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Aaron Harris for the Toronto Star
Case Studies
Posted: October 9, 2012
by Andrew Seale

Antonio Valente menswear fights outsourcers with fair labour, premium designs and Toronto manufacturing

Vital Stats
Owner:
Antonio Valente
Contact:
416.243.5028, http://www.antoniovalente.ca/
Field:
Menswear manufacturing and retail
Employees:
50
Years active:
10
Notable:
Valente once wrote a column in Ottawa Life calling on Prime Minister Stephen Harper to wear domestically-produced clothing

Antonio Valente wants to be a man of the people.

The designer has built his namesake Canadian clothing company while many in the business are packing up operations and moving abroad. The company’s shirts and trousers are imbued with his ethics — manufactured in Toronto with staff paid hourly, instead of by the volume they produce. It’s a rarity in a textile industry dominated by outsourced, or even sweatshop, labour and cheap imports – and it makes for high quality clothing, albiet at a premium price.

“I love what I do, I love making it here and I love showing the world that the best can be made here,” says Valente. But, he adds, “there’s not a level playing field.”

The clothier’s decision to use a fair payment structure and manufacture locally increases his costs, which is to be expected. His clothing is sold in 100 (mostly boutique) stores throughout North America, and has some celebrity devotees, including Greg Kinner and Rick Mercer. But Valente’s competitors have a major advantage thanks to what he calls outdated government regulations. Larger retailers are able to import finished products, such as shirts, trousers and suits, duty-free, while Valente has to pay a 10-20 percent tariff on the raw materials he imports to create his made-in-Canada products.

“It increases the price of our shirt, which in turn we have to pass on to the consumer,” he says.

Where other costs are directly related to quality, the tariffs add to price tags without increasing value, making his clothing more expensive to make and, ultimately, cutting into profits by nearly 20 percent per shirt. Valente only charges between $175 to $295 for his products – the same price range as Hugo Boss or Banana Republic – but Valente’s profit margin isn’t even close to companies that outsource their labour. He wants to expand the brand dramatically, but growing the business is nearly impossible with such stiff competition.

 

That isn’t stopping him from trying. Born of Italian immigrants and infatuated with menswear from a very young age, Valente opened his first plant in 2002 and launched the Antonio Valente brand in 2009.

“As more companies were closing down their manufacturing facilities in Canada, it became increasingly clear to me that they were closing them for the wrong reasons,” says Valente, whose workers are paid $13 to $18 an hour, on top of standard health and other benefits.

“Other companies don’t have those costs,” he says.

The factory has 50 clothing-makers, mostly from Vietnam. The designer prides himself on employing many non-English-speaking immigrants who have trouble finding work in other industries due to language barriers.

“You can’t work at Tim Horton’s for minimum wage if you can’t speak English, so where are these immigrants supposed to start?” he says, adding that there’s an ingrained sewing heritage in Vietnamese culture which helps his workers produce high quality products. “They still teach home economics in school (there) – in North America they’ve dropped it from the curriculum.”

Valente’s factory produces 220 stitches per linear run, which basically means seams are nearly invisible and much more durable than the 120 stitch shirts produced en-masse in most overseas operations.

 

“If you’re getting 10 dollars a zipper – you’re doing it as fast as you can,” he points out. “We don’t care how many zippers you sew – it’s an old fashioned (method) but it produces a far higher quality product.”

Unfortunately, this also produces a lower bottom line. Outsourced manufacturing operations take an average of 35 minutes to create on shirt, Valente’s take 80 minutes. Labour costs alone run $20-$22 per shirt, versus only $0.50 cents in other countries.

Murat Kristal, an associate professor of operations management and information systems at York University’s  Schulich School of Business, says Valente has become a victim of his personal politics.

“He wants to produce quality products and he wants to do them domestically,” he says. “The biggest challenge is to cut down his costs if he wants to stay competitive.”

Kristal says the only real way to accomplish this is by increasing volume or passing an additional premium onto the customer.

But Valente has no interest in increasing his pricetag further, and says his creative and complicated designs simply take time. He says the only way to increase output is by hiring more staff, which also increases costs.

So, before Valente expands beyond the boutique men’s stores that stock his products and into the large retail chains, he needs to convince more people to buy his shirts.

 

Between trunk sales, showing his products to distributors directly, and winning customers over one at a time, Valente is building his name. And, despite comparatively low profit margins, the business is doing well. Valente boasts a 90 percent customer retention rate, and has seen profits grow continually, even through the recession.

Still, the designer isn’t satisfied, saying he wants to see government policies change to benefit Canadian manufacturers – he sees it as the only way to level the field and allow him to lower his prices.

Until that happens, Kristal says leveraging his made in Canada image is the best way to stay in business.

“(The challenge) is working within your constraints,” he says. “At the end of the day, your customers know where it’s being made, and many will pay the premium.”

EXPERT VIEWS

As Interviewed by: Tom Henheffer

Valente runs a local business with locally-made products, and he’s investing in employment in Canada, which is fantastic. He needs to leverage those facts, not just because they’re great ethically, but because they also mean his products are extremely high-quality. One way to do this is through the company website. It already looks great, but it doesn’t say much about made-in-Canada shirts or fair labour practices. And even worse, it doesn’t have any ecommerce functionality, which means customers have to go to brick-and-mortar stores to get Valente’s clothes. If he added an option to buy online, he could instantly expand his reach, drive traffic to the boutiques, and become a bigger blip on the radar of retail chains and large distributors. And Valente should be working to get more people talking about the brand. He could hand out swag bags at events like TIFF to encourage celebrity endorsements, or send samples to bloggers and fashion writers to get them singing his praises. If people to start recognize the name and understand the ethics behind it and the quality that ensures, they’ll be willing to pay a premium price.

by Tisha Rattos

Valente has a very interesting concept, with lots of potential ways to make his value proposition even stronger. The company has a great website, but are there any free online tools that can help improve its visibility on the Internet? Perhaps he could also research regional search terms and include those words on his website to boost visibility in those markets. Valente could also look into targeting the industries where his customers work, and advertise in trade publications, industry specific websites, and even outdoors near popular traditional retailers. Asking his existing clients to refer friends and colleagues may be another low-cost way to spread the word. Another option would be promoting the quality and fair labour practices he employs and, in Canada at least, playing up the fact that his goods are locally made. With 83 per cent of Canadians saying they want to support local businesses, customers should be open to paying a premium for quality, ethically-made goods — there's a larger market out there if he can get people talking about his products.

by Mike Michell

Valente believes in the principles on which he's built the business, and he's coming off his best year. His brand is resonating with people — in other words, he's already doing what he should be doing, and I'd recommend that he stay the course. Success really boils down to how he defines it. Valente could try reducing the cost of his shirts by changing labour practices, but I don't think that would fit with his definition of success, and it would completely change the brand. So he simply needs to continue marketing the fact that he produces local, high-quality goods, and that his employees are not only treated fairly, but are paid well and given the chance to work despite language barriers that may stop them from pursuing opportunities at other companies. At the end of the day, the market is hungry for alternatives to products made in sweatshops, and consumers are willing to pay a premium. Valente needs to keep leveraging this and develop his message through marketing channels, especially social media, which is where the brand equity of ethically-produced goods often takes off through word of mouth.

by Tara Talbot