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TheStreet Open House

#DigitalSkeptic: U.S. Sheep Farmers Shears Global Supply Chain

NEW YORK (TheStreet) -- When it comes to pure new-age business disruption, it may turn out there will be no beating driving 12,000 head of sheep through the Montana wilderness.

"It's an amazing thing to see 35 dogs and 15 men on horseback driving a massive herd 60 miles through the Gravelly Range," said Robert "Bernie" Bernthal, president of a brand-spanking-new domestic woolen apparel startup called Duckworth.

"But we own the largest flock of fine wool sheep in the United States -- and it lets us rip 25,000 miles out of the global apparel supply chain."

Bernthal has spent the past few weeks educating me on how his five-person, Bozeman, Mont., business plans to give the world's clothing manufacturers a run for their money when it ships product early this summer.

Bernthal is betting that so-called revolutionary manufacturing technologies such as 3-D printers, low-cost robotics and even big data are beside the point. What Duckworth is ramping up to prove is that what will really lower costs while improving quality is having old-fashioned control of everything from the fibers that go into garments to where the garments are made and, finally, where they are sold.

"We are a high-end retail apparel company that also happens to be owned by sheep farmers," Bernthal said. "And by connecting the front end of the business to the back end, you can utterly change the way woolen garments get made."

Caring about the fiber
What's rich for investors in the evolving manufacturing world is that Bernthal's background is not farming or even manufacturing. He's a hard-core brand marketing professional who cut his teeth with brutally competitive outdoor sports industry brands such as Swatch and K2.

"I am a marketing and branding guy who fell in love with wool," he said.

Bernthal's big insight was realizing that wool itself needed a makeover. He estimates that a low seven figures has been spent reinventing how wool is processed, spun and turned into garments.

"Wool is wonderful, magical stuff, but it has stayed essentially stationary over the last several decades as a fiber," he said.

Duckworth has dug deep into such minutiae as the relationship between the length of the fibers of wool and the garment it will be made out of. Too-short fibers tend to itch in garments close to the skin. And too-long ones tend to not to last in clothing aimed at sports or exercise. The balance the company must strike will be in developing the right kind of fibers that can improve performance but still can be spun and manufactured with modern equipment.

To pull of that feat, Duckworth makes a point of keeping its labor as close as possible.

Their line of shirts and base layers are made in factories in North and South Carolina. And that type of proximity will be key in making Duckworth's clothing unique. "That is the kind of thing we spend a lot of our time understanding," said Graham Stewart, who runs development at the firm.

Now comes the kicker for investors wary of watching whipsawing commodity prices decimate manufacturers: By controlling the wool directly, Duckworth can remove the volatility of what it pays for wool. "It is really like wine, where we are stewards of the land and then each vintage is unique," he said.

"This is not a couple of guys sitting around making an app."

King of the woolen world
Of course only time, and markets, will tell if Bernthal can make good on the promise of Duckworth. First off, high-end wool is a small world. The company estimates that the total market for better woolens is just over 8.5 million garments per year. That's a fraction of the 250 million woolen pieces sold each year.

And Duckworth products will face a tough fight this summer when it squares off against major entrenched wool brands such as Steamboat Springs, Colo.-based Smartwool or New Zealand's Icebreaker.

But Bernthal has a feeling that once consumers see how he has disrupted the global supply chain to make his products unique, they will feel -- and pay for -- the difference.

"Once the customer gets what it's like to know the entire story behind what they are wearing," Bernthal said, "we think the story and the quality will come through."

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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