Seams Start to Unravel

PART I: An Empire Built on Bargains (11/23/03)

PART II: An Obsession With Costs (11/24/03)

PART III: Unions Battle to Stop Invasion (11/25/03)


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."