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The Honolulu Advertiser
Posted on: Thursday, December 13, 2001

Crazy Shirts factory to reopen

By Andrew Gomes
Advertiser Staff Writer

Four years ago, in the middle of Hawai'i's searing economic downturn, kama'aina retailer Crazy Shirts moved its production facility to the Mainland to help it survive.

Today, following the company's bankruptcy reorganization, a new owner is moving the plant back to the Islands as the reborn business looks for more efficiency in another time of economic challenges.

Crazy Shirts told employees yesterday about its decision to bring the shirt-printing plant back to Hawai'i, a move that will create roughly 50 jobs at the company's Halawa headquarters.

The facility, to be outfitted with $500,000 worth of new screen-press equipment, is expected to be up and running in February as the existing printing plant in Tustin, Calif., is phased out.

Of 441Crazy Shirts jobs, 81 will be lost in California, but the 50 or so created here bring a small bit of positive news for the state as it struggles to counter a rising tide of job cuts since Sept. 11.

Hawai'i's jobless rate recently surged to its highest level in two years. More than 35,000 residents have applied for unemployment benefits since Sept. 11, about three times the number who applied in the same period a year ago.

It was in the middle of the state's last massive layoff wave in early 1998 that Crazy Shirts decided to move its production plant from Hawai'i to California to consolidate company operations already on the Mainland. At the time, Crazy Shirts expected to gain efficiencies, but 140 Hawai'i jobs were lost.

Mark Hollander, who became Crazy Shirts president after a group of investors with ties to local retailer Waikiki Trader Corp. bought the apparel company at a bankruptcy auction last month, said the company is bringing production back to the state to help reduce shipping costs, speed product development and hopefully increase the flow of creativity at the company.

For example, making shirts colored with Kona coffee and other special dyes requires that blank shirts be sent from the East Coast to Hawai'i for dying, then to California for printing, and back to Hawai'i for sale.

"When you look at the shipping costs, the shipping is just big numbers," Hollander said.

Hollander also cited intangible efficiencies that Crazy Shirts expects to gain by restoring part of the company removed four years ago.

"We see a huge advantage in having the production division working side by side with our art department and management team, and having the entire heart of the company under one roof ... , we think the product lines will become even more creative as a result," he said.

Another factor in moving the plant is cost-effectiveness. Despite higher labor and real estate expenses here, Hollander said the move should save Crazy Shirts money because the company is significantly smaller today than it was four years ago.

The California plant, according to Hollander, is efficient for printing large quantities of shirts for which there hasn't been a demand since the company closed a quarter of its stores over the past few years.

Hollander said new owners considered keeping the California facility by seeking outside print jobs to maximize capacity, but wanted to focus solely on Crazy Shirts and its 40 stores.

The printing operations are expected to take up at least 10,000 square feet of Crazy Shirts' 46,000-square-foot building currently used to store everything from old business records to office furniture to 700 boxes of antiques collected by the company's founder.

Setting up the plant will be a challenge and may require additional warehouse space for screens and other materials, but Hollander said Crazy Shirts has been getting good advice from local printers.

"It's going to be a real learning curve," he said. "We're not printing experts, we come here with general business acumen."

The Waikiki Trader group took over Crazy Shirts last month after agreeing to pay creditors $6.75 million in cash, $1.5 million for the Halawa headquarters and at least $450,000 over two years, with more if sales exceed a certain mark. The group outbid California-based apparel manufacturer and retailer Big Dog Holdings Inc.

Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.