Farewell to a knitting factory
Changing market does in 90-year-old Near North company

by Nicole Duarte

published by the Chicago Journal, March 22, 2006

Schuessler Knitting Mills Inc. did everything right.

A fixture in Chicago's Halsted Triangle, south of North Avenue on the Near North Side, for 90 years, the winter wear manufacturing company captured a high-end niche market with a distinct distribution advantage over offshore competition. Shrewdly, at the same time, Schuessler imported gloves and more costly complex knit work from a Chinese manufacturer, taking extra care to coordinate patterns for hats and gloves, so the company was a one-stop supplier at trade shows.

Bob Schuessler, the third-generation Schuessler to run the mill, said that a decade previously, the company sensed its market was moving away from knit to polar fleece, and it rushed to develop a fleece product line. That strengthened Schuessler's foothold in the high-end head wear market and helped the company keep its competitive edge as textile mills around the country were closing under the pressure of import competition. Sales topped $14 million in the 1990s.

The Schuesslers were also beloved employers. "Bob Schuessler probably never even knew what he did, not just for my family, but for everyone," said Hurbist Johnson, 44, a former Schuessler shipping clerk and production assistant who worked there for eight years.

As Johnson was preparing a financial-aid application so his daughter could enroll at Atlanta Clark University, he was struck by the sizable gap between tuition and what loans would cover. Johnson approached Bob Schuessler for a loan.

"Bob Schuessler extended his hand to me. I didn't sign any papers; I got it on a handshake. He encouraged me to encourage my daughter to go to college, and she encouraged others," said Johnson. "She got her brother to go to college, and he will graduate in a few months."

Despite all the good business and good will, Schuessler Knitting Mills went out of business in November.

The brick factory is nearly empty now. A battalion of knitting machines sits idle in precision rows, some with the beginnings of hats and scarves caught in the still needles. Grimacing as he strolled through the quiet recently, Schuessler said he's awaiting a liquidation auction.

The sewing machines that peopled the third floor already are gone, sold to other factories, or purchased by some of Schuessler's approximately 120 former employees. When the factory started to liquidate its assets, employees also bought up the unused bolts of polar fleece and yarn spools.

Each morning for years, hand-finishing shop supervisor Emmett Frazier would walk from table to table saying hello or shaking hands with each person in his department.

"It didn't really dawn on me until that last week," Frazier said. "Certain areas of the floor were so dark. We had just lost the last hand-finisher that Friday, and I came in and there wasn't anyone to greet."

Another supervisor said hello, but Frazier didn't respond. "It was the first time since I'd been there that I couldn't say anything. The reality of it sank in." Frazier had been with the company for 32 years when he left in January.

The company that did everything right had succumbed to market forces.

The company's decline began about 10 years ago, caused by what Schuessler describes as relentless price pressure and increasing overseas competition.

In the late '90s, profitability began to suffer. Sales, which peaked at $14.5 million in 1997, had steadily declined since then.

Selling prices kept falling. The distribution advantage of being a domestic company was gobbled up by drastically lower labor costs abroad. Then the best suppliers in the business went out of business.

Production shifted to Mexico and suppliers became less responsive. Labor costs, including benefits, more than doubled.

Sweater manufacturing went offshore, idling U.S. yarn mills. Ultimately, skilled overseas producers began to take over the high-end niche market. Their quality was comparable to domestic manufacturers', but they had drastically lower production costs, Schuessler said.

Schuessler Knitting Mills had weathered previous tough times with a U.S. government contract to produce hats for the military. Throughout the Iraq War and its run-up, the military contract brought in approximately 20 percent of the company's annual sales. In 2004, military hats made up 36 percent of the company's $8.65 million in annual sales.

At the end of 2004, the company lost that contract. Then, on Dec. 31, 2004, U.S. textile import quotas lapsed, allowing inexpensive imports to flood the domestic market. Subsequent emergency quotas, only temporary, weren't sufficient for the company to get its head above water.

To manage its own labor costs Schuessler suspended employee pay raises and trimmed benefits about three to four years ago. Approximately five years ago, contributions to an employee profit-sharing program stopped when profits dried up.

Even with all possible costs cut, Schuessler realized it just wasn't enough.

To stay in business, the company would have needed to move operations overseas and import its products. However, the Schuessler family had such strong ties to the community and to its employees, it preferred to sell the company rather than learn the importing game.

"We held on longer than we thought was prudent because of the support of our family shareholders," said Schuessler.

The company sold its three brand names and its commercially viable inventory to Jacob Ash Co., a Pennsylvania clothing accessory importer, and officially closed its doors on Nov. 7.

When the decision was announced to the staff, said Johnson, some employees cried.

Maria Gervacio had been a cutting room supervisor for seven years and nine months when the company announced it would close. She and her fellow employees were devastated. The Schuessler family made the mill a terrific place to work, she said, adding the average employee had worked there for 11 to 13 years.

Schuessler was always flexible. If an employee had an appointment or needed to go to a child's school, Gervacio said, he or she was able to take three hours off and then come back to work, rather than losing a whole day's pay.

Schuessler employees qualified for help under Illinois Trade Adjustment Assistance, a state program designed to offer educational and job placement aid to workers whose jobs had been displaced by offshore competition.

Although the mill was not a union shop, the AFL-CIO created a temporary, part-time position coordinating work transitions for mill employees. Gervacio was selected for the post.

Most Schuessler former employees are hard pressed to find a comparable replacement job, including Gervacio. "I don't want to make $6 an hour when I was making $14.50," she said.

Approximately 85 former employees are still looking for work. Schuessler said that more than half the labor force was older than 50. Three people chose to retire. Two moved out of state to find work. Seven found jobs without the assistance of the TAA program.

Frazier, 51, took advantage of state assistance by pursuing job counseling with the National Able Network, a nonprofit job training organization that the state contracted with to provide educational assistance. He's pursuing his GED, after which he hopes to enroll in culinary school.

Johnson is slated to start a commercial driver's license training program next month, the tuition for which was paid by TAA.

Gervacio is enrolled in GED classes and hopes to earn a nursing assistant degree. Once the majority of Schuessler employees find work, or a year elapses, Gervacio will be in need of a job again. To her former co-workers, she stresses retraining and education. There are very few factory jobs left in Chicago, she said.