Most people at a liquidation auction see a dying business. Lewis Jaffe saw one waiting to be reborn.
For several years, Jaffe had wanted to broaden his father-in-law's tote-bag and soft-luggage importing business by adding a Massachusetts-sited manufacturing operation -- not a popular idea in such a low-tech industry. When a nearby soft-luggage company went under in 1986, Jaffe felt the time was right to test his service-intensive, fast-on-your-feet strategy. He bought the defunct company's equipment at about one-quarter the cost of new.
Since then, capitalizing on manufacturing's decline has practically become company policy at Long Wharf Trading Co., the Danvers, Mass., factory started by Jaffe and his brother-in-law Bruce Isaacson. The new enterprise also bought its customer list from a competitor leaving the industry, and some of its stitchers come from plants that have closed or cut back.
It's not surprising that Long Wharf found other companies in trouble. Luggage makers, like most technically simple, labor-intensive manufacturers, face tough competition from cheaper Asian imports. In the past decade, employment in the domestic industry dropped 23%, and the market share held by imports has grown from one-fifth to one-half.
That has always been good news for Gem Giftwares Inc., the Isaacson family importing business, which concentrates on bringing in bags and silk-screening them with promotional logos. But as Gem's president, Jaffe knew there were many customers whose needs Gem couldn't meet -- companies that would want a small number of bags specially made for some fast-approaching event. "When I import from overseas, I need a minimum of 1,500 pieces, and my customer needs a minimum of 120 days to expect delivery. So if somebody wants 250 chartreuse bags a week from Friday, it simply can't be done by importers," Jaffe says.
But it can by Long Wharf, which specializes in completing small, customized orders quickly -- at one and a half to three times the cost of imports. The company has found customers willing to pay the difference; Long Wharf broke even on its first-year sales of $650,000, and has expanded from 10 to 30 employees. This year, president Bruce Isaacson hopes to reach $1 million in sales.
Long Wharf's strategy is not unique to luggage manufacturing. The U.S. apparel industry, which faces similar foreign competition, has begun to focus on the special market created by sudden shifts in fashion demand. The makers are hoping to find, as Long Wharf has, a competitive advantage in speed and responsiveness.
Noting that tightening quotas and a falling dollar have made importing more difficult, some apparel industry observers say the new emphasis could pay off in increased retailer interest in American products. "I think there are opportunities here for smaller manufacturers," says Walter Loeb, a retail industry analyst for Morgan Stanley & Co.
Still, it's never easy being a high-cost producer in a low-cost world. "You can't expect anymore to have the kind of factory where every day your stitcher goes in and makes the same style," Isaacson says. "To stay alive and product domestically, you have got to learn to do short runs and provide an extra level of service and quality."
PRINT THIS ARTICLE