Usapang Business: From rags to gloves

Theirs is a rags to riches story, literally. Husband and wife Ramon and Carmen Fajardo’s Kar-neth Marketing supplies over 700,000 pairs of knitted and cotton gloves a month, to the country’s top electronic firms. It’s a long way from the married couple’s humble beginnings, making rags from "retaso" or scrap cloth.

In 1987, Ramon Fajardo was a minimum wage earner employed by a container van manufacturer as a warehouse man. He was exploring ways to earn extra income when the delivery of a jeep-load of rags, sparked his imagination. Fajardo began to source scrap cloth from garments manufacturers, using his small savings of P1,000. The women in his family were adept at sewing and so his wife, his mother and his mother-in-law went to work on the rags.

After work, Fajardo himself would sit behind the sewing machine to lend a hand.

The couple began to sell the rags in blocks of five kilos. They just kept making the rags even without a steady stream of buyers, often to the ridicule of their neighbors. The big break came when a furniture exporter began to order rags in volumes of 100 to 200 kilos a month. Because the profit was good, Fajardo would triple his investment with every order. But the good times did not last. The furniture maker, his biggest buyer, closed shop and their last order for rags went unpaid.

Big break

Carmen Fajardo came to the rescue and looked for other prospective buyers. One of these was Philips Semiconductor Philippines, Inc., which began to order huge quantities of rags.

Because of the couple’s good relationship with the company as a reliable and cost-effective supplier Ramon Fajardo resigned from his job and registered Kar-neth Marketing as a single proprietorship. The name was coined from combining the names of their two children, Karmela and Kenneth.

In 1992, Philips encouraged the couple to consider making gloves used by its workers in the assembly plant. "The company wanted to cut costs and to deal directly with manufacturers instead of trading companies," Fajardo said.

Because it did not know anything about the more complex task of making gloves, Kar-neth scoured for cheap suppliers and found one in Bulacan, an old lady sewer with one machine. As the demand for the gloves grew, Kar-neth’s supplier expanded her operation to 10 sewing machines. It realized that while the supplier’s business was growing, our rag making enterprise was left behind. This was when we decided to learn the business and to manufacture the gloves ourselves. "We calculated the cost of the inputs, sourced the raw material and borrowed half a million from the Livelihood Corporation, a cooperative, to purchase one speed sewing machine," said Fajardo.

Every year, Karneth would make enough to buy another machine. The demand for knitted and cotton gloves grew alongside the growth of the country’s electronic exports. Workers in the sensitive assemblies of the semiconductor companies needed two pairs of gloves a day. Ramon oversees the operations of Kar-neth, while Carmen looks after the finances.

Kar-neth now have 11 high speed sewing machines in the backyard o their home in Las Piñas. Daily production is 240 to 260 dozens of knitted gloves or about 7,800 dozens a month and 10,000 dozens of cotton gloves a month. Kar-neth has about 70 subcontractors in a barangay in Cavite.

"The business has slowed down because of increased competition from China as well as better capitalized local counterparts from the Filipino-Chinese community," said Fajardo.

Unfazed, Kar-neth forecasts the business growing by 40% next year on the belief that a reliable, predictable and steady local manufacturer will always have buyers. Kar-neth is already venturing slowly into the manufacture of factory masks and hair caps for factory workers.

"I am not a rich man. The most important thing is that we are giving our children a legacy they can build on and grow," said Fajardo.