Hatmaker's tough U.S. return

ADAMSTOWN, Pa. - If home is where you hang your hat, Kangol is struggling to afford its pricy new U.S. digs.

When the famous hat brand worn by such celebrities as Samuel L. Jackson, Brad Pitt, and Gwen Stefani moved into a Pennsylvania factory last year from China, executives with the Bollman Hat Co. billed it as an effort to create U.S. manufacturing jobs.

But as labor costs went up, profits went down. Way down. The 149-year-old company behind Kangol says it is losing money on every kangaroo-logo cap knitted at its factory in Adamstown, 60 miles west of Philadelphia.

"It has been certainly a bigger challenge than what we could've ever dreamed," said Don Rongione, Bollman's fedora-wearing president and CEO.

The nation's oldest hatmaker expects a relatively quick turnaround once U.S. workers get better at making the popular Kangol caps. But Bollman's early struggles with Kangol illustrate why the labor-intensive garment industry left the United States in the first place.

Employment is down 85 percent since 1990 - the biggest decline of any manufacturing sector - as cost-cutting apparel companies shifted production to Asia in search of cheaper labor. Bollman spends about $11 an hour per worker in Pennsylvania vs. $2.60 in China.

So why move?

In an industry where trends come and go quickly, "it's incredibly important to incorporate speed into the delivery of the product," Rongione said.

The employee-owned company raised more than $100,000 through a Kickstarter campaign to ship dozens of knitting machines from China to Pennsylvania, then got to work refurbishing the ancient, clattering workhorses that have been knitting the fabric used in Kangol caps for nearly 80 years. American workers also had to learn how to sew, shape, and embroider the distinctive headwear, a popular style of which, the Wool 504, retails for $48.

Nearly a year later, Bollman's overall cost per hat is still twice as high as it was in Asia, partly because the Pennsylvania crew cannot yet produce as many hats in a day as their more experienced counterparts at the now-shuttered factory in Panyu, in southern China. But the cost per hat was three times as high initially, and the company says it expects continued improvement.

Bollman has to start making money on its U.S.-made Kangol headwear or it will eventually have to ship production back overseas, Rongione said.

"This is not yet a success story," Rongione said, "but we have great confidence we're going to get there. . . . This is near and dear to our hearts."