New questions are emerging about changes at Filson, the 124-year-old Seattle-based apparel maker, as more layoffs and prospects for a public offering have come to light.
On Monday, Filson’s Texas-based corporate parent, Bedrock Manufacturing, confirmed it laid off 56 workers in July at Filson’s Seattle-area operations. Thirty-eight of those were in manufacturing jobs at the Kent facility Filson opened just last summer.
But Filson’s cuts have actually gone deeper. On Friday, Bedrock confirmed it also laid off 25 local union production workers in May, as well as 37 union production workers and two nonunion production workers in 2019, for a total of 102 production cuts in two years.
That leaves Filson with 123 local union production staff, or a little over half of what it had in 2019, according to the United Food & Commercial Workers Local 21, which represents Filson’s local production workers. (Filson also confirmed recent corporate layoffs, including 18 positions in March and an unspecified number in June.)
In a statement Friday, Filson CEO Paolo Corinaldesi appeared to link the cuts to the difficult business environment, saying “we have had to make organizational changes that will make us more streamlined and efficient to meet the challenges we face today.”
But some industry insiders wonder whether the cuts may also be related to another piece of Filson news: Bedrock, a privately held investment firm that also owns high-end watchmaker Shinola, appears to be considering plans to take itself public.
According to online job postings at both Filson and at Detroit-based Shinola, Bedrock seeks a chief financial officer with experience in, among other things, “leading a company through [an] IPO.” An IPO, or initial public offering, allows privately held companies to raise capital by selling shares on stock exchanges.
Both the layoffs and the CFO job posting have raised questions about Filson’s future in the Seattle area — and about where it makes its famously high-end apparel, bags and other gear.
In a statement Monday, Corinaldesi had insisted that despite “the difficult decision to reduce positions in our Seattle and Kent manufacturing facilities in recent weeks, Filson remains committed to manufacturing our core heritage styles in our Washington facilities, just as we have for decades.”
To be sure, the pandemic has led to layoffs across the manufacturing industry. In the personal luxury goods market in particular, overall sales fell 23% last year —the first contraction since the Great Recession, according to Bain & Co.
But as recently as January, Filson boasted of strong results despite the pandemic. In early January, shortly after arriving as CEO, Corinaldesi said Filson’s sales “are up 15% from a year ago” and that certain categories, such as outerwear, “are up 16%, so it’s quite remarkable to experience double-digit growth in a tumultuous year,” according to an article from Women’s Wear Daily carried on Yahoo Finance. “We also see a huge opportunity with international expansion,” Corinaldesi added.
And in the recent job posting, Bedrock said it was seeking someone with “prior experience as a CFO in a fast-growing, pre-SPAC/IPO company that has experienced rapid growth.” (A SPAC, or special purpose acquisition company, is a public company created to acquire another company.)
Changes were afoot at Filson well before the pandemic.
In 2018 Filson closed a Post Falls, Idaho, production facility, according to industry officials who asked not to be identified because they were not authorized to speak to the media. According to a Seattle Times report from 2015, Filson had 70 workers there.
Bedrock did not respond to a request late Friday to confirm the Idaho closure. But a 2018 post on the site Cyber Auctions showed hundreds of items, including sewing machines, for sale from the “Filson Idaho Sewing Manufacturing Facility.”
There are other signs that Filson may be permanently shrinking its local manufacturing footprint, industry officials say.
Filson is reportedly selling off many of the sewing machines and other equipment used by recently laid-off local workers, industry insiders say.
Also, many recently laid-off Seattle-area Filson workers were the kind of highly experienced, highly skilled employees who would have been crucial to continued or future manufacturing, industry insiders say.
And even before the layoffs, Filson, which had long touted its American-made products, seemed to be shifting more production overseas.
As recently as 2015, according to a Times report, Filson did 90% of its production in America.
Today, many of the high-end products sold in Filson’s posh Sodo flagship are imported — including its $395 Skagit Rain Jacket (Bangladesh); its $395 Cover Cloth Mile Marker Coat (Sri Lanka) and its $250 Fleece-lined Wax Jacket (Peru).
Industry officials say shifting to lower-cost foreign factories is often an inevitable consequence of rapid expansion in manufacturing sectors such as apparel.
Corinaldesi on Friday would say only that “a large share of Filson products are made in the U.S.” And, to be sure, on a recent day this week, around 30 employees could be seen working in the Filson production area off its flagship lobby. But Corinaldesi also acknowledged Friday that the location of Filson’s production “could vary from season to season.”
As long ago as 2016, Bedrock was doing enough production and sourcing offshore that federal regulators “raised concerns that certain marketing materials overstated the extent to which certain Shinola and Filson-branded products, including, but not limited to, watches and certain leather goods and bicycles, are “made” or “built” in the United States,” according to a 2016 letter from the Federal Trade Commission to Bedrock. (“As part of Bedrock Manufacturing, Filson complied with the FTC’s inquiries,” Corinaldesi said in Friday’s statement.)
Industry officials also say the layoffs and greater offshore production might also square with plans to take Bedrock public.
“They’re trying to make their balance sheet look as profitable as possible, because like that’s what an investor … is going to want to see,” said an industry official. “So, you know, cut your overhead, cut your production costs.”
One of those investors, presumably, is WP Lavori, an Italian firm that last year took a 10% stake in Filson in return for a “multimillion-dollar” investment, according to a Filson news release. Corinaldesi had worked with WP Lavori as a “global strategist.”
Bedrock downplayed the prospect of an immediate IPO.
In Friday’s statement, Corinaldesi said only that “we expect our new CFO to be with us for many years,” and that IPO experience was part of “a wide range of experience and skill set” the company sought.
In 2016, Bedrock founder Tom Kartsotis said he wanted to take Bedrock public within five years, according to Inc. magazine.
For now, people in the industry say they’re on alert for more Filson moves — including layoffs of skilled production workers, which are in short supply. As one apparel industry official put, “there are other manufacturing places here in Seattle that are looking for workers.”