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John Shmuel, Financial Post Magazine

Kloth finds a new home to battle global competitors
Michelle Lee is an entrepreneur who has turned the traditional idea of leaving small town Canada for the big city on its head. The owner of Kloth Clothing Design Inc., which helps design and manufacture clothing for fashion designers, originally operated in the trendy Gastown district of Vancouver. Although the location allowed Lee to quickly reach local designers, it also came with increasingly higher commercial property costs.
"After almost six years of being in Vancouver, we noticed the costs of doing business kept steadily increasing," Lee says. "We also realized that by 2008, we had clients all across Canada, and that being based in Vancouver wasn't exactly a necessity anymore."
As a result, Lee, who is originally from Vancouver Island, started looking for a new location and eventually set her sights on Port Alberni, a picturesque community of 21,000 in the centre of the island where real-estate prices were extremely attractive.
Of course, moving a business and finding the right place to base it in isn't always easy, but it can be a huge benefit for a company looking to cut costs and stay competitive in a global marketplace. "Prices in Port Alberni were 60%-70% cheaper than Vancouver, and that allowed us to keep our product quality high and the prices for our clients consistent," Lee says. The depressed logging and mill town also had a ready supply of motivated and trainable workers.
Lee initially chose Gastown for her company's location, because it was home to many of Vancouver's fashion designers and boutiques. After graduating from a design school in Vancouver, Lee stayed in the city to work as a teacher's assistant in fashion design and, simultaneously, started creating patterns and sewing samples as a side job. She eventually collected a sizable client list, and decided in 2003 that it was time to move her fledgling business out of her apartment.
Lee steadily built her business, eventually expanding to seven employees, as well as occasional part-time workers and interns from local design schools. But Kloth's location also meant high rent and high labour costs -- costs Lee realized would have to be passed on to her clients if the business was to continue where it was. Instead, she started looking elsewhere.
In 2008, Lee turned her eye to Vancouver Island and Port Alberni quickly attracted her attention. The resource-based town was suffering from high unemployment due to several mill closures over the years, but Lee realized that an eager workforce could help add new energy to her company.
The move, however, had its challenges. For starters, Lee had to train a completely new staff. "The amount of time, energy and effort was a large investment," she says. Logistics also proved challenging. For example, Lee says she was forced to arrange shipping for industry-specific items that were not available in the region.
But in the end, the benefits far outweighed the challenges. Costs have come down, and the company has also received positive feedback from its clients because production continues to be locally based, rather than overseas. "I find that many designers appreciate that our products are made here in Canada, and what that represents," Lee says.
In Port Alberni, it seems Lee has found the right fit for Kloth
When Kloth Clothing Design moved its operations to Port Alberni, B.C., from Vancouver, one of the main challenges was keeping clients informed. For example, clients accustomed to face-to-face meetings now had to make new arrangements because of the increased distance. Kloth owner Michelle Lee says one of the things she did to help lessen any anxiety was to clearly spell out the company's future plans. The goal, she says, was to reassure clients that Kloth wanted them all onboard for a very long time.
Due to high unemployment, Port Alberni has a large labour pool from which to draw workers. However, most didn't have the necessary skills Kloth needed, so Lee had to foot the bill to train workers. Her years as a teaching assistant allowed her to do this relatively quickly, but it was still the biggest cost and time constraint of Kloth's move. Lee says any company moving to a new location should have a training plan in place, rather than simply assuming the properly skilled workers can eventually be found.
Moving a business doesn't have to be an exhaustive trek across the country -- or overseas. Port Alberni is a four-hour trip from Vancouver by road and ferry, but Kloth's relatively short-distance move was still a huge gain. "I would encourage other business owners to look into their own backyards to find positive solutions for both company and community," Lee says.

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