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Outdoor Industry: An Enviable Engine to Manufacture Economic Growth

By Chris Meehan | Feb 25, 2021

Consumer & Lifestyle Colorado

As outdoor brands look to reshore production, they're finding mountain towns and rural communities are not only great places to test gear, they can also support tech-fueled manufacturing operations.

The numbers are undeniable: The outdoor industry (OI) is an increasingly important -- but undervalued -- cog in the U.S. economy.

Colorado might well be ground zero for the phenomenon. The outdoor industry currently generates about 10 percent of the state's gross domestic product, producing $62.5 billion in annual revenue -- including $9 billion in tax revenue -- and employing more than 511,000 people, according to the most recent state report, The 2017 Economic Contributions of Outdoor Recreation in Colorado.

For comparison's sake, the American Petroleum Institute has estimated the annual economic impact of oil and gas in Colorado as $31 billion.

The state's outdoor industry "is bigger than agriculture, it's bigger than automotive, and it's bigger than pharmaceuticals," says Nathan Fey, executive director of the Colorado Outdoor Recreation Industry Office.

But it's also decentralized, so sector-specific data is elusive. OI encompasses experience-based businesses -- fishing lodges, climbing guides, and ski resorts -- as well as the toys necessary to take full advantage of them: fly rods and reels, crampons and carabiners, and skis and snowboards, not to mention outdoor apparel, tents, trailers, and sleeping bags.

For decades, the country's leading OI brands have offshored manufacturing of most products that they designed and engineered here to partner factories in Asia, but that trend hit a wall in 2020 in the form of COVID-19.

In this pandemic-altered era, more and more companies are looking for domestic manufacturing options as supply-chain disruptions, brand imperatives, and new tech-fueled production processes reshape manufacturing in the U.S.

Before the pandemic struck, OI manufacturing was growing modestly in the U.S. In 2019, it provided more than 244,000 jobs, according to the latest Outdoor Industry Association and the Bureau of Economic Analysis figures. The total economic impact grew from $51.7 billion in 2017 to $55 billion in 2019.

It looks like the upward trend will only accelerate from here. Plenty of outdoor gear is ripe for domestic production, but only if the infrastructure can support it. And when it comes to reshoring, Colorado is near or at the top of most brands' lists.

There are success stories all over the state. In Denver, Guerrilla Gravity makes mountain bikes and Never Summer Industries crafts innovative snowboards. Beyond the Front Range, companies like Mayfly Outdoors (parent of Ross Reels, Abel Reels, and Airflo) in Montrose, Moots in Steamboat Springs, and Mountain Racing Products in Grand Junction are leading the way on the Western Slope.

Brands are relocating from other states and overseas, as outdoor companies disperse from the Front Range to places with easier access to the great outdoors. "I think it's the start of seeing more clusters emerge," says Fey. "We're seeing more early entrepreneurs relocate and set up shop in rural parts of the state."

The building blocks of labor and capital investment need to scale in order to catalyze a broader shift for OI manufacturing. Regardless, there's a lot to be said for manufacturing boats on a body of water, or making skis at the bottom of the slopes.

Take Wagner Custom Skis, which crafts skis in the heart of Mountain Village at Telluride Resort. "Our competitive advantage has to do with the technology that we've created here," says Pete Wagner, who founded his namesake company in 2006. "What we're doing is we have an innovative way of doing mass customization for design and manufacturing that's more agile and faster, and ultimately produces a better-performing product."

It's all about innovation, he adds. "I think that that's really what is needed to be a successful manufacturer today or in the future. You have to be doing something different, I don't think that you can be successful with just saying we're going to do the same thing as a factory in China, and we're going to beat them on cost."

Then there are the fringe benefits that come with running a ski factory in a base village at a ski resort. "We've got the dream manufacturing setup," says Wagner. "It's amazing that we get to run a manufacturing business in such a cool place. We've got world-class skiing, sweet singletrack and trail systems and biking and hiking, and all that stuff right outside of our door."

Based in Pagosa Springs in southwestern Colorado, VOORMI has built a reputation as one of the most cutting-edge manufacturers of high-performance clothing and outerwear since its founding in 2010. "By establishing VOORMI in our rural mountain town, we have to be authentic in everything we do because you can't really fake it," says Dustin English, the company's co-founder and director of product integrity. "It's allowed us to put the blinders on . . . and really develop fabrics and textiles and technology from the ground up."

