From greenbacks to blue jeans: A Chicago apparel story

November 27, 2016 01:00 PM
A bond trader walked away from his firm to focus on one goal: Making the world’s most comfortable jeans at an affordable price.

A bond trader walked away from his firm to focus on one goal: Making the world’s most comfortable jeans at an affordable price.

From his Chicago manufacturing facility, Rob McMillan isn’t thinking about interest rates or the problems plaguing the German banking center. The former bond trader has one thing on his mind: A fresh roll of technologically advanced denim shipped from Georgia.

McMillian is the founder of Dearborn Denim, a Chicago-based apparel startup. His direct-to-consumer sales platform undercuts the global apparel supply chain and helps fulfill the company’s mission: $45 for a great pair of jeans.

After college, McMillan was a trader at Traditum Group, trading U.S. Treasuries in the overnight markets. “It was off-hour trading in the Asian and European markets. It was a lot of hours,” he says. “I felt worn thin.”

With a background running a silk-screening company during high school, McMillian reconsidered the apparel industry. 

 He leased an old industrial laundry on Chicago’s West side, built a factory and taught himself how to maintain dozens of industrial machines. By March of 2016, he  finally quit trading and starting making jeans.
 
“When I was first getting into this, people said you can’t manufacture [in the United States] because labor is too expensive.”

McMillan wanted to challenge that premise and argues that cynics are focusing on the wrong problem regarding cost structure. “[Labor is] not the problem. The problem is how traditional retail works, and how inefficient it is.”

McMillian says that the global jeans business operates on a flawed supply chain that reduces quality and fuels steep markups. A traditional brand like Levi’s enters a pipeline that can take six months to a year to sell. Many brands typically take a Trans-Pacific freight trip. From there, jeans are sent through the branding process and distributed to big box retailers. Each stage sees markups along the way. 

“Generally, the cost of production for what people are buying for $40 to $60, depending on from where you’re buying them, is around $6 or less. You’re paying for markups; you’re paying for brands,” he says.

Dearborn Denim is different. “We don’t sell to a brand, who then sells to a retailer, who sells to a customer. We sell directly to customers online.”

The direct-to-buyer channel allows them to sell – without markups – “a great pair of jeans for $45.” The product consists of a lightweight stretch denim marketed as comfortable and durable. The material is sourced from West Texas long staple cotton and processed in a technologically advanced denim mill in Georgia. “It’s a superior quality material that people aren’t used to,” he says.

The production is done in Chicago, including the design, cutting, washing and finishing. He says that a $45 pair of Dearborn Denim jeans would sell at retail stores for $180 after markups. 

The company has a broad selection of waist sizes and inseam sizes thanks to the customization of their production process.

“I haven’t found any company that has a wider selection than we do and 

that’s primarily because of how we’re structured. We can make everything right there. Regarding fit, we have very low return rates and very low exchange rates,” he says. “So far costumers love it. If they buy one pair, they tend to come back and buy more. We hear they are the most comfortable pants that they have ever worn.”

“People really love the fact that it’s an American made product. It’s a great experience to build something in apparel manufacturing — an industry that’s been stripped, specifically in Chicago, which used to be an apparel hub,” he says. Back in 1920, about 25% of all clothing sold in the United States was made in Chicago. There are still remnants of that today in tailored suit businesses, but the rest has vanished. 

“Can we convince people to buy a spectacular pair of jeans, made in Chicago, sold directly from the sewing floor for $45? I think we have a good shot,” McMillan says.

About the Author

Garrett Baldwin is the Managing Editor of the Alpha Pages and the Features Editor of Modern Trader. An author and Baltimore native, he earned a BS in journalism from the Medill School at Northwestern University, an MA in Economic Policy (Security Studies) from The Johns Hopkins University, an MS in Agricultural Economics from Purdue University.