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In the fable, we see every jiggle of the emperor's naked pink flesh, but his garments are invisible.
At the JC Penney in Hampton Village, you walk straight into sale racks of pastel acrylic and slick rayon, all bearing Kellwood's Sag Harbor label. Finger a few necklines, and you find they came from Taiwan, Malaysia, Hong Kong, Honduras, Guatemala, Indonesia, Korea, Australia and Sri Lanka. The size-large short-sleeved black sweater is made in Hong Kong, the medium in Cambodia, all the lavenders in Cambodia. The first purple wool jacket was "assembled in the Dominican Republic," the second "assembled in Mexico." The French-blue skirt by Koret (another Kellwood label) was made in Mexico, the print version in El Salvador, the matching sweater and vest in Macau. (In fact, there are quite a few garments from Macau, the decayed, corrupt Portuguese colony that just reverted to Chinese rule last month.)
Most St. Louisans haven't been to any of these places, haven't seen Kellwood's factories, can't name even five of their 150-plus labels, don't realize they're the fifth-largest publicly held apparel company in the country. We've only seen Kellwood's headquarters -- the dark-brown brick-and-glass rectangle off Highway 40 in Chesterfield, out where multinationals stand like cool eighth-graders on the edge of the playground. About 160 of Kellwood's 19,200 employees work there, lending such dry support as legal counsel, financial planning and enough PR to murmur the news when last year's sales hit $2.15 billion. But the actual product is manufactured by more than 700 overseas contractors, with a smaller share (20 percent and dropping) at Kellwood's own fast-closing factories here and abroad. (Kellwood just budgeted $6.8 million to close five more domestic plants, promising shareholders it would soon be "sourcing" overseas exclusively.)
In other words, Kellwood is a textbook example of the large U.S. corporations that now manufacture globally, housing only their computerized brainpower, marketing and distribution operations back home. According to the firm's 1999 annual report, the formula's working: Once you get past the middle-class models cavorting on white seamless backgrounds in shiny, overbright clothes, you'll find the strongest balance sheet in years, with 10 percent annual growth, a 16 percent increase that took operating earnings up to $101.5 million; a 17 percent rise in net income; and a $76 million reduction in debt.
Kellwood's not exactly blue-chip, but it's always stayed just ahead of the curve, first by buying up technological bells and whistles, then by buying up brand-name companies, then by outsourcing a full 80 percent of its manufacturing (22 percentage points above the industry average). Oddly enough, nobody seems to notice; in the International Social Responsibility Research Service report on Kellwood, the media-coverage section is blank -- except for the wry observation that "the company has not been subject to media or public scrutiny." The research department of St. Louis-based A.G. Edwards doesn't even track Kellwood; on CNBC this fall, Michael Santoli of Barron's remarked that because the company is "kind of unglitzy in general as an apparel stock, it's kind of ignored."
The unglitziness is an accident of history. Merged out of 15 suppliers to Sears, Roebuck and Co., Kellwood took its name from two former Sears executives, Charles H. Kellstadt and Robert E. Wood. For years, the company focused on cheap, sensible, private-label clothes for large chain retailers, keeping Sears as its best customer. Then Sears' fat orders and shrinking profit margins began to strain the relationship. When Sears plucked home furnishings from their catalog in 1979, depriving Kellwood of all those ruffled-curtain orders, the manufacturer started playing the field, courting and supplying other retailers.
As appearance-conscious as a recent divorcée, Kellwood even opened a New York office to monitor fashion trends. It also began edging toward brand names, and by 1985, it was gulping down smaller firms -- first Cape Cod-Cricket Lane, Parsons Place Apparel (now Sag Harbor), Robert Scott Ltd., David Brooks Ltd.; then, in the '90s, Décorp, California Ivy (now Ivy), Halmode, David Dart, Fritzi California, Koret. Meanwhile, Kellwood also acquired significant manufacturing licenses, including the coveted master license from Lambchop Productions Ltd. to make Kathie Lee products for Wal-Mart.
Kathie Lee's name quadrupled Kellwood's Wal-Mart sales. Kellwood's own name, however, wasn't the brand of anything. Seldom linked, in the consumer mind, with its ever-widening maze of subsidiaries, divisions, licenses and brands, Kellwood grew huge -- and remained anonymous.
The way Kellwood produces apparel accounts for a newer aspect of Kellwood's anonymity: its refusal to address activists' questions about factory conditions, or participate in the White House Anti-Sweatshop Task Force or the Fair Labor Association, or open its inspections to human-rights groups. Ironically, Kellwood has a comparatively clean record and spends more than $1 million monitoring its own contractors. But the company was burned by U.S. Department of Labor citations in 1996; a few Kathie Lee brushfires that came too close for comfort; and a burst of allegations this fall from the National Labor Committee (NLC), a human-rights advocacy group based in New York. Now, Kellwood's spokespeople refuse to answer even the most basic questions about their company's manufacturing.
Transparency might be hip in junior blouses, but it's dangerous to global business.