Kleer-Vu moves plant to Compton from Tennessee.

Photo albums firm says doing business here is cheaper

Publicly held Kleer-Vu Industries Inc., the leading seller of photographic albums to giant retailer Wal-Mart, has moved its main factory from Tennessee to Compton -- and a top official at the 51-year-old company said the cost of doing

"Wages are lower here, productivity is higher, rents are lower, and the City of Compton is very business-friendly," said David Hardee, Kleer-Vu's president, co-chief executive officer and major shareholder. "In the City of Los Angeles, you have a lot of problems with building permits and whatnot, but here in Compton (where the firm also is headquartered), I can just call the mayor on the phone and get things straightened out. And the humidity is awful there in Tennessee."

Kleer-Vu pays "around" 25 cents a square foot in monthly rent for its Compton plant, said Hardee, who described the facility as new, state-of-the-art warehouse space. "That's less than we were paying in Tennessee," he said.

Local rents are down; leases on similar, good-quality Southland warehouse space hit 45 cents a square foot a month in the late 1980s. But the long, industrial recession in greater Los Angeles has driven down rents on warehouse space.

Kleer-Vu reported a loss of $1.6 million on revenues of $11.6 million in the six months ended June 30. For full-year 1993, it posted a loss of $2.95 million on revenues of $24.4 million.

Kleer-Vu's Hardee said last week the worst was behind the company, and both revenues and profits should surge in the months ahead.

Some smaller subsidiaries have been shed, the move completed, and the company is now concentrating on the album business, said Hardee.

Too, Kleer-Vu had been the target of litigation from, and has been in settlement talks with, the federal Resolution Trust Corp. A subsidiary had not made good on a unpaid balance of $4.1 million on a promissory note issued by a Texas thrift.

The RTC had taken over the thrift, and pursued Kleer-Vu for the money (the debt was incurred prior to Hardee taking his position at Kleer-Vu).

Under Hardee's direction, Kleer-Vu fought the RTC, and last month settled the debt "for 10 cents of the dollar," said Hardee last week.

He advised investors and others not to be too daunted by Kleer-Vu's recent losses. "The whole purpose of the 8Ks, the 10Ks, and the 10Qs was to make the company look bad for settlement purposes with the RTC," said Hardee.

Kleer-Vu manufactures photographic albums and recipe books for mass merchandisers, such as Wal-Mart, Target and Costco. The mass merchandisers are known for buying cheap, and in quantity, in order to sell cheap. They also want fast turnaround on orders -- one reason Kleer-Vu keeps $9.4 million worth of albums in stock, ready for shipping on a moment's notice.

Helping to hold down costs, Kleer-Vu sources plastic sheeting and paper from South Korea, and also has a plant in Mexicali.

"We are the low-cost producer of photographic albums in the country," claimed Hardee. "As such, we expect very strong growth in the years ahead. Most of the other photographic album makers are mom-and-pop outfits, or they are based in the Northeast, with high utility bills and union wages."

Wages in Tennessee are relatively high, said Hardee, because they were raised long ago in an effort to keep unions out.

Kleer-Vu employs 240 workers, 110 of whom work at the 135,000-square-foot Compton plant and headquarters. The remaining employees work in the Mexicali plant.

Access to the maquiladora plant, and low-cost paper and plastic from the Far East (due to the proximity to the Los Angeles and Long Beach ports) make Kleer-Vu a formidable competitor, said Hardee.

And there is competition -- 10 other major domestic makers of photo albums and 25 substantial importers, according to Kleer-Vu disclosure documents.

In late 1993, Hardee, along with business partner H.P. Park, bought a majority chunk of Brownsville, Tenn.-based Kleer-Vu's stock and moved it to Compton. Hardee is general partner of Hardee Capital Partners L.P. in Santa Monica, and through that investment vehicle controls 30 percent of Kleer-Vu stock.

H.P. Park, described by Hardee as a American of Korean descent, owns 31 percent of Kleer-Vu, and is its chairman and co-chief executive.

Park is "affiliated" with a trading company that provides Kleer-Vu with raw materials from South Korea, according to disclosure statements.

After Hardee's and Park's shares, the remainder of the stock, 39 percent, is traded on the American Stock Exchange.

Kleer-Vu stock commanded $8.625 a share last week, up from a 52-week low of $4 a share. It traded as high as $14.125 a share in 1992.