"The Rise, Fall, and Reinvention of an American Company," by Alpha Unit

Overseas competition mortally wounded the Faribault Woolen Mill Company. It finally died in 2009 and joined the ranks of similarly disposed of American companies, all casualties of the ongoing quest for “cheaper” manufacturing.
At the time of its demise, the company was nearly 150 years old. It had been created in 1865 when a German immigrant, Carl Henry Klemer, entered the woolen mill business after arriving in the village of Faribault, Minnesota. Prior to the Civil War, most woolen goods in this country were imported. Says Peter J. de Carlo:

After the war, domestic wool manufacturing increased as the country became more industrialized. The growth of wool production was aided by the Tariff Acts of 1867. The acts provided protection for domestic wool makers and made them more competitive. In Minnesota, the 1860s saw the beginning of many woolen manufacturing companies.

In 1882 Klemer moved his business to a building on the Straight River, in Rice County, Minnesota. A succession of fires over the next ten years ultimately destroyed the facility. In 1892 Klemer bought property on the Cannon River, built a fireproof brick building, and replaced the wooden dam that powered the mill with one made of stone.
During this period, the Faribault mill picked up a military contract with West Point that allowed the business to expand.
The company grew slowly during the early 1900s but built on its success with the military after being awarded a contract with the US Army in 1917 for 100,000 blankets. It also manufactured blankets for the military during World War II. In the postwar years Faribault led its industry with new products like washable wool and moth-proofed wool, with its profits peaking during the 1970s.
Things began to change during the 1990s. A lot of woolen manufacturing had moved offshore, and high-tech synthetics were beginning to inundate the market. Faribault was struggling. In 1998 a majority of its stock was acquired by a businessman named Peter Lytle who was based in the Twin Cities. The company became a subsidiary of a new entity, North American Heritage Brands, which also bought a cotton mill as a hedge.
North American Heritage Brands wasn’t up to the task of saving Faribault. The entity went bankrupt, taking both mills down with it. The Faribault Woolen Mill Company was finished.
The owners shut the mill down abruptly. Employees were asked to leave their posts; blankets were still on the looms half-woven. Nearly everything, from office supplies to spinning machines, was left behind.
To make matters worse, the mill flooded in 2010. The entire lower level had been filled with unattended machinery. According to John Mooty, everything that was still working was tagged to be shipped to a manufacturer in Pakistan. The rest was to be liquidated, and the facility would finally be emptied.
What was left of the once-thriving company was the empty building and the rights to its name and brand. Someone came along and decided that these were worth holding onto. That was John Mooty’s uncle, Paul Mooty, and Paul’s cousin Chuck Mooty. After consulting with the mill’s former controller, the Mootys decided that reviving the mill would deliver a good return on investment. They reopened the mill in September of 2011 and brought back many of the employees who had been let go.
“In less than six months, we went from not having a single usable restroom to selling goods in 50 states,” says Paul Mooty.
The new owners had decided at the outset on a particular strategy, according to Adam Platt. They were going to get the acrylic out of their products, for starters. But more importantly, they saw no point in trying to compete with output from India and China. They were going to bring their products back as a brand.
A major selling point was that Faribault’s products were American-made. Paul Mooty says that a lot of people are seeing now that the country has paid a price for shipping so many jobs overseas. The Mootys see great value in reviving a historic Minnesota business that they don’t want to see tossed by the wayside. In addition, they believe the art of textile manufacturing should be kept alive in America.
The Faribault Woolen Mill Company creates its products from start to finish under one roof, making it one of the last fully vertically integrated manufacturers in the United States.
Some analysts, including the Mootys, say that small manufacturers are going to be the key to bringing back jobs to the United States that big businesses sent overseas. Says Chuck Mooty:

The Chinas of the world were wonderful places for people to get value, but the middle market players are frustrated with rising costs of labor, energy, and transporting products. This is the time for people to step up and take some risks and invest in ventures that produce and manufacture products domestically.

