Paddi Murphy to return manufacture of it premium line to the U.S.
Dennis Murphy, founder and president of Edina sleepwear maker Paddi Murphy, has become a reverse outsourcer.
He's moving manufacturing of the company's premium, moisture-wicking Softies sleepwear back to the United States from China.
Four pajama lines have relocated so far, to factories in South Carolina and Los Angeles, Murphy said. That accounts for about a quarter of Paddi Murphy's production.
He hopes to hit 50 percent by the end of this year or the first quarter or 2013, and one day make most of the company's moisture-wicking products in the United States. The Softies line is made from a patented performance fabric that the company says keeps the wearer cool and dry. It's designed for women who experience night sweats and hot flashes from menopause, chemotherapy, pregnancy, diabetes or slight temperatures.
Production costs are 30 to 40 percent higher here because of higher labor costs, Murphy said, but many customers are willing to pay more for something produced in this country. And domestic production has helped boost sales, which topped $1.2 million last year and are projected to come close to doubling this year. Paddi Murphy has four full-time employees and eight commissioned sales reps.
But getting apparel made in this country has been challenging for Murphy. Finding production capacity is daunting in a U.S. textile industry that, according to an industry group, has lost more than half a million jobs and close to 1,000 plants since a surge in Chinese imports began in 2000.
Murphy had hoped to set up production lines in Minneapolis, where his corporate career started in the 1970s at Munsingwear. Murphy, who had once studied for the priesthood, sold lingerie for the company's Vassarette division. He left after a decade to pursue his own apparel-related ventures, leading up to the 2004 launch of Paddi Murphy.
"Just because you want it doesn't mean you can make it," said Murphy, who spent 18 months getting U.S. production going. "I bet we had a thousand 'no's.' Half of those were in Minneapolis. It was really hard but it's getting a lot better now.''
The shift to domestic production is in part a response to growing consumer demand for made-in-the-USA products, Murphy said, a demand that boutiques, catalogs and online retailers that carry Paddi Murphy's products are eager to help meet. The company sells directly through its website as well.
An important label
The new strategy also reflects the family's strong sense of patriotism: Murphy, who served two years in the Army, and wife, Peggy, a self-described "Army brat" who is Paddi Murphy vice president, have a son and daughter-in-law serving in the military in Afghanistan.
"I never thought a made-in-USA label would mean so much as it means today," Dennis Murphy said. "We're hearing it more from the grass roots. Our customers are really backing the idea, which helps a lot."
Murphy's son, Paddi Murphy vice president Tim Murphy, said moving its Softies lines back to the U.S. has brought a number of benefits, including shorter production cycles, higher quality and reduced inventories.
Catalog sales have taken off in the last year as the company has developed specific designs for each catalog's customers, Tim Murphy said. Catalog and private-label sales account for a third of today's sales.
"Our long-term strategy is to increase our Internet and high-end women's boutique sales, which is where our margins are," Tim Murphy said, noting that a revamped Paddi Murphy website will debut later this year.
The future also includes a leadership transition beginning next year, with Tim Murphy taking over as president and his father in a vice president's role.
Jennifer Andres, general manager at online retailer Sleepyheads.com, said Paddi Murphy is helping meet customers' demand for U.S.-made sleepwear.
"Customers are always looking for products that are made in the U.S.A.,'' Andres said. Paddi Murphy is ''definitely innovating in moving it here sooner than a lot of companies."
The expert says: Mike Felmlee, who has consulted with the Murphy family as CEO of the Prouty Project, a strategic planning consulting firm in Eden Prairie, said domestic production will benefit Paddi Murphy as it moves to increase Internet sales of a niche product.
"When you start using the Internet as an important strategy in your business, it's hard to project demand," said Felmlee, who has consulted with the family on both business strategy and transition planning. "So having more control over that, having the ability to be flexible and nimble, is a real advantage for them."
Felmlee said he sees several factors that weigh in favor of a successful transition for the Murphy family, including strong support between generations, Tim Murphy's strong desire to build the business and his parents' commitment to help without pressuring their son.
"Dennis has this deep knowledge of the industry and Tim is gaining that each and every day," Felmlee said. "Yet Tim has ideas on how to use technology in new and different ways that maybe Dennis isn't aware of. They are a nice complement to each other."