St. Anthony: St. Mary's hosts apparel industry change-maker

Joe Bozich, the founder and CEO of Knights Apparel, said last week that his pioneering Alta Gracia collegiate-sportswear plant in the Dominican Republic has broken even after four years paying its 150 workers "living wage" compensation that amounts to 3.5 times the legal minimum pay in the Caribbean country.

"It's the most gratifying thing I've ever done," said Bozich, who started South Carolina-based Knights about 20 years ago. "It's growing and sustainable."

Bozich was in Minneapolis and Winona last week as the headliner for a seminar called "Is What You're Wearing Enslaving or Liberating" hosted by St. Mary's University of Minnesota.

The moderator, Fred de Sam Lazaro, who directs the Under-Told Stories Project at St. Mary's, also is a veteran PBS NewsHour correspondent whose powerful piece earlier this year brought attention to Bozich's quest to deliver a high-quality product to U.S. retailers from a well-paid workforce that can support housing, food and education. Find the piece at www.pbs.org/ newshour.

Alta Gracia-made shirts and sweatshirts are sold through 1,000-plus college retailers, including 15 in Minnesota, complete with a tag that bears the picture of a worker and philosophy of Alta Gracia. It will generate about $16 million in retail sales this year. Knights Apparel is a big U.S. wholesaler of college-licensed apparel. Knights also is supplied by 30 contract manufacturers in Asia and elsewhere. Bozich said they must meet the wage and safety standards of the two principal global fair-labor organizations. And the factories are subject to unscheduled audits by Knights and independent inspectors.

"You can always find somebody cheaper," said Bozich. "We compete on value and service. Target is one of our big customers."

Bozich envisions Alta Gracia factories in Haiti and Bangladesh. He focused Alta Gracia first on college bookstores because young people were most attuned to the message of fair pay for quality goods.

And he told an audience of several hundred business people, St. Mary's business faculty, students and others that he expects to announce new partnerships with "big retailers" in 2015.

Bozich, 51, said part of his inspiration was his own diagnosis with multiple sclerosis. He began to appreciate good health care and his good fortune in an industry known for sweatshops. He decided to prove that investing more in workers and improved conditions could be good for them, their communities and Knights Apparel.

John Kline, a professor of international business at Georgetown University who studies the Alta Gracia business model, has said this demonstrates that at least some consumers will purchase high-quality apparel made by better-paid workers.

Trade group Files Complaint Against Element Electronics

The Washington, D.C.-based Alliance for American Manufacturing (AAM) has filed a petition with the Federal Trade Commission, claiming that Eden Prairie-based Element Electronics misleads American consumers by falsely advertising its products as made in the U.S. when virtually all of the manufacturing is done in China.

"If a company wants to wrap itself with the American flag in advertising, it should at least meet the bare minimum standard for manufacturing and assembling products in the USA," said AAM President Scott Paul in a statement that accompanied the petition. "We hope the FTC will take all the actions necessary to preserve the integrity of made or assembled in the USA."

AAM says Element's assembly process at its plant in South Carolina violates the FTC's minimum "Assembled in USA" standard because it consists of nothing more than Element employees removing the televisions from their boxes, checking the screens for scratches, and using pneumatic screwdrivers to open the back of each television and insert a Chinese-made memory board, before repackaging it for sale. Elements opened a suburban Detroit plant about three years ago. It was shuttered, and production moved to a subsidized site in South Carolina in 2013.

Meanwhile, Element's CEO Michael O'Shaughnessy has settled for $2.6 million with the receiver of the Tom Petters bankruptcy estate. In a 2012 lawsuit, court-appointed attorney Doug Kelley sued for $6 million to reclaim compensation Kelley said constituted "fraudulent transfers" that should be returned to help repay victims of the fraud. O'Shaughnessy was one of dozens of former executives, investors and others from whom Kelley has tried to recover funds as a result of the $3.65 billion Ponzi scheme that landed Petters in prison.

Staff writer David Phelps contributed to this report.

A Scholarship in John Olson's Memory

Last month, the big news in the local ad world was the $259 million cash offer by ICF International of Washington, D.C., to acquire Olson, the 545-person agency. Founder John Olson died of cancer in 2013 at age 56. On Oct. 22, Olson's birthday, a few former colleagues and friends gathered to present a $10,000 scholarship check in his memory to Karis Pryor, a BrandLab alumna who was an intern for three summers at Colle+McVoy. Olson also was the founder of the BrandLab, a nonprofit supported by 32 firms that helps expose minority high school students to the marketing industry.

"Through the BrandLab, I see the importance of diversity in marketing and advertising," said Pryor, a junior at St. Cloud State University. "With the help of this scholarship, I will … make that change and continue to admire those who have dedicated their lives to making a change as well."

Many others in the industry have stepped forward to donate to BrandLab scholarships in Olson's name, said BrandLab Executive Director Ellen Walthour.

Team Industries joins Ranks of Expanding State Companies

Team Industries, a Bagley, Minn., manufacturer that specializes in components for vehicles, is planning a $7.8 million expansion and equipment upgrade at its production facility in Detroit Lakes.

The company plans to build a 22,500-square-foot addition at the factory, which specializes in high-pressure aluminum die castings. Team expects to add 16 jobs that will pay an average of $14 an hour. The state Department of Employment and Economic Development has pledged $174,900 from its job creation fund that will be paid after the addition is complete.

Team, in business since 1967, makes drivetrains, transmissions, axles and gears. The company employs more than 1,000 at several Minnesota facilities and at a manufacturing plant in North Carolina.