Red, white and blue keeps flag company in the black
terry savage email@example.com July 3, 2011 6:20PM
Martha Rodriguez Magana stitches together the stripes of the American flag at the J.C. Schultz Enterprises, Batavia, The FlagSource factory.
Updated: May 3, 2013 12:15PM
There is one manufacturing business in America that doesn’t worry too much about competition from Chinese imports. Makers of American Flags know their customers are patriotic enough to look for the “Made in America” label on their products. And business has been booming.
Janice Christiansen, president and CEO of J. C. Schultz Enterprises/The FlagSource, says there has been a mini-boom in American flags this year — perhaps in anticipation of the 10th anniversary of the Sept. 11 terrorist attacks, or perhaps as part of the rebound in consumer spending.
Christiansen notes that patriotism is good for her business. After the 9/11 attacks her company went full time to making American flags, setting aside its custom flag and banner business for two years to keep up with demand. Then business settled back a bit, but has grown steadily.
Her company, which is privately held and does not disclose sales, is one of the largest U.S. flag manufacturers. Headquartered in west suburban Batavia, it employs 85 workers on a full-time basis — despite the fact that new machines do sophisticated sewing and assembly.
While competition from imports is not a huge factor, the flag business is definitely impacted by the global economic situation. Currently, the cost of all raw materials has been rising steadily. Flags are made of either cotton, nylon or polyester. Cotton prices have hit new all-time highs, while material needed for synthetic flags is derived from petroleum. Thus, while volume has increased, profits have been squeezed.
The company is a manufacturer, and sells only to distributors. But you can view their products online at flagsource.com. They range from flags in all sizes to bunting and other decorative and patriotic themes. Many are used by the military, which buys not only American flags but also flags denoting pride in units.
Not so obvious is the “custom flag” business — used by corporations and associations. Think about the number of flags flown in front of corporate headquarters and hotels, for example. In its 90-year history, this company has had a lot of “firsts”, including creation of the first McDonald’s corporate flag, now flown around the world.
FlagSource stocks flags ranging in size from 2 feet by 3 feet to 30 feet by 60 feet. But the most popular is the 3-by-5-foot flag in nylon, with embroidered stars and sewn stripes. It typically sells at retail for under $25. Summertime is the big flag-selling season, as flags are needed to commemorate Memorial Day, Flag Day in June, the Fourth of July and Labor Day.
The flag draped over the Wrigley Building for the Fourth of July measures 50 feet by 100 feet. Each star is 3 feet in diameter!
Manufacturing in the U.S.
Although making American flags may give some immunity from global competition, they are still a manufacturing business. Christiansen serves as chair of the Illinois Manufacturers Association, the first woman in the organization’s 116-year history. How do these companies, based in the heartland, view our economic prospects?
“There’s guarded optimism,” says Christiansen. “We’re not sure if the uptick in business earlier this year was inventory restocking or a response to real end-user demand. All Illinois manufacturers are concerned about the recent tax increases. They got all that new money and our state is still heavily in debt, with the most underfunded public pension system.”
But Christiansen says manufacturers have another worry: finding qualified workers. That cuts across the board, she says, from manufacturing and the steel business to banking and other services that require an educated worker. The Illinois Manufacturers Association is involved in helping schools create trained and credentialed workers, noting that most young people don’t realize manufacturing and other good jobs are all high-tech.
Back to patriotism
As you fly your American flag this summer, think about the fact that 40 years ago, overt patriotism was definitely out of style. In fact, flag burning was in — as an expression of free speech, defined by the courts. Now that many flags are made out of nylon, Christiansen notes, flag burnings aren’t so dramatic: “Nylon doesn’t burn. It melts!”
You can’t make millions of American flags without feeling proud and patriotic — emotions Christiansen says hit her every day she walks into her factory. “An ocean of red, white and blue makes you feel patriotic . . . . I want my grandchildren to feel safe in America . . . . The flag is a great symbol of all we stand for, and everyone in our company shares that feeling of pride.”
Wave our flag this summer — on holidays and every day. Amidst all the discussion of debt defaults and economic woes, we have plenty of reason to be proud. And that’s The Savage Truth.
Terry Savage is a registered investment adviser.