Everyone knows that it is impossible to run a thriving company with union workers in New Jersey. Right? Well, Mitch Cahn, the founder and president of Newark-based apparel maker Unionwear, will beg to differ.

Unionwear‘s customers include the U.S. Army, Marines, Coast Guard and Air Force, along with presidential campaigns and big companies – like Budweiser brewer AB InBev and Chevrolet builder General Motors – that use Made in America as a selling point for their own products.

Cahn recently spoke with NJBIZ about the company, its plan for growth and what it’s like running a union manufacturing shop in the Garden State.

“We do everything from scratch right here in our facility in Newark,” Cahn said. “We have a 70,000-square-foot facility with 160 union employees here, and we manufacture for businesses, organizations and the government—anyone who is looking for made in the U.S.A. products. For most of our products. We’re the only place in America where people can get the product manufactured from scratch.”

While Cahn acknowledges that the costs of doing business in New Jersey can be onerous – including paying union wages – he has a nuanced view of the challenges he faces and the advantages the state has to offer.

What follows is an abridged version of that discussion. The questions and answers have been edited for length and clarity. A video of the full interview is available at NJBIZ.com/njbizconversations.

NJBIZ: On this question of the Made in the U.S.A. label, and the interest in it—is that something that that the companies themselves want or are trying to feed off? Or is it something that consumers want? There’s sort of a patriotic feeling watching American teams or American athletes [in the Olympics or World Cup] doing great things. Is that where the demand comes from?

Mitch Cahn: So, I would love to say that patriotism sells Made in U.S.A. products. I just haven’t really seen it happening. I have not seen a lot of brands pushing themselves as Made in U.S.A., and that are really moving the needle for retail sales of their product. We are seeing more brands getting stuff made in U.S.A. just because of what’s going on with supply prices in China and import costs going up. So, it makes more economic sense to make a lot more products here. What we see is really businesses making a business, a B2B decision. They don’t want to have this whole message about how they’re supporting the U.S. economy and U.S. workers and then, next to their logo they see Made in China or somewhere else. So that’s what’s driving it. It’s really starting with the businesses.

And also, there are lot of nonprofits that do that as well, because they’re looking to avoid any connotation that it could possibly be made in a sweatshop or made in a place where there could be labor violations, things like that.

Q: So, retail consumers are still mostly price sensitive, is that what drives their decisions for the most part?

A: Yes, I believe that to be the case.

Q: Now I read an interview you did a couple of years ago in which you talked about how the company grew. You would find bankrupt textile companies and buy them relatively inexpensively, because, as I think you put it, they didn’t go bankrupt because they had no sales. They went bankrupt because they didn’t have enough sales. So, you were able to get these assets relatively inexpensively, and, at least at that time, you didn’t have any bank debt. Are those things still the case. Are you still doing those things now?

A: Yes, that is still what we’re doing. And we’re seeing a lot more companies over the last year or so go bankrupt than we normally see. We have been just trying to add to our product line, trying to add to our customer base by picking off some of the customers of those companies, some of the machinery of those companies and adding product lines there. But a lot more of our growth in the next few years is going to come from automation and we’re not able to get that equipment from companies that didn’t make it, because there really hasn’t been a lot of automation in the textile business. It’s the last big industry to automate and it is now coming our way. There’s a lot of robotics. There’s a lot of artificial intelligence that’s available. A lot of machine learning there. And we are at the forefront of it, because we have to be. We’re running a union shop 11 miles from midtown Manhattan. So, our labor cost is going to be higher than anyone else, which means we’re going to reap the benefits of automation before anyone else will.

We’ve gotten some help from the NJEDA [New Jersey Economic Development Authority] with this new MVP [Manufacturing Voucher Program] grant to buy robotic equipment. So, we’re going to have installed here, in 2024, the first fully automated tote bag production line in North America.

Q: Well, you actually anticipated the next question, which was again from that same interview, where you talked about technology and how you were going to use that. What I hear you saying is that it’s a lot of robotics, and a lot of automation of the assembly process. Is that what technology is doing for you?

A: So, the technology is definitely improving our ability to remain cost competitive. Because as costs go up in New Jersey, we’re able to stay ahead of that by investing in automation and requiring fewer people to do the same work. With labor the way that it is now, it’s hard to hire people.

Our growth is going to have to come from automation, where artificial intelligence comes in. We’re using that for product development. Since we can make anything here, you can make a trillion iterations of a tote bag or a baseball hat, and we can use artificial intelligence to create products for us, based on the demands of consumers and based on what’s out there—create images, create product pages. And it’s a lot easier than trying to do that manually and guessing what customers want.

Q: Now, you’ve also been an advocate of reshoring; that is, bringing manufacturing back to the United States. There was a lot of talk about that, especially during the pandemic, when the supply chains were disrupted, and we realized we couldn’t get all the things that we needed to fight COVID because they really weren’t available. How is that process going now? Is manufacturing back in New Jersey?

A: So, I really feel that a lot more attention is being paid to manufacturing in New Jersey. I feel that the supply chain is working a lot better for New Jersey. But the threat of supply chain disruptions actually benefits New Jersey more than most other states, because we have a population density here, and we have access to the ports here. If companies want to bring in raw materials or partially assembled items, this would be one of the best places to do it. Where we last ran into each other was at Manufacturing Day, and you could see over a thousand manufacturers showing up for this one event. There was a demand for an event like that that I’ve never, never seen before. So, I’m just excited about the prospects for manufacturing here.

Q: OK, since you are a manufacturer in New Jersey, I’ll ask you—what is it like doing business here? We hear all about the challenges. You mentioned the costs of being a union shop 11 miles from midtown. Manhattan. Do you ever think that maybe it’d be better if you just went off to South Carolina, or Mississippi, or Mexico or China? What keeps you in New Jersey?

A: What keeps us in New Jersey is really the population density, the number of skilled employees that are here. We have an endless stream of people who are looking for work in this area and you don’t have that if you go to a rural area. If we’re going to move to the South … you have a limited number of people that will come to work for you. And while things like the minimum wage might be close to half of what it is here – actually, it’s going to be less than half in January in most states in the Southeast – you can’t get people for that wage down there, because there are just not enough people to work. So, the wages bid up to close to what they are in New Jersey. There are a lot of other things that are more expensive here. Health insurance, workers comp, rent is ridiculous right now because there’s just a shortage of industrial properties. So rents have gotten bid up. Energy is also very expensive here.

But the fact that we’re able to hire people, and the fact that we have access to great transportation, great port and great people who can help us who live in New Jersey or live in New York City is way more than worth the extra expense of being in New Jersey.