You are trying to build something in an industry where the market keeps rewarding the cheapest option. You have run the math. You cannot match the price. And every time you try to compete anyway, you end up either losing the margin you need or losing the contract.

Most founders in this position keep trying to close the price gap. Kathy Cheng went the other direction entirely.

Kathy is the founder of Redwood Classics Apparel and president of WS and Co., a family-owned Canadian garment manufacturer that has been operating for nearly 40 years. In 2008, after the offshore wave shrunk her family's factory from nearly 500 employees to around 100, she and her father made the decision to restructure to 40 people and go all-in on made-in-Canada. She built a Tier 2 supplier model inside the $28 billion branded merchandise industry, a four-part value proposition that removes price from the conversation entirely, and an internal supplier diversity policy where over half of factory spend goes to women-owned and minority-owned businesses.

What We Break Down:

• The constraint-based positioning decision: How Kathy identified what domestic production made structurally possible that offshore could not replicate, and built her entire value proposition around those four things instead of price.
• The Tier 2 distribution play: Why she sold through branded merchandise distributors rather than direct to corporations, and how that decision got her into a $28 billion industry without building a sales team from scratch.
• How Redwood Classics was actually born: A customer tracked down the factory through a CA number on a label to find a sweatshirt they had washed a million times and could not find anywhere else. What that call told Kathy about who was actually buying and why.
• Certification as a capacity tool: Why she pursued CAMSC certification not primarily for business leads but for executive education at Tuck Business School at Dartmouth, fully funded by GM, and what that reframe means for founders eligible for certification right now.
• The factory floor moment: What she felt standing among her makers when the word got out the factory might close, and why that emotion became the entire strategic foundation of what she built next.
• The internal diversity spend commitment: How Kathy operationalized a policy where over half of her factory's spend goes to women-owned and minority-owned businesses, and why she believes the ultimate goal is a world where programs like this are no longer necessary.

This episode is for you if you are running a product or service business where price pressure never lets up, if you have been wondering whether supplier diversity certification is worth pursuing, or if you are trying to find a distribution strategy that does not require you to build a full sales infrastructure from scratch.

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