Posted on 11/05/2012 9:25:34 AM PST by robowombat
112-Year-Old Apparel Maker In Pa. To Close Sun, 11/04/2012 - 1:20pm Michael Rubinkam,
ORWIGSBURG, Pa. -- One of the last U.S. apparel manufacturers of its kind is losing its shirt.
FesslerUSA had survived war and depression, free trade and foreign imports, producing millions of knitted garments from its base in eastern Pennsylvania. Five years ago, third-generation owner Walter Meck and his family were feeling so good about the company's prospects they doubled capacity, moving into a former pencil factory outside the small town of Orwigsburg.
They were still setting up shop in the new place when the Great Recession hit.
Sales plummeted. Financing dried up. And, after a long struggle to keep the manufacturer afloat, Meck has finally run out of time and money, still awaiting the strong economic rebound that never came. Production will shut down in early November, tossing 130 employees out of work and ending a run of nearly 113 years.
"We're not even on life support any more," the downcast CEO said in an interview on the floor of his cavernous factory, ominously quiet on a recent workday.
Meck blames the historic mill's demise on weak consumer spending, fresh competition from Asia, tighter credit standards that he said prevented Fessler from getting a desperately needed loan, and a lack of interest from private investors and potential buyers.
In Schuylkill County, an economically distressed region where good-paying jobs can be hard to come by, Fessler's workers are jittery.
Cutting room manager Gloria Bambrick, 57, has worked in the garment industry for 32 years. Her previous two employers also shut their doors. With Fessler set to join them, she's not sure what she will do.
"It's going to be tough for me to get a job because of my age," said Bambrick, who became the sole breadwinner for her stepdaughter and elderly mother after the recent death of her husband. "I am very strapped. I will need a good job."
Bemoaning the disappearance of so many textile jobs, she said: "I am an American girl and I wish more people would think like me and would have left the industry here and not send it overseas."
Indeed, it's a minor miracle that Fessler held on this long.
Though domestic production has ticked up recently, more than 97 percent of the 19 billion pieces of apparel sold in the United States last year were made somewhere else, primarily in China and other Asian nations, according to Labor Department data compiled by the American Apparel & Footwear Association. Employment has declined 75 percent since the late 1990s, from 621,000 jobs in 1998 to 151,800 today.
Fessler had been a rare breed among apparel manufacturers not only for its longevity, but also because it controlled all aspects of production. The company weaves its own fabric, cuts it and sews it into private-label garments shipped to stores around the nation.
"There aren't very many vertical, made-in-the-USA apparel companies left," Meck said. "It is an incredible feeling to watch those garments go out the door."
FesslerUSA began life in 1900 as Meck & Co., producing cotton underwear at a factory in Schuylkill Haven, a river town about 90 miles northwest of Philadelphia. Meck's father sold it to the Fessler family in 1960. Meck joined other family members to buy the company back in 1994 — just as the North American Free Trade Agreement was claiming its three biggest customers.
The family weathered that crisis by pivoting from high-volume, mass-market apparel toward higher-end pieces made with more expensive fabrics, a segment of the market that foreign manufacturers were unable or unwilling to touch. Fessler thrived because it could produce quickly and in small quantities, and its fashionable tees appeared on the racks of such retailers as Bloomingdale's and Nordstrom.
"We knew that it was change or die," Meck said. "We had to reinvent ourselves."
Change or die. It became a way of life as Fessler bucked the odds and enjoyed years of double-digit growth.
So when retail sales took a nosedive amid the worst economic crisis in 75 years, Meck knew he had to pivot once more. Gathering his employees together, he told them: "Is it more important for half of you to work, or more important for all of you to go out of business?" Fessler laid off nearly half the workforce.
The smaller, leaner company was profitable for a while. But the good times didn't last. Sales plummeted again in 2010, and Meck could no longer cut his way to prosperity. He had to grow revenues while reducing Fessler's dependence on women's fashion. His team began working on new products and new markets, including a flame-resistant shirt for firefighters and utility workers that Meck said showed great promise.
But he needed time, and he needed money, and both were in short supply.
In the end, he couldn't find the cash. And a few months ago, the bank called Fessler's loan. The company was doomed.
Given its weak cash flow — Fessler's sales were down 50 to 75 percent from their pre-recession peak of $25 million per year — did it ever stand a chance?
Meck, a wily businessman with nearly four decades of experience, insisted Fessler could have survived had he found a willing lender.
"Very quickly it became clear that new regulations that were being placed on banks were crippling banks' ability to do business, and it didn't take along for that to rumble right down and hit us square in the face," he said.
Meck's lament about tightened credit is a common one among small- and medium-sized manufacturers, said Chad Moutray, chief economist for the National Association of Manufacturers.