It’s true that manufacturing in America includes many small businesses. Will the “Made in America” movement be the job creator people expect it to be?

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4 thoughts on “"The Rise, Fall, and Reinvention of an American Company," by Alpha Unit”

  1. This is interesting. There are some points to note in this article.
    The first is that people love to exaggerate how free the market is in the US. Even in the late nineteenth century, military contracts were critical to the success of lots of business. Second, capitalists and particularly manufacturers for some reason are fanatical in having production in the most low cost area. To get manufacturing you either need tariffs or low wages. You can have relatively high wages with tariffs since you have driven up the cost of importing from low wage areas. In the late twentieth/ early twenty first century, China had high tariff barriers and low wages, and the US tried to combine high wages and low tariff barriers, so the result was kind of inevitable. Late nineteenth century US had high tariffs, the wages were actually high compared to the rest of the world, though maybe low enough to be competitive.
    If a company does try to manufacture in the US, vertical integration, and a high quality high margin strategy is the way to go. With vertical integration you get better quality control. Oil is cheap for now, but you can’t repeal geology, and transportation costs will rise over time, meaning people will be forced to source more locally. But I don’t see any large scale revival of manufacturing without tariff barriers. Even dropping wages won’t really work since you will never be able to compete with some of these super high birth-rate companies.

  2. Mercantilism used to be the American way. It was called the “American system”. Mass identical product production and tariffs. It could be very profitable for us. Especially because of the use of robots. The building of robots would provide high paying jobs and spin offs from the manufacturing knowledge gained. In ten years the general trend is that computer power will equal human level computation for around $1,000. This is very soon. So robots taking over all manufacturing is a given. It can’t be stopped. Wouldn’t it be best if it was the US? If so we could tax the robot output to provide a citizens dividend. I believe this is a long term Japanese goal that they just refuse to talk about.
    If you read a little about the Japanese you soon realize they don’t talk about a lot of what they are thinking and their people have a kind of inborn “Gestalt” . They have a word for this I can’t recall. It’s not easily translated into English. The Jews have the same thing. Jon Stuart talked about this feeling with Robert Rich. I can’t find a link to what he said but it was something like, “I immediately recognize him [Robert Reich] as just like my Uncle in New York. That same kind of attitude and I immediately felt comfortable with him.”
    The only time White people have these feelings is when we’re surrounded by people of another race. Maybe we’ll have more of this as the future unfolds. Whites will make up less and less of the world’s population and will increasingly be surrounded by “others” just like the Jews.

  3. Speaking of robots. We better keep the Chinese out of our building markets or we’ll be doomed.
    The finish doesn’t look so good but that can be changed. There’s a type of magnesium based concrete that dries real fast and sticks to most anything especially wood and cellulose fibers. They could make flat panels from this and tile the walls. Like a tile floor sorta and glue on the wall with magnesium cement.
    The same type magnesium cements were used centuries ago by the Chinese. Researchers were looking into replacing a stone column on a Chinese temple. There chip the column some and find it’s actually a perfectly preserved large wooden post covered by the magnesium cement that sticks to the wood.
    I think, though I’m not sure, that these type cements are somewhat the same as geopolymer cements. Plastics are polymers. Repeating units but you can also do the same thing with certain cements, ergo Geopolymers.

  4. Made in the USA as a job creation device sounds like a great idea. But the question is mass. More great stories like this in their thousands need to get those abandoned old factory sites going. Sadly this story seems to be a one off.
    The question then becomes after Made in China what next?
    Made in China is kept alive by massive currency dealings which keep the cost of the Chinese currency down and hence the cost of manufacturing, Th Chinese have the financial resources to make their currency competitive for overseas manufacturing companies, plus a low paperwork welcoming smile to get foreign firms to place a factory in China. Both strategies have yielded tremendous results as can be seen by the GDP data which shows China as current biggest economy in the world on PPP.

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