Brands that invest in socially and environmentally responsible supply chains reduce risk to their reputation and generate consumer goodwill both of which drive business growth.
SanMar is an excellent example of a sustainable apparel brand leading the industry on the strength of sustainability. While you may not know their name, you probably have a SanMar product in your closet. One of the largest B2B apparel companies in the United States, SanMar sells blank T-shirts, hats and other garments to corporations, businesses and sporting brands like the Seattle Seahawks.
I had the chance to chat with Jeremey Lott, CEO of SanMar about why sustainability is so critical to their business success and how they retooled to help address Covid-19.
Simon Mainwaring: As a family multi-generational business, what insights were passed down to you?
Jeremey Lott: My father started the company in 1971. Early on he brought my grandfather in and they worked together for 20 years. I’ve been working in the business really since birth, but full time since 2002. I became president in 2013.
When I grew up, SanMar was a small business and kids were there to help. At the dinner table, we didn’t talk about sports or politics. We talked about the business.
In the late eighties, I would go on fishing trips with my dad and his suppliers. I was a young teenager. These guys taught me how to make Bloody Marys for them in the morning. What you learn through those conversations is amazingly valuable over time.
Some of the best advice my dad ever gave me was ‘Work harder.’ There’s no substitute for hard work. He started the business because he saw an opportunity to treat people well. He always says, ‘Tell the truth and be nice.’ If he could do that, he could be successful in an industry where that didn’t exist before. Values have been an important part of the business from day one.
Mainwaring: Did you start with sustainability in mind or did it evolve more recently?
Lott: My dad built a distribution business. We bought T-shirts and sweatshirts in truckloads and sold them in pieces. We made a margin doing that.
The big change I’ve led is building an apparel business. We focus on imprinted sportswear, promotional products and uniforms. Distribution is still a huge part of what we do.
We’re in Seattle. Our customers like the Seattle Seahawks, Starbucks and resellers want our products to be made responsibly. It helps our customers sell to their clients. They want stories about sustainability. They’re proud that the factory in Honduras supports the Touching Hands Project.
Everything we sell gets someone elses logo on it, whether it’s a school company, a church or a team. Once that happens, it stops being a SanMar shirt.
When the Rana Plaza factory in Bangladesh collapsed, that was a real wake up moment for me. I said, ‘Are we part of this global problem of unfair and potentially dangerous labor practices?’ I’ve spent a lot of time traveling and in factories. I’ve seen bad factories. If I’m being honest, we had production in some bad factories. I’ve also seen a lot of good factories.
We made a conscious shift at that point to work with people who are doing good things. We started to be more purposeful when thinking about our supply chain.
That led to our first CSR report. We became more transparent. We started reporting how we are working with internal and external stakeholders. They hold us accountable to the standards we’re setting.
Mainwaring: How and why did the tragedy in Bangladesh wake up the apparel industry?
Lott: In Dhaka, Bangladesh, there were a lot of multi-story buildings with factories on several floors. In 2013 one of these buildings collapsed. It killed over a thousand people.
As an industry, we hadn’t prioritized physical safety. This was a huge wake up call to everyone.. In Bangladesh, they have building codes but these buildings aren’t built to the codes. There’s a lot of corruption.
As brands, we have a choice on where we want to manufacture. We can be influential in implementing change. It changed how many brands, ourselves included, wanted to produce. It changed who we wanted to produce with. We started to rethink how we could use our buying power in a positive way.
Mainwaring: How did you justify the financial cost of that shift inside the company?
Lott: It wasn’t hard at SanMar. I only had to convince my dad. If I were selling it to a CFO, I’d say, ‘It might cost 25 cents more for the shirt in factory A than it did at factory B. What does it cost me if CBS News goes to factory B and shows child labor or dangerous working conditions? How would that affect sales?’ There’s a huge PR risk.
We’ve found that better factories are a little more expensive but they provide quality and consistency. We’ve minimized problems and make more money working with better factories.
Selling it internally was easy because I was able to make it a rallying cry for our organization. People got excited about being part of social change. It’s helped recruit and retain talent. It has galvanized the organization. Doing good things has been a success for us economically.
Mainwaring: How do you measure the effect of doing good on your employees and culture?
Lott: SanMar employs around 15,000 people globally. Companies are the number one driver behind many positive development metrics like women’s empowerment, economic security and even life expectancy. This is the way we can have the biggest impact.
For example, there’s a factory in Jamestown, Ghana, that’s employing women in a part of the country where there’s zero formal employment or opportunities for women. This factory is addressing intergenerational poverty.
We started telling these stories internally and people got really excited about it. It’s a great rallying cry and recruiting tool.
Mainwaring: And how do you justify your sustainability commitments?
Lott: There’s a moral imperative and an economic one. Here’s an example. One of our customers had been selling about $100,000 worth of swag to a conference for several years.
