Ethics the best marketing technique
Like most businesses, Maggie's Functional Organics of Ypsilanti, probably the best-known apparel company based in Michigan, didn’t have an easy time of it during the Great Recession. One of its most important markets are the major corporate retailers, and corporations across the board were on the ropes in 2009 — so much so that Maggie’s sales dropped 22 percent that year.
“We leveled off the next year and now we’re back to growing our sales,” said Bená Burda, who founded the company in 1992.
“We’re not growing at the rate we were before, but we’re growing again and we feel very encouraged by that,” she added.
Burda (her first name is pronounced “b-nay”) has put together the nation’s longest-surviving producer of clothing made with organic fibers. It also has another first, as of 2010: It’s the first manufacturer in the world to sell clothing that is independently certified to a new standard for fair labor practices and community benefits.
Those will be among the experiences she will recount as the keynote speaker at the Grand Rapids Business Journal’s “Top Women-Owned Businesses: A Celebration of Women Entrepreneurs” luncheon on March 2 at Frederik Meijer Gardens & Sculpture Park.
“We obviously sell to LOHAS,” said Burda. That stands for “lifestyles of health and sustainability,” and Maggie’s typical customer is a woman, 35 to 55, who “raised her kids on organic food and now she’s looking beyond the label or behind the label — really motivated to purchase things that she feels good about, that she feels in some way enhances existence on the planet.”
Since the recession, people in general have less discretionary income, she said, but the type of people who are Maggie’s customers are probably going to be even more careful about what they buy, “and make more thoughtful decisions with their purchasing dollars. So we are very optimistic about the future and feeling really good about the decisions we’re making,” said Burda.
Launching any new business in this economy is a challenge, she said, but with courage and honesty, success is possible.
“If you market your products or service using the truth, then it will set you free,” she said. “There is an honor in business that is really there and that people will gravitate to.”
“If a LOHAS consumer feels like she’s been lied to, she will turn her back on a brand forever,” said Burda. “I would encourage any new business owner to really think carefully and lead with their ethics, their motives for being in business, and really speak the truth.”
Ethics in business can be a somewhat slippery issue, but Burda is armed with a good sense of humor: “I’ve been swimming upstream for a long time,” she cracked. However, she also is a person to be reckoned with, as one of her former suppliers learned the hard way.
Socks are the biggest share of Maggie’s line, and over the past 18 years, Burda has worked with several U.S. companies that make socks, one of the few types of apparel still actually produced in the U.S.A. One of those suppliers — ex-supplier, now — used to tease her for spending too much on raw materials for socks. But that wasn’t the reason she fired him.
One year she went to the MAGIC Show in Las Vegas, the major trade show in North America for the apparel industry. Friends there told her, “Go see your supplier’s booth.”
He was exhibiting a line of “organic” socks under his own label, a knock-off of socks he made for Maggie’s, but “he used the same marketing story as we did — our entire thing.” Even the brand name sounded like a knock-off of Maggie’s Organics.
The apparel industry “is known as a knock-off industry,” she said, but this seemed a bit too much. She chose not to sue because “I didn’t want to be in court the rest of my life.”
“What we sell is, who makes our products and how we put our production team together, and how you can be assured that there is not only quality, but that human rights are valued. So for someone to take that entire story and make it his own was really disconcerting to me,” she said.
In the early 1990s, Burda was an executive with a company that made organic tortilla chips. She was working with an organic corn farmer in Texas to improve the quality of his blue corn crop. He decided that adding cotton to his organic crop rotation might change the chemistry of the soil and enhance the blue color, and it worked. But he also wound up with 200 acres of certified organic cotton, which he expected Burda to sell. She then researched cotton and learned that it is grown on 5 percent or less of the world’s cultivated land, but uses a much larger proportion of the world’s pesticides and insecticides.
She and a partner who had also been with the tortilla chip company left it in 1992 to start Maggie’s Organics. They planned to make organic T-shirts.
Making T-shirts turned out to be complicated, but socks were easier to make and sell. So in 1992, they went to the Natural FOODS Expo with organic socks, and eventually got Maggie’s production sold in organic food stores around the U.S. Eventually, she bought out her partner and soldiered on, a neophyte in the apparel industry in a niche by herself.
Burda had a lot of T-shirts made under contract in the U.S. in the mid-1990s, but “between 1998 and the year 2000, we lost five contractors to bankruptcy” due to declining orders across the board. She also was having high-quality button-down Oxford shirts made in Virginia, and had just delivered $50,000 worth of organic cotton fabric to the plant.
Burda recalls that “the guy called me up on a Friday and said, ‘I’ve just sold my equipment to China because I can make more money selling the equipment than I can paying my workers to finish your run. Come get your fabric.’”
At the same time, T-shirt manufacturers she was using in other southern states also were suffering, providing poor quality and unable to fill her orders on time. Burda spent time in those factories, trying to figure out the problem. What she learned was that the workers, mostly women and usually poor and under-educated, were paid by the piece, so they opted to stay at the same repetitive job for years, to become more efficient and make more money. But there was a cost to those workers in terms of ergonomic injuries and a feeling of disenfranchisement from the companies whose labels they sewed.
“It was eye opening to me — that these women were getting paid such ridiculous wages and working so hard and doing the same job year after year. That’s when I said there’s got to be a better way,” said Burda.
“So we had to go offshore,” said Burda — but with the goal of using factories where the workers have a voice and where the concept of “fair trade” means something.
“To me, it means treating people with respect, making sure that wages are livable wages, not just minimum wages, because in many foreign countries, of course, minimum wages are slave wages,” said Burda. It also means children are not exploited, and working conditions are safe for all workers.
Maggie’s Organics fair trade concept is a “pretty revolutionary idea in the apparel industry,” she noted, but now its suppliers include three worker-owned cooperatives that are “doing good business and are making money, sharing profits.”
She admits that perhaps every co-op isn’t run exactly as it should be, but at least now it makes the playing field for the workers a little more level to begin with.