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New Era continues move in fresh direction

Caps are big business for Peter Augustine, the president of New Era Cap Co.

The cap and apparel manufacturer has been growing in Western New York after deciding in 2010 to close an Alabama factory and shift that work to its plant in Derby, which now employs 407 workers. Its headquarters on Delaware Avenue in Buffalo also has been adding jobs.

The company is a global brand with its high-profile clients including Major League Baseball, the NFL and the NCAA plus close ties to popular music culture.

Augustine spoke with The Buffalo News about New Era's local operations and its plans for the future.

>Q: How are New Era's local operations doing? How has the consolidation worked out?

A: Locally, we've got the two facilities here in Buffalo. With our Derby facility, when we went through the difficult task of consolidating manufacturing into that facility, we made commitments to increase our employment levels, which we did. In fact, I think we're a little above where we thought we'd be.

>Q: What is employment now?

A: We're around 400 employees in that building now. That's up probably 125 to 150 from when the consolidation took place. We've also invested considerably in the facility in the form of machinery and some different systems that are helping from an efficiency standpoint.

And we've worked with the union there to address some specific efficiency concerns we had. We've seen a lot of progress on all fronts and we're pretty excited about how all that's come together. We look forward to continuing to invest in that facility.

>Q: Can you give an example of how efficiency has improved or how much you've saved by the consolidation?

A: We're employing some different lean manufacturing techniques. We aren't completely done with that project, but in the first part of the production line, we've been able to do some things and put some systems in place that allowed us to reduce inventory levels, which increases the speed of throughput. If you have less inventory, you can get more product through quicker than before. We were helped by the state in some of these projects.

We aren't completely done with that, but we're happy with the initial results.

Also, when we vacated the facility and [moved our headquarters] downtown, that freed up some space to re-layout the manufacturing floor. While that's not necessarily a new thing, that certainly helped as we added new people into the process.

>Q: So it still makes sense economically to make caps and products in the United States?

A: That facility has done everything we have asked. The employees definitely embraced the challenge of thinking progressively to make sure we can try to maintain that facility as long as possible. We're very happy with the results we've seen over the last couple of years.

>Q: What about the headquarters?

A: We're sitting at about the five-year anniversary of us being here at 160 Delaware Ave. We're doing some additional reconfiguring to support some additional hiring that's going on at the global headquarters. We've added close to 100 people in the last year.

Directionally, we're looking to add another 100 people in this office.

>Q: How is the cap business? I know it took quite a hit during the recession, especially with your small retailers.

A: We're starting to move in a better direction. With those small businesses, I think that's probably created a permanent change in the landscape of retail that we're dealing with. The bigger guys have gotten stronger, which is OK because we have good relationships with Lids, Champs Sports, Foot Locker -- these big national retailers -- as well as the strong regional guys like Hibbett Sports and Modell's Sporting Goods here in the Northeast.

That certainly is moving in a better direction and I think people are starting to reach into their pockets again. We saw that this past year. Obviously, with so many people still looking for employment opportunities, that's suppressing the economy as a whole. But overall, we see it heading in a good direction heading out of 2011.

>Q: What does it mean to New Era to get more of your sales from big-box retailers?

A: New Era is known for a lot of unique products in the marketplace. When you've got individual retail stores that you service, we've always allowed them to tell a unique product story in each of their stores.

As we get into a bigger account relationship, what we have to do is be mindful of how to give them the right level of product diversification. A lot of the conversations we're having right now with some of the bigger guys is how they can make their buying as regional, or as locally focused, as they can within the landscape of a large retail operation.

We've always worked from that perspective, so I think it's more getting them lined up with that possibility. It's a big challenge, but one that, if they want to try to make sure they're locally relevant for a store that's in Buffalo, like a local retailer would, it's a challenge that can bring them a lot of opportunities if they figure it out.

>Q: What products are selling now?

A: The big story in the head wear business is the snap-back, which is our 950 style. There's a big retro style pointing back to the mid-'80s. That's the old fashioned plastic strap back adjustable cap. For some reason, that's gained a lot of momentum in the market. It continues to be a really hot trend and, during 2011, definitely served to invigorate the market.

>Q: Your NFL contract is on the verge of kicking in. What are your expectations there?

A: We've got a good base of business booked for our first launch, which is going to be centered around the draft. If Andrew Luck goes No. 1, he's going to be the guy officially wearing that New Era draft product.

We'll follow that up with product that's focused on the training camps. Our big launch will be for the official on-field product that will hit in the August time frame, ahead of the regular season.

We really feel we're going to change the look and feel on the sidelines and bring some real authenticity there.

>Q: What are your plans for your own retail stores?

A: We're looking to get more aggressive with New Era-specific retail. We've got 12 stores that are open right now. Five years ago, we opened our first flagship store in New York City. Last year, we added Tokyo, Hong Kong, Los Angeles and Chicago to the mix.

What that allows us to do is basically allow us to tell the full New Era product story.

>Q: Are you looking to add more stores?

A: We have a plan, directionally, to get to 100 stores over the next five years, focused mainly on North America, but we do have activities going on in other international markets. We're about to open a second store in London.

>Q: Is that causing any issues with your retail customers? Are they unhappy that you're moving into direct competition with them?

A: We're not looking to open a store that replicates the New Era head wear story that our key accounts do so well for us. We're looking to use the New Era stores to start driving a bigger story on New Era-branded product that doesn't necessarily fit into the landscape of our retailers, who are kind of more sports-themed than where our branded product is heading.

We're obviously sensitive to the great relationships we have and we're not looking to do anything with this initiative that's going to put those in a bad spot.

>Q: What are you doing internationally?

A: International is really where we saw some growth last year. We're really still pretty much in the development stage in almost all of our international markets, so we see a lot of upside.

We had a strong year in the European region. We purchased a company in the early part of 2011 in Brazil. We're excited about what's coming to Brazil, with the World Cup and the Olympics coming in the next couple of years.

Q: What do you bring to the table internationally?

A: Internationally, I think New Era is really an Americana story. Americana, as a brand story, plays well in a lot of international markets. We're able to go in and bring an authentic product story that's U.S. sports-based. So we do pick up people who are following that internationally, but that's a small part of the business, even though the leagues are trying to grow and expose their brands in those international markets.

The unique thing that we bring is really that lifestyle story, where somebody might not be a Yankees fan, but they might be a Jay-Z fan or they might just like the NY or that it stands for New York or that the LA stands for Los Angeles. That's an America story. That's really what's helped us tell the story as we go into new markets. But we also try to be authentic in those markets, so we've established different soccer relationships in Europe or Brazil that help to tell that same story that we're telling on the U.S. side with U.S.-based sports.