Made in USA Gaining Traction
For a decade, business press pundits have repeated the mantra, “Domestic manufacturing is not a viable option for American companies.” Yet outdoor brands like Kokatat, Smith Optics, Thule, and Farm to Feet have shown that domestic manufacturing can be successful, and the “We can’t build products here” attitude is changing.
Outdoor brands with domestic production range from small, single product line companies to global leaders who have invested in American manufacturing capacity. Kokatat has been building paddlesports apparel and gear in Arcata, Calif., since 1971. “We recognized that the only way to ensure that our products perform to our expectations and perform better than any competitor in the industry is to control our manufacturing,” said Jeff Turner, sales, marketing and design manager for Kokatat. “That’s what’s driven us for 40-plus years.”
One of the most important benefits of domestic production is shorter lead times that allow brands to respond to changes in product demand. “A big factor for us is lead time and the volatility of demand for snow goggles,” said Scott MacGuffie, vp operations for Smith Optics. “If it’s a good snow year, we have strong demand. If it’s a bad snow year, we have less demand. Having a domestic manufacturing capability allows us to react to those changes and fluctuations faster.”
Thule also finds that domestic manufacturing offers added flexibility and a competitive edge.
“At Thule we produce close to the market where our products are sold. Historically, this has been because vehicles differ so much from country to country,” said Fred Clark, president at Thule Inc. “Today, domestic production gives us a competitive edge by being able to closely watch our quality and inventory. When a product is seeing higher demand, we can quickly react and supply the market. Our factory is very flexible and we can produce just in time. If we have a mild winter and the snow doesn’t fall, by producing in the United States, we won’t be tying up inventory dollars in ski rack finished goods. If we see a major increase in a particular product, we can deliver in four to six weeks vs. three months if we were producing overseas.”
There’s no question manufacturers face challenges when considering domestic manufacturing. Obstacles such as hiring a talented workforce can be daunting. Still, the advantages of offshore production are also facing scrutiny.
“Even companies who felt they had to be in Asia are finding that lead times and transportation costs are adding significant cost pressures,” said Alex Boian, senior director of government affairs for Outdoor Industry Association® (OIA). “Obstacles that may have seemed insurmountable three to five years ago may not be as difficult today. There is a fundamental shift in the way executives are thinking about domestic manufacturing.”
Outdoor brands that once considered domestic manufacturing fraught with difficult challenges are now giving it another look. Often mentioned obstacles, such as the lack of an educated workforce, may not be as valid as in the past. Boston Consulting Group research finds little evidence of a meaningful and persistent skills gap in most parts of the United States, including in its most important manufacturing zones.
Shorter lead times, lower transportation costs and quality control are several factors influencing increased interest in domestic production.
“There are a couple of key factors allowing outdoor brands to consider domestic production. The first is transparency into the supply chain. With domestic sourcing, brands are afforded better opportunities to understand the supply chain behind their products,” said David Petri, vp of marketing for Farm to Feet. “The other factor is lower transportation and time to market costs. There are clearly lower transportation costs with domestic production compared to overseas, but also the time it takes to get finished goods from the manufacturer to the retailer can be drastically reduced.”
Consumer attitudes about manufacturing are also influencing decisions about production processes. “Social compliance is becoming a much bigger issue. It’s more effective to manage your social compliance in a facility that you own and operate here in the United States than it is in a factory thousands of miles away,” said MacGuffie. “Our retail customers and consumers want us to pursue social compliance programs.”
In previous decades, support for American workers played a role in urging companies to consider domestic production. Today, these attitudes have evolved. “Over the past five years we’ve seen an increased interest in U.S.-made goods. The desire for American-made products, however, has always been a deeply rooted part of American society — a sense of patriotism. Yet, there may be more to it now then just the patriotic perception of ‘Buying American.’ Consumers are starting to become more aware and interested in what materials are in the products they purchase as well as how and where they were made,” said Petri.
Clark added, “Consumer and retailers appreciate when a product is made in the USA. After the economic downturn of 2008, many people experienced the harsh reality of lost jobs, lower wages and falling home prices. When you see that a product is ‘Made in the USA,’ it reminds people that an American worker made this product in an American factory.”
In January 2013, OIA launched a Made in America Working Group to provide a forum for companies interested in pursuing domestic manufacturing. “The quick answer used to be that domestic production is too hard. Now they say, ‘Yes, it’s hard but what can we do about it? What are we going to do about those challenges? Let’s solve the problems,’” said Boian.
As perceptions about domestic manufacturing change, brands with long histories of “Made in USA” are fielding questions about their experiences. “More people inside and outside of the outdoor industry have come to us to ask about a Made in USA strategy. We’ve seen an increase in interest over the last few years. That’s due to uncertainty about supply chain issues, currency fluctuation and quality demands,” said MacGuffie.
“Those kind of calls have increased significantly in the last few years. People aren’t saying we can’t anymore, they’re saying it’s going to be difficult but how can do we do it? In the outdoor industry, we’ve discovered that there are a number of really cool companies who have successful, profitable businesses that are making products here that are every bit as good in terms of quality as anything that is made offshore,” said Turner.
“Over the past 10 years, consumers are more and more relating ‘Made in USA’ with quality and jobs. At Thule, we spend many days out in the retail market,” said Clark. He added that when people ask how Thule is different than its competitors, ‘Made in the USA’ always gets attention. “People respect companies that can be competitive while producing in the United States.”
OIA’s Made in America Working Group is helping companies who currently manufacture in the United States or want to figure out how to do so. For more information, contact Lindsay Bourgoine, OIA’s advocacy manager.