A growing number of brands are prioritizing supply chain innovation and sustainability, driven by rising costs and growing customer demand. At the same time, small-batch “craft” denim is rising in popularity. Frame recently released a $12,000 pair of jeans, and Hugo Boss launched the high-end denim line Hugo Blue in May. According to a report from the World Economic Forum, new small-scale factories could create 4.5 million jobs globally by 2030 by generating jobs throughout the entire value chain, including design, production, marketing and sales. These factories produce small product runs of 50-500 units.
A November 2022 report by consulting company McKinsey stated that small-scale local factories can fashion brands reduce costs by up to 20%, improve time-to-market by up to 50% and reduce lead times by up to 70%. Globally, economic issues are making the need for nearshoring more urgent.
Craft denim manufacturing practices are starting to be nearshored in the U.K., as the post-Brexit environment brings investment into R&D within the British fashion industry’s borders. In the region, most fashion material production is focused on wool and tweed. However, with the Brexit-related rising costs for goods transportation from Europe, the U.K. government is increasingly investing in local manufacturing. This is coupled with a new prioritization of sustainable manufacturing. Small-scale production is also growing in Europe, where Portugal has become a key hub for smaller brands prioritizing sustainable production, although Portugal is not yet a go-to for denim manufacturing. In L.A., the U.S.’s garment production hub, sustainable factories are starting to open up.
According to a report by innovation platform Fashion for Good, small-scale factories can reduce water usage by up to 90%, chemical usage by up to 50% and energy usage by up to 80%, compared to traditional manufacturing methods. Energy use has been of growing concern among E.U. denim manufacturers, as their costs went up significantly in 2022 due to recession pressures.
Craft denim manufacturing hub Blackhorse Lane, which opened in London in 2016, produces small-scale denim collections for its own brand as well as brands including Studio Nicholson, TOAST and Mr Porter. Bilgehan Ates, founder of Blackhorse Lane, is a 34-year manufacturing veteran. And Blackhorse Lane has produced up to 28,000 pieces a week. According to Ates, nearshoring has become increasingly desirable for brands due to globally rising costs and demand for more sustainable manufacturing.
“Because of factories closing all around the world, a container with fabric from Japan that used to cost £1,500 ($1,855) now costs £7,500 ($9,276),” he said. “We used to sell our Japanese fabric jeans for £280 ($346) to customers in Holland, Germany and France. But, because of Brexit — the resulting duties and red tape — we are selling the same garments for £410 ($510).” Local production would lower these costs.
R&D in small-scale fashion innovation in the U.K. is seeing government investment for the first time. In April, Blackhorse Lane received an investment from the government of £80,000 ($98,000) to develop the U.K.’s first sustainability-focused denim laundry facility. The government investment stemmed from the Business of Fashion, Textiles and Technology, a five-year project aimed at driving sustainable innovation. Investment was also awarded to eight other R&D projects in the U.K.
Ashleigh Dunn, head of the evaluation committee at the BFTT and R&D manager at the University of the Arts London, said the success of Blackhorse Lane is evidence that the approach to funding needs to change. “We are [considering] a slight change in the structure of funding mechanisms to involve capital investment,” she said. “We’re now able to demonstrate that it’s crucial to have cutting-edge machinery, in order for U.K. manufacturers to scale up their business. We need to communicate to investors that there is value in investing in fashion on the technological and environmental sides.”
“If you’re a small designer, and you’re traditionally making your denim in Turkey, Morocco or Portugal, the [production] minimums are much higher,” said Ates. “Here, that is reduced, and you’re using a local facility that is much more environmentally advanced.” Blackhorse Lane is open to the public, and it is also partnering with UAL to educate students and researchers about denim manufacturing. UAL is the leading arts university in the U.K., with alumni fashion designers including Pheobe Philo and Stella McCartney.
In L.A., craft denim manufacturing is harder to find. However, local production is increasing in demand, as companies look to lower transportation costs, decrease carbon impacts and build out local R&D facilities. American denim has been a growing proposition over the last few years, and sustainability-focused brands like L.A.-based Reformation initially built out production in L.A.
“When we first launched denim, we built an L.A.-based supply chain, and there were some [production] partners available, albeit it is a smaller set of options,” said Kathleen Talbot, Reformation’s chief sustainability officer and vp of operations. “Most facilities were less mature in their journey or hadn’t invested much, in terms of sustainability. And when we set out to scale and really level up, on the technology and innovation fronts, we found that this was much more established and advanced in a few global hubs outside of LA.” The brand focused on Turkey, linking with sustainable manufacturers Strom and Bossa, which prioritizes organically grown cotton.
But Reformation still has “a meaningful manufacturing presence in L.A. for our other apparel categories,” and it will continue to explore options to nearshore its denim supply chain, for both sustainability and business reasons, Talbot said.
For sustainability-focused brand Everlane, maintaining strict standards around denim production is a priority. “When selecting factory partners, we seek the best around the world and prioritize partners that align with our values and sustainability goals, over geographic location,” said Katina Boutis, Everlane’s director of sustainability.
Everlane came out with its first denim collection in 2017, after securing production through Saitex in Vietnam. Saitex holds one of the highest environmental standards for denim manufacturing. It recycles 98% of its water in a closed loop system, plus it uses electricity for energy, lasers for distressing the denim and Jeanologia’s Environmental Impact Measurement to log the impact of each denim style. Saitex also works with Madewell, J.Crew and Mara Hoffman, among other brands.
Saitex opened L.A.’s first vertically-integrated denim facility in 2021 — a 52,000-square-foot operation with a focus on smaller-scale production than its Vietnam facility. In 2022, Everlane leveraged Saitex’s L.A. factory to produce a capsule collection.
“Saitex and other like-minded factories continue to expand into the U.S., and Everlane is open to forging new responsible and transparent partnerships those that can uphold our core values,” said Boutis.
The benefits of a smaller, nimbler production means that companies wanting to focus on limited, high-quality collections can do that with local manufacturing.
However, Saitex says that, in the L.A. factory, additional funding is to buy machinery is necessary. The U.S. government is not providing such funding, although companies that do nearshore are expected to receive a 30% reshoring tax credit as part of the Fashion Act.