The Economics of Flag Waving


Though selling flags might seem like an obvious career choice for someone whose great-grandmother's maiden name was Flag and whose grandfather was born on Flag Day, Kyle Laukus never intended to be a peddler of patriotic wares. But after his Michigan-based art gallery went under in the early 1980s, a friend found him a gig selling flagpoles in Texas. Though skeptical of making the move from fine art to flags, Laukus reluctantly took the position, assuring himself that it was only temporary.

Apparently, he underestimated just how tightly flags are woven into the family fiber. Within months he had found his new forte and launched American Pride, a mail-order flag and pole company. In 1987, he moved back to Coloma, Mich., where he expanded operations to include full-service retail and custom installation. Five years ago, he opened Patriotic Products, a seven-employee wholesaler, and now runs both companies.

TIDE OF IMPORTS. Though the resurgence of patriotism following 9/11 sent sales of all things red, white, and blue skyrocketing, and a plethora of mom-and-pop flag dealers suddenly sprouted up, many disappeared just as quickly. In an industry dominated by large corporations, that leaves Laukus among a dwindling handful of well-established small businesses still giving patriotism a go. "It's just basically where my heart is," he says.

Amidst an explosion of imports in recent years, Laukus has watched as many businesses, both big and small, have started opting for foreign-made goods. But even though it has proven a bit costly, Laukus has maintained a strict "Made in the USA" standard on everything he sells -- especially his flags. "I've just always felt that if you're going to fly the flag that all those guys fought and died for, that it should at least be made in the U.S.," he says.

But turning away foreign-made flags is becoming increasingly difficult. According to data from the U.S. Census Bureau, the dollar value of flag imports grew from just $710,000 in 1997 to more than $5.2 million in 2002. And though that still amounts to only a fraction of the $349 million in sales by national manufacturers, imports can be 20% to 50% cheaper wholesale than their American-made counterparts.

TELL-TALE SIGNS. That's enough to send consumers home with an overseas product, says Joyce Doody, executive director of the National Flag Foundation, a Pittsburgh-based organization dedicated to patriotic education. Though Doody believes that most people would prefer to purchase flags made at home, come buying time, many people simply don't think to check where they're made, she says.

"It takes some time to investigate those things, but in the long run I feel that it's what I need to do," Laukus says. And though what he calls stubbornness sometimes cuts into his profit margin, in the end it has made good business sense, allowing him to attract a large and loyal customer following among Veterans of Foreign Wars and other veteran and military organizations.

To ensure every flag he sells is American born and bred, Laukus vets manufacturers carefully, and over the years he has snooped out a fair share of Stars and Stripes that were not up to snuff. One company boasted a host of American-made components but failed to disclose that it used foreign fabric. Another suddenly slipped a batch of Chinese-made flags in amongst their regular U.S. factory-made wares. And yet another sent him a shipment of gravesite flags whose poles had a mysterious gummy residue where the stickers indicating where the flags were made seemed to have been removed.

MATERIAL HISTORY. It's all part of a growing trend: In recent years, however, though plenty of flags are still being made in the U.S., more and more component parts are being manufactured overseas, which means making the flag is slowly becoming an international effort.

When his supplier recently switched to brass grommets (the reinforced metal rings around the holes where you clip the flag to the pole) made in Taiwan, custom flagmaker Richard Gideon switched to U.S.-made plated zinc -- but for some of his flags, especially historical replicas from the Civil War era, he says it's nearly impossible to purchase all the necessary materials in the U.S. "Real, honest-to-goodness silk is all generally imported, and there's nothing you can do about it," he says.

But ironically, this is simply keeping with tradition, as Americans bought bunting and other flag supplies from Britain until after the close of the Civil War. "It's not that there ever was a thing about where the materials came from," Gideon says. "The U.S. has always imported things from Day One."

FOR UBER PATRIOTS. That's not to say all patriotic products are outsourced, in one way or another. The world's largest flagmaker is still based in the U.S. That's Annin & Co., which produces more than 10,000 different types of flags and accessories and uses only American-made fabric. Founded in New York and now based in New Jersey, the company has made the flag flying at Presidential inaugurations dating back to that of Zachary Taylor in 1849.

Gideon -- who is also an accomplished vexillologist (that's someone who studies flags) and publisher of American Vexillum Magazine -- says, technically, even purchasing a 100% American-made flag isn't going far enough, since a majority of flags -- including the popular 3x5-foot size -- don't conform to the 1 to 1.9 ratio mandated by President William Howard Taft in 1912. "Most 50-star flags that you buy in the local store today don't meet the flag code," he says.

And for the uber patriot wishing to salute the nation in true 1776 style, today's Stars and Stripes simply won't do. "In modern usage, we fly the U.S. flag on the Fourth of July, and who can say anything against that," he says. "However, at that time, there was no country called the United States of America, and there was no U.S. flag."

To be historically correct, he suggests opting for the 13-striped, no-star American Merchant Flag or the Continental Colors, which has a combination of 13 stripes and British crosses. The classics, it seems, never go out of style.

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