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News Blog

Is Amazon reviving U.S. manufacturing?

Adrian C.

by Joseph N. DiStefano

Amazon boxes ride a conveyor belt at the UPS Worldport hub in Louisville, Ky

Amazon boxes ride a conveyor belt at the UPS Worldport hub in Louisville, Ky

It started with that shopping website. Grew by shipping other companies’ stuff cheap, from all those upstate warehouses (now hiring, at $12 an hour, for the Christmas rush). Built Amazon Web Services, tying corporate software to everybody’s smartphones. Added new outposts, in towns such as West Chester, King of Prussia and Langhorne, for next-day deliveries of a growing list of Amazon’s own products and its newly acquired Whole Foods groceries.

Up next: Amazon factories — and maybe a surprising revival of U.S. manufacturing.

Suppliers and industry analysts say Amazon Woot — what the company calls its “fringe” bargains unit — plans to install at least 25 $1 million-plus cloth-printing machines, each of which can produce hundreds of digitally designed shirts, denim, fashion or other garments per hour, in an industrial park in West Norriton Township near Norristown. Spokeswoman Lori Torgerson declined comment.  (The 110,000-square-foot plant is waiting for a Pennsylvania air-pollution permit, as colleague Sam Wood and I reported Sept. 28.)

Amazon is buying and adding other services that underline its clothing ambitions — such as  its $50 million purchase Oct. 4 of Body Labs, a New York “body visualizer” digital fitting company.

It’s not just Amazon: Fanatics Inc., the pro- and college-team clothing giant founded by Conshohocken-based Michael Rubin and backed by Alibaba (China’s Amazon), has bought its own high-tech machines from Israel-based Kornit Digital — the same supplier as the Amazon plant’s.

At the Fashion Institute of Technology in New York last month, Fanatics president Raphael Peck told investors how the company used a Kornit machine to print and ship 4,000 T-shirts depicting New England Patriots receiver Julian Edelman’s spectacular game-tying catch at the Super Bowl before the sun rose after the game. Fanatics is also getting into traditional manufacturing: Earlier this year, it bought the 600-worker Majestic plant in Palmer Township, Pa., near Easton, where major-league baseball uniforms are made, for $225 million.

Decades after the block-long clothing mills that once lined Philadelphia’s avenues fled to cheaper places, why is it suddenly good business to make clothes in America again?

Digital design/manufacturing/distribution systems and fast, efficient new automated production machines such as the ones Kornit builds have made it “much cheaper to make these things in-house,” says stock analyst David Rose, who follows Kornit and other machinery makers for Granahan Investment Management, of Waltham, Mass.

It’s about speed: By turning live events and fashion trends into clothes that can be designed, produced and shipped in hours, instead of weeks or months, “you exponentially lower the cost of inventory you have to maintain” and cut the risk of products going stale before they reach consumers, Rose says.

That doesn’t mean a factory-jobs revival: “These machines save a tremendous amount of labor,” Rose tells me. “There are far fewer steps. The set-up time from design is much quicker.”

Amazon is advertising for managers and a “counter” who can wield a code-reading electronic device at the West Norriton site. But nothing like the thousands of cloth cutters and sewing-machine operators who crowded immigrant Philadelphia neighborhoods and nearby towns years ago.

Amazon’s retail partners and suppliers may be squeezed out if the company can build its own faster and cheaper. Retailers such as Urban Outfitters are trying to compete by upgrading their own digital shipping systems and building fancy new smartphone apps that show shoppers what clothes might look like on them. But Amazon is growing faster.

How far will the new in-house factories grow? One thing is getting clearer: As Amazon sells more of its own-made stuff — from ebooks, video content, groceries and now clothing, maybe on to (who knows?) auto parts, furniture, appliances, guns, anything that can be made efficiently by 3-D printers and other new machines  — we can see how this company really could need the 50,000 staffers it says it will locate in a “second headquarters.”

To manage all the industries it’s starting to replace.