Patriotism Is Good for Business

07/04/2011 12:01 am EST

Focus: MARKETS

Terry Savage

Author, The Savage Truth on Money

There is one manufacturing sector in America that doesn’t worry too much about competition from foreign imports, writes MoneyShow.com personal finance expert Terry Savage.

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 The FlagSource, says there has been a mini-boom in American flags this year—perhaps in anticipation of the 10th anniversary of the September 11th attacks, or perhaps just as part of the rebound in consumer spending.

Christiansen notes that patriotism is good for her business. After the 9/11 attacks, her company devoted itself 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 US flag manufacturers. Headquartered in Batavia, Ill., they employ 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.

Most Popular
The company is a manufacturer, and sells only to distributors. But you can view their products online at www.flagsource.com. They range from flags in all sizes to bunting and other decorative and patriotic themes.

Many are used by the military—not only American flags but flags denoting pride in units.

Not so obvious is the “custom flag” business—used by corporations and associations as part of their branding. 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 the creation of the first McDonald’s corporate flag, now flown around the world.

FlagSource stocks flags ranging from 2 feet by 3 feet, all the way up to 30 feet by 60 feet. But the most popular is the 3x5 flag in nylon, with embroidered stars and sewn stripes. It typically sells at retail for under $25.

Summer is the big flag-selling season, as flags are needed to commemorate Memorial Day, Flag Day in June, the July 4th holiday, and then Labor Day.

Fun fact: The flag draped over Chicago’s Wrigley Building on July 4th measures 50 feet by 100 feet. Each star is 3 feet in diameter!

Manufacturing in the US
While making American flags may give some immunity from global competition, it is 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 re-stocking, 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 she says manufacturers have another worry: finding a qualified labor force. That cuts across the board, says Christiansen, from manufacturing and the steel business to banking and other services that require an educated worker.

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 that 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 Janice Christiansen say 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.

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