Seams Start to Unravel

Sewing contractor Rob Reed shut down his Commerce factory this summer after 17 years, laying off 100 workers and adding his name to a long list of bankrupt U.S. manufacturers.

He isn’t shy about assigning blame for what happened.

“We’ve been forced out of business, No. 1, because of the likes of Wal-Mart,� Reed said.

Wal-Mart was once a solid account for his company, Stitches. But every season, Reed said, the retailer demanded a lower price, shrinking his profit to the point that an unexpected expense could push him into the red.

In January, he lost money on a Wal-Mart order. A few months later, he was asked to make 10,000 intricately worked cardigans for the retailer within a week. The sample already bore a Wal-Mart price tag: $8.47. “You can’t make it here at that price,� Reed said at the time. “Not legally, anyway.�

Although desperate for work, he turned the order down.

Reed, 61, now works as a consultant and dreams of opening another contract shop that can focus more on quality and still succeed.

He isn’t terribly hopeful, however. “The thing is,� Reed said, “with so many contractors on the verge of extinction, there’s always someone willing to do it cheaper.