New England's apparel industry has been in decline for decades. But that hasn't stopped Ken Schwartz from making a fortune in the hat business. The story of the #1 2001 Inner City 100 company.
The Inner City 100
Ken Shwartz has made a fortune in a business and a city that have been foundering for decades
New Bedford, Mass., was once among the richest cities in America. That was in the 1840s, when whaling was at its zenith and Herman Melville walked the streets collecting details for Moby-Dick. When demand for whale oil waned, the city became a mill town. But the textile industry faltered too. "New Bedford was a one-industry town," says Jack King, director of the Massachusetts Division of Employment and Training. "And when you have one industry -- and it's not an industry that's growing -- you're in trouble."
Out of that bleak milieu emerges the number one company on this year's Inner City 100. It turns out to be not a software developer, not a burgeoning service provider, but a hat embroiderer. Ahead Headgear Inc. designs ball caps and visors for golfers, which it sells to pro shops at golf courses. A custom-embroidery service for tournaments has made the company especially popular with customers at such storied resorts as Pebble Beach. "I can take slow-moving merchandise and specialize it for an event, which prevents me from having to mark down inventory," says Darcy Ryan of the Congressional Country Club, in Bethesda, Md. "The year I started selling Ahead products, our headwear sales tripled."
For CEO Ken Shwartz, Ahead's success is a source of wealth -- he owns 100% of the company -- and of familial pride. Hats are to the Shwartzes what sedans are to the Fords. The tradition dates back to the 1920s, when Shwartz's grandfather opened a hat shop in New Bedford. "My father took over that shop after World War II," says Shwartz. "But the business disappeared when Kennedy decided not to wear a hat to his inauguration."
Forsaking retail, Shwartz's father took a job running a hat distributor, and Shwartz grew up sweeping floors there. He joined the business after graduating from Oregon State, in 1978, eventually becoming part owner. That company was sold in 1992. In 1994, Shwartz launched Ahead with $350,000 of his savings.
In five years of sales, the company achieved roaring growth of 6,667%, culminating in 1999 revenues of $18 million. That success appears sustainable: each of the company's 7,000 retail customers accounts for less than 1% of gross revenues.
But like many growth companies, Ahead struggles to fill dozens of good-paying line jobs, even though New Bedford often has the state's highest unemployment rate. "We have a very high-tech company, but younger workers don't seem to want our production jobs," Shwartz explains. "They equate us with the old, dirty sewing factories." Although the CEO wants to stay in New Bedford, he regularly flips through brochures inviting him to relocate. "I don't want to move any part of my company," he says. "But if I have to, then I will."
The Inner City 100
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MIKE HOFMAN was previously editor of Inc.com and a deputy editor at Inc. magazine, which he joined in 1996. The site was nominated for a National Magazine Award for Digital Media in 2010, and was named the best business website by Folio Magazine. In 2006, Hofman was part of a team of writers nominated for a Webby Award for best business blog. He lives in New York City. @mikehofman