About Us: Financial Times of London

About Us: Financial Times of London

[Brent Black quoted]

Financial Times of London; Weekend Magazine Feature

January 13, 2007

The Last Straw

By Hal Weitzman

About 18,000 of some of the finest Panama hats in the world are piled in a locked, caged-off corner of the storeroom at the Homero Ortega factory in Cuenca, Ecuador, a picturesque colonial town in the province of Azuay in the southern Ecuadorean highlands, 2,350 metres above sea level. As I inhale the intoxicatingly sweet smell of straw, Ivan Maldonado, the company’s marketing manager, unlocks the padlock. It feels like being let into the inner sanctum of some holy temple, and we talk in tones of hushed reverence. The difference between these Panamas and the hundreds of thousands of hats stacked in the rest of the storage area is immediately clear. The rows of weaving are perfectly straight—and so tight that some of the hats look as if they are made of off-white cotton.

For almost 30 years, one of Ecuador’s most famous hat producers has been building up this stockpile, aware that the knowledge of how to make the very best Panama hats—the superfinos—is being lost. These superbly woven specimens are meant to extend the life of the company, a preparation for a time when production of the Panama hat is no more.

“This is the most important stockpile of superfinos in the world,” says Maldonado. “We have it because we have to recognise that the art of weaving like this is dying out.”

A little bigger than New Zealand, Ecuador is one of South America’s smaller countries, but it contains a remarkably diverse geography: Amazon rainforest in the east, the Andean highland ridge in the centre, a tropical coast in the west and, 965km out in the Pacific, the rich biodiversity of the Galapagos Islands.

I am here to investigate the curious yet imminent death of one of the country’s most emblematic products: a signature of old—fashioned debonair elegance; the headwear of US presidents, European leaders, English cricket umpires and spies the world over; the hat worn by Churchill, Hemingway, Edward VII and Al Capone.

The internet and the rise of the global market should have been the saviour of the Panama. Instead, globalisation appears about to seal its fate: most experts agree that within 20 years an Ecuadorean will weave the last-ever traditionally made Panama hat.

In Ecuador they don’t call them Panamas. They call them sombreros de paja toquilla—hats woven from the straw of the toquilla plant, which grows in the swamps near the country’s central coast. The origin of the misnomer comes from the hat’s widespread use by the workers who built the Panama Canal from 1904 to 1914. The nomenclature is not merely fodder for afternoon television quiz shows: it is also partly responsible for the hats’ demise. The headwear has been a paja toquilla hat for far longer than it’s been a Panama—going back at least to the Spanish conquest in the 16th century—but the naming anomaly has made it difficult to prevent other countries from producing hats and marketing them as Panamas.

As in many other industries, the biggest threat to Ecuador’s Panama hat makers is China. No matter that China’s “straw” hats are actually woven from paper—few consumers would notice the difference. They are cheaper than the real thing, look as good to most people and are more flexible. Tom Miller, an American author who has written about the plight of the Panama, says of Chinese hats: “They have every advantage except authenticity.”

China is the world’s top “straw” hat producer, exporting more than $1bn-worth a year—more than 40 per cent of world demand. Ecuador, in 34th place, exports $2.3m-worth—about one-10th of 1 per cent of the global market.

“We cannot compete with the Chinese on price,” says Alicia Ortega, the elegant daughter of Homero Ortega and now the company’s president. “We can only compete on quality.”

But Chinese encroachment is helped by another important factor—one that also has a lot to do with globalisation. Young people in Ecuador, as in many poor countries, do not aspire to follow their parents into traditional occupations such as hat making. Nowadays, the South American dream is to migrate, usually to Spain or the US.

Kurt Dorfzaun—who heads Homero Ortega’s rival K. Dorfzaun—made the opposite journey. Fleeing Nazi Germany in the 1930s, he ended up in Cuenca and built his uncle’s company into Ecuador’s biggest Panama-hat exporter. Now 83, he has seen the industry slowly fade from the glory days of the 1940s and 1950s, when no self-respecting person would leave the house without a hat. In heavily German—accented English, he explains how much things have changed: “An importer from Madrid called me and said: ‘We need more hats!’ So I said to him, ‘Put an advert in the paper—you have more weavers there than we do here.’”

Some 23 per cent of Ecuador’s 13 million people are estimated to live abroad, many of them without documentation. Cuenca, Ecuador’s third-largest city, has been particularly affected by migration. A census a few years ago calculated the city had 400,000 inhabitants. The real figure is thought to be about 250,000, as people did not want to admit to government officials that their relatives were living abroad illegally.

