Entrepreneur clears hurdles to a “Made in USA” label

    By Adrienne Burke | Small Business

    A stitcher works in American Blanket Company's Fall River, Mass., factory

    Rick Lotuff is a third-generation manufacturer whose first claim to fame was starting the Berkshire Blanket Company in 1993 when he was 21 years old. He has high hopes that his second claim to fame will be reawakening an industry that once thrived in an historic New England town.

    In September 2012, Lotuff launched American Blanket Company in Fall River, Mass., and has so far hired five of the town’s talented textile cutters and sewers. “Our goal is to build the best product we can, incorporating an American workforce and getting people back to work in a city that has seen a lot of difficulty,” Lotuff says.

    The labels on every kind of fabric-based product in your home offer evidence that running a textile business in the U.S. in 2013 is not common. Lotuff says market forces ultimately pushed manufacturing for his first company offshore (he sold Berkshire in 2006), and it wasn’t easy to establish a new business offering an American-made product.

    But he was determined to offer consumers a way “to buy American again” when it comes to baby blankets, bedding, and throws. So he invested his own capital and found a few workarounds.

    The first concession Lotuff was forced to make was to import his raw materials from Asia. Of the few U.S. textile mills that still exist, none could meet his demand for a luxurious “soft, plush, warm, easy-care fabric—key attributes of what we consider to be the best blanket on the market,” he says. He found a mill in Asia to build a heavy fabric that resists pilling and outlasts inferior materials. In fact, American Blanket Company promises that its Luster Loft fabric, made from 288-filament polyester yarn, yields a “never experienced before” feeling of “wrapping yourself in warm cotton ball softness.”

    His next challenge was facing a tax disincentive to cut and sew the fabric at home. At 18 percent, the duties charged by the U.S. government on raw material imports are twice as high as those levied on finished products. The outdated policy once aimed to protect American textile manufacturers from foreign competition, Lotuff explains. Now, however, the law encourages entrepreneurs to have their products made entirely overseas, and just run sales and marketing in the U.S.

    Beyond the import duties, of course, labor costs are much higher inside the U.S. than out. But here Lotuff refused to compromise. He figured out that he could employ U.S. workers but keep his prices competitive by leveraging technology that wasn’t around when he started his previous business: e-commerce. American Blanket Company sells direct to consumers online instead of distributing to retailers.

    Lotuff also sells blankets to small boutiques, spas, and resort hotels, but says, “We would be challenged to sell at a wholesale level that would make big-box retailers able to purchase from us.”

    To add value for its online customers, his team in Fall River wraps orders with ribbon, offers custom embroidery on gift blankets, and guarantees the products for life. “If it sheds or pills, you can send it back,” Lotuff says. “If we’re going to put our name on it, it has to be the best quality. If we can’t stand behind it we don’t want to be in business.”

    His advice to other entrepreneurs who would like to manufacture their products in the U.S.? “There will be a premium to pay, but you can do it," Lotuff says. "There are always bumps in the road. You keep fighting.”

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