Flag Fever Dollars Go to Imports

Nearly 10 months after the terrorist attacks, sales of American flags are still lighting up cash registers. But for some local apparel manufacturers who took a flier on the flag-making business, it’s the twilight’s last gleaming.

They blame a flood of low-cost foreign-made flags that swept them out of the banner trade almost as quickly as they entered it. America, manufacturers said, can’t resist a bargain, even if the Stars and Stripes are stitched abroad.

It’s a familiar story for Southern California’s garment makers, who have been battling cheap imports for years. Still, it rankles industry veterans such as Los Angeles textile maker Ali Zahedi, who figured this was one product on which a “Made in USA” label would give him an edge.

Within days of Sept. 11, he and a handful of other nimble apparel entrepreneurs were producing tens of thousands of car, porch and hand-held flags to feed surging demand. But Yankee ingenuity was soon trumped by globalization as more than 100 million foreign-made flags hit U.S. shores in the last three months of 2001, according to government trade data.

Zahedi and others said profits quickly outstripped patriotism as retailers shifted to cheaper imports.

As if that weren’t bad enough, eagle-eyed flag experts suspect countless foreign-made flags have been passed off as domestic to satisfy some consumers’ desire to buy American.

Flag Fabric Goes Unsold

As flag dealers celebrate their best Fourth of July in a decade and crowds stand to salute Old Glory, Zahedi finds himself sitting on enough unsold flag fabric to give even Betsy Ross a case of the red, white and blues.

“I’ve got 10,000 yards at least,” said Zahedi, president of Lafayette Textile Industries. “Once the imports hit, it was all over.”

Like the rest of the nation, U.S. flag makers were caught off guard by the devastating attacks on the World Trade Center and Pentagon. Despite their link with crackling fireworks and drum-pounding parades, flags are a sleepy trade dominated by old-line companies whose core product hasn’t changed since Hawaii gained statehood in 1959.

The peak selling season begins around Memorial Day and winds down by Labor Day. Presidential elections provide a little fall excitement for the flag industry every four years, but nothing like the outburst of patriotism that swept the country after the attacks.

“At a time when there was nothing in the pipeline, demand just spiked” to unprecedented levels, said Tibor Egervary, director of sales and marketing for Womelsdorf, Pa.-based Valley Forge Flag Co., one of the nation’s largest manufacturers.

Flag dealers ran out of stock within days as consumers snatched up anything red, white and blue. With only five major domestic manufacturers supplying the U.S. market and retailers desperate for the product, quick-thinking entrepreneurs spotted an opportunity.

In the United States, no region was more prepared to pounce than Southern California. Apparel manufacturers here specialize in quick-turn production, churning out small runs of up-to-the-minute women’s fashions at blazing speed, with products going from design to department store shelves sometimes in a matter of days.

Seizing an Opportunity

Compared with a Lycra bikini or multi-pocketed jeans festooned with rhinestones and zippers, a simple rectangle printed with stars and stripes would be a snap, reasoned David Glasberg, co-owner of Vernon-based U.F.N. Textile Group Inc.

Within days of Sept. 11, he had rounded up fabric, found a nearby textile printer to press the design on the material, hired a local plastics company to produce a holder and lined up seven area sewing contractors to begin cranking out porch and car flags--200,000 of them in the first week.

“People think we don’t make things here anymore, but they’ve got short memories,” Glasberg said. “When American industry is called on, we can perform like nobody else.”

But the real engine of global textile and apparel production now lies in Asia, whose manufacturers also had their eyes on the grand old flag.

In 2001, foreign nations led by China exported more than 112 million U.S. flags of all sizes to the United States, virtually all of them arriving during the last three months of the year, according to the U.S. International Trade Commission.

That compares with an average of 2 million annually over the previous five years. Imports are still running strong, with about 9.6 million units arriving in the first four months of 2002. That’s on pace to beat the 14.1 million tallied in 1991 when the United States saluted the troops of Desert Storm.

But the fireworks have fizzled for local producers. Glasberg said customers who rang his phones off the wall immediately after Sept. 11 have defected to foreign suppliers peddling Chinese-made car flags for less than $1 each--20% less than it was costing Glasberg in labor and materials.