The organizers called one day and said, ‘We’ve decided not to give any swag away. We’re going to give carbon offsets instead.’
That customer lost a huge piece of their business. For me, that’s an economic wake up call. If we can’t make products in a sustainable way, then brands are going to choose not to buy our product.
I also have six kids. I want my grandchildren to have the same quality of life I’ve had.
Mainwaring: How do you do to ensure your employees, retailers and consumers know these commitments are real?
Lott: SanMar has a full time representative in every factory we do business in. A lot of the labor abuses are not in factories where you think your product is being made. They happen in factories you didn’t know your product was being made at. That factory can outsource production to another factory as easily. We’ve made decisions to move out of factories that we weren’t comfortable with.
Mainwaring: And this is all driven by your vision statement, ‘Canvas For Good’?
Lott: Our leadership thought about how to invest in communities that make our products and drive our business, both domestically and abroad. That’s where ‘Canvas For Good’ came from.
We also considered our customers. Some of our shirts go to things like cancer research fundraisers. That gives you a sense of pride and community.
With all the divisiveness in society, anything we can do that helps build a sense of community is a positive. I’m not naive enough to think that T-shirts solve everything. I believe that when we feel a connection with other people, that does help.
Mainwaring: What are you doing to engage employees and generate that impact together?
Lott: We support different organizations in the communities that we live in every year. The employees get excited about how we’re raising money. It could be a golf tournament or a bake sale. People feel part of something good, even though the company donates most of the money. It also deepens connections with the communities we are in.
Mainwaring: How have you responded to Covid-19?
Lott: Business was good at the beginning of the year. Then the NBA stopped. Tom Hanks, announced he was positive. Our business stopped fast. The events and brands that we normally sell to weren’t happening. No kids sports. Concerts were canceled. No more conferences.
It was scary. We didn’t know what the bottom looked like. We had to send everybody home. We had to figure out how we could safely keep our distribution centers open. We needed to cut expenses. We reduced employee salaries. I cut my salary to a dollar.
Then I got an email from one of our employees. Her son was an EMT in Bellingham, Washington. She said they didn’t have masks. They were telling him to wear a bandana. I thought that it was insane that in 2020 in the United States our first line responders don’t have basic protective equipment. It crystallized for me that there was this need.
I wasn’t sure we could do it. Our largest yarn vendor said, ‘We’re putting together a coalition of American textile companies to make protective masks. We want you to be part of it.’ I was all in.
Normally it takes 18 months of developing and testing to make a shirt. From March 18th to March 26, we went from never having made a mask before to mass production. Now we’re making about 10 million a month for the government’s strategic stockpile.
Mainwaring: What did you learn through that process that you’re going to carry forward?
Lott: The biggest lesson I learned is that when you’re in a crisis, it’s time to leverage partnerships you’ve built during good times. In good times, I think businesses can think of the world as transactional. They’ll move from one vendor to the next because it’s 5 cents cheaper. That comes back to bite you during tough times. When you treat people right, you build social capital that allows you to call on people when you need them most and they respond.
We asked, ‘How can we do this in a short period of time?’ The answer was collaboration. Our supply chain across the globe understood the urgency and showed up in record time.
I sent an email to the Chief Sales Officer at UPS, who I’d met once before. I asked if UPS would be willing to help? 30 seconds later she said, ‘UPS is here to support you.’
I needed a plane the next day to move fabric from the Dominican Republic to our sewers in Tennessee. No one normally runs that route, but she helped us make that happen.
Mainwaring: Did retooling help the company bring some employees back to work?
Lott: When we started making protective equipment, we were able to reopen factories in Tennessee, Honduras and Vietnam that otherwise would have been shuttered.
We had to cut hours and salaries in our U.S. corporate and distribution offices. We didn’t lay anybody off. As of June 1st, we brought everyone’s hours and salaries back to their full amount. The mask was a big piece of that. Our regular business is also coming back.
Mainwaring: How do you keep in contact with employees and customers when everyone is working remote?
Lott: Our sales people normally visit our customers face to face. In these times, they’re doing it over Zoom calls. We have a large call center staff to take incoming calls. We communicate outward through email.
We created SanMar U to educate customers about things like factory and product information. We want to help them become experts on things like Jersey knit or sustainability means for an apparel product. It’s also been a valuable storytelling piece for us on Instagram and Facebook.
Mainwaring: What would you say to companies questioning whether they should invest in purpose, sustainability or impact work?
Lott:The world is accelerating. This change is happening. Whether we like it or not, customers, employees and other stakeholders expect business leaders to be positive participants in the world. If we don’t do our part, people will choose to work with companies that do.
Mainwaring: What is your hope for the future of business?
Lott: When you align economics with positive change, you can move things in a powerful way. Think about what industry has been able to do with a capitalist mindset. If we combine that with purpose, we can generate so much good. That gives me hope.