As a result, Cuenca’s employment rate is high—60 per cent, compared with 37 per cent in Guayaquil, Ecuador’s biggest city, and 46 per cent in Quito, its capital. The city is buzzing with illegal Colombian and Peruvian immigrants, but local employers complain of the lack of skilled labour. And residents say the pull of joining relatives abroad remains strong.

Rafael Correa, a radical leftwinger who will be sworn in as Ecuador’s president on Monday, campaigned on a promise to create a ministry for migrants and set aside six congressional seats to represent them. Some of his strongest support came from Cuenca.

Most toquilla straw hats do not end up as “traditional” Panamas. Instead, the vast majority of the hats woven in Ecuador are shipped unshaped, and blocked in the country where they are sold—ending up as Mexican sombreros, cowboy hats (Stetson and Resistol, both US hatmakers, are big purchasers) or ladies millinery.

Demand for genuine Ecuadorean Panamas had been falling for many years, as hat-wearing has become less common and the baseball cap more ubiquitous. In the past year, however, the decline appears to have halted. Retailers even report that at the very top end of the market, demand may be on the rise. While the hat has yet to shed its somewhat stuffy image, there are signs that as awareness has grown of the skilled artisanship needed to make Panama hats, so has the appetite of consumers for finos and superfinos.

Corpei, the Ecuadorean exporters’ association, is working to get everyone in the industry—weavers, small producer groups, factories and exporters—to co-operate. Alicia Ortega is sceptical. “It sounds good, but this has failed so many times before,” she says wearily.

Ivan Maldonado agrees. “The weavers resent us,” he says. “They hear about hats being sold for thousands of dollars and they think we’re exploiting them. But we have to clean, finish and commercialise the hats—and we don’t determine the final price at which they’re sold.”

Animosities permeate the Panama hat industry. A longstanding personal feud between Kurt Dorfzaun and Homero Ortega continues, seven years after the latter’s death, preventing the sector’s two biggest exporters from working together. The companies also complain about the preponderance of middlemen—from comisionistas, who go from village to village buying hats, to exporters and distributors, whom they accuse of jacking up the price at the other end. The multi-tiered structure means that while some very fine hats are sold for $10,000 and up, the artisans who make them rarely receive more than a few hundred dollars per piece.

With some hats taking months to weave, many weavers and their children have calculated that they can earn more money fishing or picking flowers—or in virtually any other type of steady employment.

The road north out of Cuenca is punctuated with posters warning about the dangers of migration. “If you are going to leave, inform yourself—people smuggling is a crime,” says one. Another shows a picture of an overcrowded boat sinking. “Don’t let your dreams sink in the sea.”

In Azogues, a town of about 28,000 some 30km north-east of Cuenca, the signs of migration are everywhere. Betty Ruiz, who is showing me round on behalf of a local weavers’ foundation, says that five years ago the association had 500 members. Now it has 200. All are women: the men have mostly left for the US.

There is furious construction activity and the hillside neighbourhoods outside the centre are peppered with half-built mansions. “The migrants send back money to build the houses for themselves,” says Ruiz. “They say they’ll come back to live in them when they’ve made some money, but they never return.”

Maria Bertha Azuero, one of the weavers we visit, is working in the main room of one of the villas whose garish exterior belies an empty cement interior. She explains that the house belongs to her brothers, who are working in Chicago. She says that no, they do not intend to return. “So why do they need the house?” I ask. “They’re illegal immigrants,” Azuero says. “They could be deported any day.”

Like most of those produced in Azuay, Maria’s hats are of cheap quality. She makes four a week and sells them to a comisionista for $4 each—her only source of income. Like the other weavers we visit, she says that her children are not interested in learning how to weave. They are students at the local technical college.

At the end of our day together, Ruiz admits that she too once tried to leave. Four years ago she saved up enough money to buy a plane ticket to New York. “They wouldn’t let me in,” she says self—consciously. “I lived for five days on a bench in JFK airport. Then they deported me.”

If Azuay is now the production centre of the Panama hat industry, the province of Manabi, on Ecuador’s central coast, is its spiritual home. The town of Montecristi, where hats from local villages are cleaned, finished and sold on, is to Panama hat lovers what Havana is to cigar aficionados.

