rank Los Angeles AND California the very worst region to do business in, for each of the past four years. Add to that, a very laissez-faire attitude toward the industry by our public officials and our uber-industry groups, with no concern for the over-riding issues that affect our business, and the 100,000 plus people employed in it.

By contrast, New York’s legislators understand the importance of their fashion industry, and have tried to revive the trend of encroaching real estate in their once-flourishing ‘garment district’. A valiant effort is underway; we’ll see how it plays out.

Meanwhile, it has never paid to bet against an industry with as many inventive people as we have here. Even if California is in the dumps, it still boasts an unequalled array of sunrise start-ups, and the most agile venture-capital entrepreneurs on the fashion planet. Our technology providers are telling us that they are (strangely) seeing more and more start-ups – with more creative products, and more original ideas. Additionally, the smart business operators are examining the way they do business; being much more price conscious, cross training their personnel, analyzing every SKU, investing in technology, etc. The businesses surviving during these economic tough times will only emerge stronger and leaner, with more exciting product.

The California fashion industry has an awesome ability to reinvent itself – as it did when everything stopped right after 9/11.

Perhaps this new ‘crisis’ brought about by the troubled assets of our largest lender will promote what the politicians call ‘structural reform’. The truth is that we can learn from other apparel production centers and other business models. There is no perfect model; it is our genius to have 7000 companies competing to find out what works best. The relentless competition of clever new firms from San Diego to San Francisco will pull our west coast fashion industry out of its current gloom. All the world still wants the ‘California look’ – whatever that is!

Thursday, July 16, 2009

Where are our Public Officials, Civic Leaders, and LEGISLATORS????....

Report: The New York Stock Exchange halted trading on shares of CIT Group Inc., the largest factor to the apparel industry. Talks ended late on July 15 without a solution; CIT has been told there is “no appreciable likelihood” of government funding in the near term.

Significance of the Bankruptcy
“It sends a chilling message when the government will bail out Wall Street but then turns its back on the biggest lender to Main Street”. (Cass Johnson, National Council of Textile Organizations). The significance of this situation, and its affect on the design based industries of apparel, furniture, toys, etc., is noticeably absent from the “economic impact” analysis being put forth by the local ‘economic gurus’. Just wait until they are faced with real estate vacancies and increased unemployment!

The ramifications inherent in having the largest factoring firm to the apparel industry go bankrupt are far reaching. In addition to the crippling impact on both manufacturers and retailers, the situation also affects suppliers, service providers, shippers, and, most of all, employment. CIT is responsible for 60% of factoring in the US apparel and footwear industries, therefore bankruptcy has a huge ripple effect.

CIT funds more than a million businesses—many of them are small- or mid-sized companies. In the case of the smaller manufacturers, more than 90% of the business is done with the thousands of U.S. specialty retailers who have one or more outlets. Industry growth has happened because of available factoring; it has been the lifeblood of the creative process.

Industry Reliance on Factors
Manufacturers lose the ability to approve credit for their orders, and with it, the cash advance used to make payments to overseas sources and domestic contractors (even for previously contracted goods), and to pay their vendors and their employees. Working without factoring will be a challenge for the businesses that rely on the 80% advance on the retailer’s invoice to help finance production and manage cash flow.

Without factors, retailers will be required to pay up front and draw down on their own credit lines at a time when credit remains difficult to obtain - or find other ways to finance an order. The availability of credit and cash flows is key right now, and we are coming into the industry’s busy shipping season for ‘back-to-school’, and ‘holiday’ merchandise. The local textile industry is also adversely affected. Textile companies, for their yarn and design suppliers, have relied on CIT to assess the credit, and factor shipments for the manufacturing client base they supply.

Next Steps for Apparel and Retail Industry
Where the industry goes from here is unclear. Among the likely changes will be stricter rules for lending money, more-limited access to credit and increases in lending rates. Cash is king now, for both manufacturer and retailer, but there will be alternative ways to do business. Most alternatives carry their own sets of risks, all of which demand a re-evaluation of accounting procedures, terms and insurance policies.

CFA Actively Seeking Solutions
The California Fashion Association (CFA) will be organizing a series of focused gatherings with industry experts, manufacturers, retailers and other professionals to evaluate options, and explore creative new frameworks for business development. We are not done yet!!!!