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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.

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