Hagale plant closing result of harsh market conditions

by Karen E. Culp

SBJ Staff

Hagale Industries is closing its Marshfield plant and relocating the workers there to its other sites in the area.

The closing is a result of ongoing problems for the textile and apparel industries, said Jim Hagale, president and chief executive officer of Hagale Industries, which manufactures dress shirts and slacks for private label clothiers.

"Right now, we are being led to believe that in the U.S. economy everything is good, when in fact, some sectors of this economy are deeply troubled. Ours is one of those," Hagale said.

The company is not placing any more work in its Marshfield plant, but the 105 employees have some time before they must relocate.

"Some of them have already moved. Some of our people have asked to wait until after the first of the year to transfer, and we're accommodating those requests," Hagale said.

The company, which has its headquarters in Ozark, also has plants in Ava, Forsyth, Salem, Stockton, Republic and Reeds Spring. There are two Hagale plants in Oklahoma and one in North Carolina. No closures are planned for those plants at this time, Hagale said.

Conditions in overseas markets have affected companies in the apparel industry, Hagale said.

"Our industry is upside down right now. In the past six months we've lost three major raw materials suppliers. We're in a situation where we're being forced to import our raw materials," Hagale said.

Importing raw materials, or fabric, means that Hagale and other apparel manufacturers will not have the advantage they once had over overseas clothing manufacturers: timing.

"Our advantage has always been that we do not need an extended lead time to get a product to our customer. Now that we must import raw materials, we must also extend the lead time we need to produce a given order," Hagale said.

At some time, clothiers may see fit to import the finished product, rather than waiting for domestic manufacturers to import the necessary raw materials and assemble the garments, Hagale said.

"That is a fear of everyone in this industry right now," Hagale said.

Exacerbating those conditions is the world economy.

"Many Asian markets are in seriously bad shape now and have no place to sell but the United States. So, we see the world manufacturers reducing their prices and selling the products here at a reduced price," Hagale said.

It is to Hagale Industries' benefit that its customers are not opportunistic, Hagale said.

"Our customers are high-quality, high-end brands such as Lands End and Brooks Brothers. They are looking for the higher quality products. Our business only becomes affected when comparable products become available elsewhere for less. That's when our customers would feel pressure to take part in an opportunistic buy," Hagale said.

The apparel industry has been struggling under such conditions for about two years, and Hagale said he predicts the situation will continue another two years.

"The prices will cycle back. It is not realistic for things to stay this way," Hagale said.

Whether the raw materials will ever be milled in the United States again is doubtful. Right now, no cotton is manufactured here and there is only one corduroy plant in the Western Hemisphere, Hagale said.

Until overall economic conditions improve for the industry, Hagale is forced to look at ways to innovate and reduce overhead costs. Closing the plant is one step toward that, Hagale said, and the company is also looking toward a new type of garment production.

Mass customization is a new concept in the apparel industry that allows a customer to choose certain components of a garment. Some of Hagale's customers are already offering this option.

For example, the customer can choose a fabric and shirt, and then choose from five or six options for a style of collar or sleeve. The program is ideal for domestic manufacturers such as Hagale, because foreign clothing makers would need too much time to return the shirt, jacket or pair of slacks to the customer.

"We will be the best at this because we have the ability to deliver to the customer in a reasonable amount of time," he said.

The mass customized products are being sold by Hagale's customers through catalogs and the Internet, he added.

Hagale sells about 95 percent of the clothes it makes to private labels and markets about 5 percent under its own labels. The company's predecessor, Hagale Garment, was founded in 1949 in Reeds Spring by Hagale's father. Hagale Garment made the uniforms that service station workers and other tradespeople wore in the first half of the century.

"In the 1960s, that business started going away because these workers weren't wearing those uniforms anymore, and increasingly, self-service was displacing a lot of the workers themselves. I started Hagale Industries in 1969 as a specialty clothing manufacturer," Hagale said.

The company started out catering to the late 1960s and early 1970s flower children, manufacturing such garments as 26 inch bell bottoms, stretch velvet pants and garments made of tapestry fabrics.

"We were really into that stuff at the right time. The boutiques that sold our products started popping up all over the country," Hagale said.

Hagale Garment continued to operate after Hagale Industries began, but merged into the younger company in the early 1970s, Hagale said. Hagale Industries now makes swim trunks, jeans, casual dress trousers and woven shirts.

Hagale said the closing of the Marshfield plant is a "tough thing all the way around. It's just not a healthy market right now. I just don't know what will happen next. I hope we can continue to look out for the majority of our people," Hagale said.

Hagale Industries employes 1,500 and is among the largest privately held clothing manufacturers in the country, Hagale said.