"Many of them have complained to me that the standards for borrowing have become a lot more strict since the recession," said Moutray, formerly chief economist of the Small Business Administration. "It's much tougher to get a loan today than it was in the past."
Banking industry veteran Bob Seiwert agreed that lending standards have made it more difficult to get a loan, but he said banks are eager to lend to viable firms, and are even sacrificing on terms because demand is weak.
"Right now banks are awash in funds and they don't know what to do with them. Banks are scrambling, competing for those few small business loans that are out there," said Seiwert, a senior vice president at the American Banking Association. "Most small businesses today are on the sidelines."
Meck acknowledged his company's problems went deeper than its inability to get a loan. And once word got out, customers began to flee.
Fessler continues to fill existing orders, but the signs of a company on the brink are unmistakable. Most of the sewing machines sit idle, and a section of the factory is filling up with equipment destined for liquidation.
Meck tries to focus on the good times.
"I don't want people to be sorry. I want people to be proud we lasted this long. I want people to be proud we tried," he said. "We did good work. There is nothing to be upset about. In today's economy and today's world, it didn't work."
” Meck, a wily businessman with nearly four decades of experience, insisted Fessler could have survived had he found a willing lender.
“Very quickly it became clear that new regulations that were being placed on banks were crippling banks’ ability to do business, “
There you are.
China makes most of our stuff: Obama makes U.S. uncompetitive
The U.S. economy is crap . We can’t even make most of our own stuff we use as China is making that and beating us. Obama has been president for 4 years so it’s that piece of crap’s fault.Obama’s socialism has destroyed the U.S. economy . We have much more coal, oil, shale oil , natural gas etc. than China but Obama is restricting energy production which could have created cheap energy for manufacturers . Instead China is building 1 coal power plant per week and makes most things we use ( more every day but the media lies and says the economy is great). 17 million more people on food stamps, 8 million more on disability , 20 million more unemployed. millions of manufacturing jobs lost , 50% college grads can’t find jobs, other good jobs replaced with fast food jobs and part time jobs all this with 6 trillion $ in debt it added on us . after election Obama ‘s EPA plans to almost completely shut down coal,oil, natural gas etc. Don’t you democrats and other voters for Obama get it socialism never works
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Romney gets this! It is the Dodd/Fankinthebutt law.
In one of the debates Romney addressed the topic perfectly. He was 100% spot on and I was more than a little impressed that he knew about this disaster of a lew. The way Romney described the “kiss” given to the big banks. See here:
http://www.huffingtonpost.com/2012/10/04/mitt-romney-too-big-to-fail_n_1938096.html
America is primed for one of the biggest awakenings in its history. I was never a big Romney fan but over time I have been able to see he is the right guy for the right time. He gets it because he has lived the dream himself.
The best thing Romney has going for him is his financial talent.
These folks should try to hang in there until Romney’s elected. If Obama’s team cheats to win, they might as well close up shop ‘cause things are gonna be getting worse.
This my home town! I’m away at PSU right now though.
“Five years ago, third-generation owner Walter Meck and his family were feeling so good about the company’s prospects they doubled capacity...”
I did the same thing with the Family Farm Business, in 2007; in 2010-2011, a thriving $8.5mm business came tumbling down, after 21yrs, even though I downsized from 28 to 6 employees, and cut overhead by 60%.
EPA, USDOT, ACoE, DER, DEP, Ag Dept, Int Dept etc etc etc just buried us with taxes/rules/regs/taxes/fees/permits/fees/taxes/inspections/fees/taxes until I closed it down Nov 1, 2011.
But alas, they couldn't survive hurricane Obama. Four years of wind. Terrible amounts of damage. No relief in sight.
Sorry to hear that Carriage_Hill.
Thanks, DO. In 21yrs, I employed 604 people, and took care of a lot of people, families and hugely-helped the regional economy. We had a good run. Family Farms are under attack and are being destroyed by the hundreds, every week. This forced, so-called “retirement” isn’t much fun, compared to owning/running an operation of that size, scope and power.
bfl
If this guy had been a woman or minority he would have gotten the loans; race- and gender-based wealth redistribution at work.
Hurricane Sandy was bad. There’s lots of pictures to prove it.
Hurricane Obama was worse. There aren’t any pictures to prove that.
So we weep at the sight of what took place on the East Coast, and forget that exponentially more people have been ruined over the last four years. Who gives a rip about their lost homes, their lost dreams, their children growing up in poverty?
Four more years of this? No thanks.
Tomorrow can’t come soon enough.
I spent ten years on a 120 acre farm. I was young, but I remember quite a bit of those years. I have a soft spot in my heart for farmers. IMO, they’re the life-blood of the nation.
Who is John Galt?
You are so right about that. We’re now a dying breed, too. Agri-Business/Gov’t is taking it all over and once they control the food chain, they control all of us.
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