Quick, Where Do They Make Panama Hats?

Alicia Ortega has a problem. A client just sent her a couple of pages from a British fashion magazine with pictures of the Royal Family wearing hats. The client wants a hat just like Princess Diana's, a small-brimmed number with a little point on the top. "That hat is made of plastic," says Alicia. "How are we going to do that in straw?"

The question is clearly rhetorical. Alicia Ortega, sales manager and one of five heirs of Homero Ortega y Hijos Ltd., probably the largest Panama-hat dynasty in the world, doesn't let problems go unresolved.

Except one, that is--the name of the product. Panama hats don't come from Panama, you see. They're made here in Ecuador. "You [journalists] have to tell people," grumbles 79-year-old Homero Ortega, Alicia's father, who still dons a lab coat each day to oversee operations. Those creamy white Panama hats, woven of superfine straw, made famous by Theodore Roosevelt, infamous by Al Capone, and revived by modish urbanites such as writer Tom Wolfe--"They're made here. They always have been," says Homero, proudly. The only authentic Panama hats in Panama, in fact, are imported from Ecuador.

Homero obliges visitors with hat history as he shows off his airy factory in the colonial city of Cuenca, located in the foothills of Ecuador's Andes. "When Seor Roosevelt came to Panama to build the canal," he and his men liked the finely woven straw hats they saw. Assuming they were made locally, Roosevelt and company called them Panamas. Another version has it that the hats were first spied by the '49ers as they crossed the Isthmus of Panama en route to California to search for gold.

USER-FRIENDLY. Whatever the origin of the name, the hats became very popular in the early part of the century, not only in the U.S. but in Britain, where no self-respecting gentleman would be seen in summer without a Panama.

Here in Ecuador, however, most self-respecting upper-class Ecuadoreans wouldn't be caught dead in the Panamas that are once again in fashion and fetch $70 at Bloomingdale's. That's because such headwear is ubiquitous among members of Ecuador's lower classes. Even in rural Ecuador, a good straw hat costs up to $40, about a month's salary for many workers. Worn night and day, hats are regularly coated with shellac and can last for as long as a dozen years, the proprietor of a bustling hat-repair business near Cuenca tells me.

It's hard to make a living from customers who shop once every 12 years, though. That's why hatmakers have always relied on exports. These days, exports are a cause of concern. In 1980, Ortega shipped some 600,000 hats out of the country. Now, exports are off by 30%, to about 425,000.

The Ortegas blame economic problems that hit hat-buying countries such as Brazil. Fifteen years ago, Brazil was the Ortegas' biggest customer. Now, it's No.2, behind the U.S. "If a country is in bad shape, no one worries about fashion," says Alicia, with a sigh.

Exports to Japan have been off, too, and in Mexico, Panama hats compete with cheap plastic knockoffs from Asia. "Those acrylic hats are very hot and not very healthy to wear," contends Galo Cedillo, Under Secretary of Industry for Cuenca and the surrounding region. Straw breathes, he explains.

Local sales aren't great either. In Ecuador, recession has dragged on for six years. A flood devastated Cuenca two years ago, and this summer a drought played havoc with hydroelectric plants, causing energy rationing.

And to cap it all off, Ecuador has to pay the costs of last February's war with Peru. The war lasted less than a month, but "it hit us very hard," says Cedillo. He explains the war was the latest chapter in a 170-year-old border dispute between the two countries. The fighting frightened away the tourists, who buy Panamas as souvenirs.

Ecuador's economic woes are causing another problem for hat companies: Weavers, who earn an average of 50 cents per hat, are fleeing. Even in Ecuador, where wages are low, hatmaking isn't the most lucrative of careers. "People are looking for a better life," says Alicia. About 10% of the Cuenca area's 500,000 residents have emigrated since 1990.

Despite all this, the Ortegas have reason to be optimistic. Tourists are beginning to return, and at least one travel agency offers a special Panama-hat tour. And there are still enough hatmakers to supply the Ortega factory. Besides, Alicia thinks she can duplicate that point on Princess Diana's hat and maybe start a trend.

So the attitude is decidedly upbeat around the factory. The company was founded by Homero's grandparents, entrepreneurs who turned a centuries-old craft of weaving hats, baskets, and even boats from toquilla palm into a thriving business. Homero expects to turn the company over to his five children. "We were born in straw," jokes Alicia, whose chemist husband creates new colors and chemical solutions for treating the hats. Their 22-year-old daughter is studying fashion design in expectation of joining the business.

On Thursday mornings before dawn, the hatmakers come into Cuenca with the week's production. They take their earnings to the banks of the Tomebamba River, which runs through Cuenca, where they buy bleached toquilla fronds that have been laid out in the sun. Then, the weavers go home and start the process again. Some 180,000 local residents, many of them farm wives, weave hats.

Ortega workers stack the hats they've purchased in piles inside the factory for finishing. Homero asks an assistant to pick one from a tower of at least 50. He rejects a few because of imperfections; then, finding one that satisfies him, he explains how it is made. The weavers start with fronds of toquilla, working out from the center of what will be the crown of the hat. You can tell the quality of a Panama from the number of center rings--23 rings for the highest grade. Coarse hats take only a day to make, while top-of-the-line Panamas require a week or more.

The Ortegas stock 40 different styles, including bowlers and homburgs, in some 90 colors. Still, most customers opt for the traditional--an ivory-colored fedora with a dark band.

HAT TRICK. Cuenca is the center of Ecuador's Panama--or rather, straw-hat--industry, but even Homero admits the very finest hats are made in Montecristi, a tiny town on the coast. Those hats, they say, can be rolled up and drawn through a wedding band, or folded to the size of a pocket handkerchief. "I won't try to deceive you," Homero says. "We don't make those hats here."

Homero's hats might not hold water as the Montecristi hats are said to do, but to my eyes, they are fine indeed, silky soft and pliable. They can be stuffed into a bag and yet later be easily reshaped to look like new. And they're suitable for any occasion, whether you want to build a canal, run a speakeasy, write a bestseller--or look like Princess Di.

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