Business leaders who have gone through times of intense change and turmoil before already know that having a strong, guiding North Star is necessary to survive and, ultimately, thrive. Through pivots, customer and employee communications and considerations, and tough calls on the bottom line, companies with a clear mission and purpose as that guiding force have proven to be more resilient through downturns and crises.
Certified B Corporations are companies that have a verified positive impact on people and the planet. Many B Corps, which are held accountable by the nonprofit B Lab, have been exemplars of how to address crises with stakeholder considerations beyond their shareholders. For North Carolina-based B Corp TS Designs, the pandemic has provided what CEO and president Eric Henry calls “a second time at bat at building domestic, transparent, equitable supply chains.”
“I think COVID is impacting our country so much worse because of our dependence on global supply chains and our failure to take care of social, racial, and other inequities. We can do a better job to build a resilient supply chain to be better prepared next time,” Henry says.
For Henry, the first time “at bat” was when the North American Free Trade Agreement took effect. In the wake of that international trade agreement, TS Designs lost many clients to cheaper labor abroad and had to downsize the company considerably. In a recent interview I conducted as part of my research on B Corps, I spoke to Henry about how his experiences with NAFTA have influenced his approach to COVID—and the role his company’s purpose and mission played in guiding its path forward.
Christopher Marquis: You mention on your website that January 1, 1994, was really the turning point for your “journey into sustainability.” Tell me what you mean by that.
Eric Henry: A lot of why I’m here today and what I do centers around January 1, 1994, when NAFTA was enacted. I started my business while I was at North Carolina State in 1978 with my business partner, Tom Sineath. We started out screen printing T-shirts. It was a way to make some money while I was in college. We quickly grew to a 20,000 square-foot location with clients like Tommy, Nike, GAP, Polo, and Adidas. We had 100-plus employees. The banks loved us. The business was growing. Then when NAFTA rolled in, we rapidly lost clients and had to lay off 80 of those employees. The brands we worked with could not get out of the country quick enough.
After that, brands said, “Well, they make it a lot cheaper overseas,” and consumers said, “Hey, we can get a lot more cheap clothes.” I think, looking back, one of the failures we made was we forgot to focus on the human aspect of who was getting left behind and only focused on the dollars being made or saved. To me, that was a wake up call, my epiphany of the values of a triple bottom line of people, planet, and profit.
It’s not as if we weren’t following some of these practices before. We always cared for our employees since day one in business. We consider them the most valuable asset. We’ve always offered some type of health care and never paid a minimum wage—always a living wage. And I’ve always believed in caring for the environment. But when NAFTA hit and destroyed our business, we spent about two years kind of wandering out in the desert before we came back and changed our mission to explicitly operate a successful company looking after the people, the planet, and the profit.
Marquis: When COVID hit, how did it affect your business and what was your response?
Henry: Prior to COVID, our business was B2B. We are fortunate that we have a contract with the military. We have a facility that does garment dyes, and we dye berets for the military. So when the shutdowns started, we were able to get this exception from the military to keep that part open.
But even still, our other clients, like restaurants, bars, conventions, trade shows, were starting to crater in. We jumped on the federal money to patch up some holes. We hung onto our employees as long as we could, then had to furlough everybody except two people, including me, to continue to run this one beret-dying program.
Since then, we’ve done a couple of things. First of all, we started making face masks. We have a big network of cut-and-sew folks. So, we said, “We’ll make 500 masks and see what it does.” The day we launched, we sold 500 the first day. So, we’ve ramped up since then. We’re producing different models, including custom masks. Most of the masks are upcycled from our T-shirts.
We also developed a brand about two years ago to be a direct consumer e-commerce brand, so we started selling masks through that platform. We have been investing a lot of money in this, and it’s paying off. We just brought a brand manager online, and we’ve brought on a new marketing person as well.
Marquis: What have you learned from these experiences?
Henry: We believe in the things that we invested in over the last 12 years—what I call domestic, transparent, equitable supply chains. Now we can go to the farmer that grew the cotton and we control that supply, as we say, from dirt to shirt. That resonates for some people.
I like to tell people, “COVID to me is a second time at bat at building domestic, transparent, equitable supply chains.” Because I did that after NAFTA with Cotton of the Carolinas, which was an initiative to produce T-shirts with cotton grown locally here in North Carolina, creating a totally transparent supply chain. But NAFTA only impacted a sector of people. If you weren’t in the textile industry and you were just a consumer or a retail brand, you’d likely think, “Hey, I can get stuff cheaper now. Let’s go with it.” You may not be connecting with it in any other way. COVID, as we know, has impacted everybody, either health-wise or business-wise. So I now have a greater audience to connect with to say, “We’re going to have another global disruption.” It might be a pandemic. It might be a trade war. Hopefully never have a physical war, but I mean, it’s going to happen again.
I think COVID is impacting our country so much worse because of our dependence on global supply chains and our failure to take care of social, racial, and other inequities. We can do a better job to build a resilient supply chain to be better prepared next time.