He has tried selling his remaining stock of more than 50,000 flags via a Web site but so far hasn’t found many takers. Though Glasberg said he knew demand couldn’t possibly continue at last fall’s frenetic pace, he blames cheap imports for torpedoing what could have matured into a profitable sideline.

Flag vendors said their summer sales are shaping up to be the strongest since the Persian Gulf War and probably will be elevated for years to come as a new generation embraces the colors.

No one tracks domestic flag sales, and the industry is notoriously secretive. Still, Fred Bretzloff, president of the National Independent Flag Dealers Assn., said that his company’s revenue this season is up 50% from last summer and that many of his group’s members are reporting similar increases.

“I’ve sold three truckloads of in-ground poles since 9/11 and thousands of porch flagpoles,” said Bretzloff, owner of Yankee Doodle Flag Co. in Toledo, Ohio. “Flags eventually wear out, and people are going to keep buying replacements.”

Like all members of his association, Bretzloff carries only American-made products. It’s a decision that cost him plenty in the post-Sept. 11 frenzy, when he sold out his inventory within five days and waited nearly two months for more stock. Foreign-made flags became widely available within a short time.

“Importers were flying them in by the plane load,” he said.

Taking a Stand

Still, Bretzloff refused to carry them despite the tantalizing profit opportunities.

For starters, he is a veteran and Toledo is a blue-collar union town whose denizens might have hanged him from his own flagpole for selling imports.

But he also insists that all flags are not created equal. He said the traditional American suppliers do extensive quality testing to retard shredding and fading. His bestseller is a 3-foot-by-5-foot nylon porch flag whose stars and stripes are stitched rather than printed. That item retails for about $35 compared with less than $10 for a Chinese-made model that comes with mounting brackets.

Though he commends Southern California’s garment makers for their entrepreneurial spirit, he said there is a lot more to flag-making than slapping a design on fabric. He said their quick entry in the bargain end of the business has put them squarely in the path of low-cost foreign producers whose products are sold mainly through discount chains.

“I can’t imagine buying a foreign-made [American] flag, no matter what it costs,” Bretzloff said. “But there are plenty of them out there.”

He isn’t the only one dismayed. Rep. Ted Strickland (D-Ohio) was so incensed by the foreign invasion that in October he introduced the “Genuine American Flag Act” prohibiting the importation and sale of foreign-made U.S. flags.

That legislation has gone nowhere, and even staunch flag advocates such as David Martucci, president of the North American Vexillological Assn., an organization that studies the history and cultural significance of flags, said the United States must stand behind its own philosophy on free trade, even when it comes to imported flags.

Clouded Origin

What really irks Martucci and others is that some sellers may have tried to hide their flags’ pedigrees to avoid consumers’ wrath at a time of intense nationalism.

Like other textile products, flags must carry a country of origin label. Martucci said that at a store near his home in Maine a few months ago, American flags were being marketed as the product of a U.S. firm. Closer examination revealed that, although the distributing company was U.S.-based, the flags were manufactured in China.

He also has heard anecdotes about retailers and suppliers selling flags with no origin labels, or repackaging them in “Made in USA” plastic wrap.

None of those claims has been substantiated, however. And at least two of the nation’s largest discount chains, Wal-Mart Stores Inc. and Kmart Corp., said all flags sold in their stores after Sept. 11 have been made in the U.S. But Martucci is skeptical.

“Everyone is denying [that they carried foreign-made flags], but the import figures tell the real story,” he said. “All those flags didn’t come into the country and just disappear.”

All L.A.’s former flag makers know is that while others are profiting from the banner boom, they’ve had the wind sucked from their sales.

In fact, the biggest problem for Los Angeles apparel maker Masoud Rad is figuring out what to do with his unsold bolts of preprinted stars-and-stripes fabric--enough to manufacture thousands of flags.

Born in Iran but now a U.S. citizen, Rad said he has a profound respect for Old Glory, which to him represents freedom and opportunity.

Wary of running afoul of cultural taboos about defiling this most American of symbols, the president of CR&A; Custom Apparel has opted to store the fabric rather than sell it at fire-sale prices or toss it into a dumpster to save space.

“If it’s only worth a penny, I’m hanging on to it,” Rad said. “No way I could throw it away. It’s still the American flag, no matter how you look at it.”