While the mountains of Azuay are verdant, the thin air frequently broken by sudden downpours, Manabi is hot, dusty and steamy. In the highlands, the Spanish sounds as if it contains little but consonants; on the coast, vowels dominate. The archetypal highlander is indigenous, the coastal resident mixed-race. In the mountains people view the lowlanders as uncultured and disorganised; on the coast people say residents of the highlands are obstinate and lazy. Mountain dwellers are generally thought of as more conservative and less hedonistic than people on the coast, but when it comes to elections, the former votes left and the latter, right.

This profound regional, social and political divide has aggravated the Panama hat industry’s seeming inability to save itself.

I travel to Manta, South America’s most western port and Manabi’s biggest town, with Claudio, the diminutive owner of a clapped-out taxi who tests his decrepit Toyota’s suspension by approaching speed bumps at breakneck velocity, breaking ineffectively half a second before the car is launched into the air.

Montecristi is a grubby and unattractive pueblo like a thousand other South American coastal towns. Manta, once a parish of Montecristi, now dwarfs its more famous neighbour. The two towns, which were distinct entities until the 1920s, have blended together in a dust and concrete conurbation—an inauspicious centre for the production of some of the most expensive headgear in the world.

The weaving takes place in a handful of villages outside Montecristi. One of the most prominent is Pile (pronounced Pee—lay), a town of 1,000. The houses are ragged redbrick dwellings with rusting corrugated iron roofs, the degraded dirt streets patrolled by strutting chickens and shuffling pigs.

The weavers work indoors, since the sun can make the straw too brittle to manipulate, and mostly in the early morning and evening, when the heat and humidity are at ideal levels for the work. They weave bent over in the half-light. Many complain of back and eye problems.

Manuel Alarcon, a 71-year-old who has been weaving Panamas for 60 years, says it takes him six weeks to make a hat, for which the comisionista pays him $150. The money doesn’t go far: in 2000, amidst a devastating economic crisis, Ecuador abandoned the sucre, its own currency, and adopted the US dollar. That brought macroeconomic stability, but steep increases in consumer prices.

“We used to get 300,000 sucres for a hat, which was OK money,” says Alarcon. “But now I get the equivalent of $25 a week, which doesn’t buy you anything.” He and his wife and three children live in two bedrooms separated by a flimsy wooden partition.

Dollarisation is another reason young people are disinclined to stay in Ecuador and continue the weaving tradition: of Alarcon’s six children, two live in Venezuela, one in the US. Of the three who remain, two work as agricultural labourers. One son, Mariano, is a weaver. “But I may well have to leave the country when I get married,” he says. “To make some real money.”

Cenovio Espinal, a 63-year-old who I later discover is considered one of the finest weavers in the world, lives in a bamboo house nearby. He receives $500 for his hats, each of which takes up to three months to make.

“It sounds like a lot, but it doesn’t pay the bills,” he says. “It’s no surprise that we’re losing this art. In Pile only 20 of us know how to weave well—and almost all of us are elderly.”

Total production in Montecristi is now down to about 5,000 hats a year. Only about a dozen of these are the finest “museum quality”.

In The Panama Hat Trail, Tom Miller quotes a Guayaquil hat retailer as saying: “In 20 years the weaving of the Montecristi finos will be all over.” The book was published 20 years ago.

So are reports of the death of the Panama greatly exaggerated? When I reach Miller by telephone at his home in Tucson, Arizona, he sounds a note of caution: “Remember,” he says, “it’s in the interest of the retailers to say the industry is in decline so they can jack up prices.”

But I cannot help feeling that the situation now looks more bleak than ever: the rise of China, the migration, the politics and structure of the industry, dollarisation—all seem to have conspired to kill off the legendary hats. Along the trail, I ask everyone I meet how long the Panama has left. Everyone gives one of two answers: 15 years or 20.

As with all endangered species, there are glimmers of hope for the Panama hat. In Chordeleg, a small town in Azuay, Anita Loja, a weaver, has formed an association that is producing small numbers of Fairtrade Panama hats for the Spanish market. In Montecristi, Brent Black, a US retailer who sells the hats for up to $25,000, is working to get more money directly to the weavers and so keep the tradition alive. And in Pile I meet Simon Abel, a 38-year-old who is teaching his three children to weave superfinos.

Still, when Black and I talk by phone, I suggest that his efforts to save the industry may have come too late. His answer is that of someone who reveres the art of the real Panama hat. “We may be rearranging the deck chairs on the Titanic,” he says, “but, by God, they’ll be in neat rows.”

 
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