VOORMI's cut-and-sew operations are in Pagosa Springs and Bozeman, Montana. (The latter is also home to a second flagship store VOORMI opened in 2019.) The company has developed eight proprietary textile platforms and secured dozens of patents as its catalog expanded from base layers to outerwear to socks, gaiters, and other accessories.

As for the company's domestic supply chain -- the majority of its fabrics are milled on the East Coast, some using Colorado wool -- the production cycle is unbeatable. "We'll develop the fabric in-house, get it [milled and] shipped from the East Coast and then we'll sew the sample here at our facility in Pagosa Springs," says English. "That afternoon I can drive it up to Wolf Creek and have it on half a dozen ski patrollers, testing it in some of the most snow in the country, and then I have complete iterative feedback."

Local manufacturing also means the company doesn't have to deal with the disadvantages of overseas production. "We're not filling containers from Asia with a hundred thousand units that's going to put us over through the fall," English says. "We are on a year-round manufacturing cycle for all of our stuff. . . . We make a batch and then we sell out of that batch. And then six weeks later we have the next batch. We're just constantly year-round doing it."

As most mountain towns are often reliant on seasonal labor for tourism and construction, workforce is not an issue for year-round manufacturing operations like VOORMI's. "We're really proud to be able to offer folks full-time jobs in the town that they want to live in and recreate in and raise a family in, and then be able to pay them a livable wage, provide benefits, and other business perks as well," says English.

Guerrilla Gravity's short supply chain pays big dividends for the Denver-based mountain bike manufacturer. Thanks to manufacturing domestically and sourcing materials locally, the company is able to meet demand when most of its competitors can't -- despite crippling supply-chain issues brought on by COVID-19, which include delays of up to 12 months for Asian-made frames and components.

"We're actually one of the few companies in the industry right now that does have breakthrough sales," says Will Montague, the company's president and co-founder. "It's been a long time since bicycles were made here in meaningful volumes."

There's a common theme: As is the case with VOORMI and Wagner Custom Skis, Guerrilla Gravity's manufacturing success leverages innovation in a big way. "The underlying technology allows us to be cost-competitive with Asian-made frames and bicycle components," says Montague.

Guerrilla Gravity spun its patented carbon manufacturing technology off as a separate company, Revved Industries. Montague says that Revved is already in talks with other OEM companies to build frames for them, and it could also manufacture other bike components -- handlebars and seat posts, for example -- or even delve into products for the aerospace or automotive industries.

In Montrose, Mayfly Outdoors has doubled down on OI manufacturing by consolidating production for its brands at a development of its own making: Colorado Outdoors, an OI-oriented, mixed-use project on the Uncompahgre River. Mayfly opened its new, 41,000-square-foot headquarters and manufacturing facility as the 164-acre revitalization project's cornerstone in summer of 2019.

David Dragoo, president of Colorado Outdoors and founder of Mayfly, says it's all about having the requisite infrastructure to rethink manufacturing processes: high-speed Internet, high-capacity electrical systems, high-bay ceilings, and an open floor plan.

"Any future technology that we need, we have the capacity and infrastructure to execute it," says Dragoo. "And that's the key -- you have big-city amenities in a small town. That’s been one of the biggest differences for us in Montrose."

Colorado Outdoors is expected to represent more than $83 million in infrastructure investments upon buildout. Dragoo says that total includes "anything that's a horizontal improvement, so curb, gutter, sidewalk, upgraded utilities, fiber-optic, the river trail, the river restoration -- all the things that create a sense of place and allow you to build the place."

In the new facility at Colorado Outdoors, Mayfly's daily throughput is "up about 40 percent," he adds. "There's a lot of things in that figure, but one is new machinery and new equipment driven by our ability to implement and streamline new technologies."

Other OI companies like what they see at Colorado Outdoors. Wedge Brands is set to break ground on a facility at the development by the end of 2021, and Dragoo says several other as-yet-unnamed tenants have committed as well.

Beyond immediate access to the Uncompahgre, the lures are many. The Colorado Outdoors project is located in a federally recognized Qualified Opportunity Zone (QOZ) as well as a state of Colorado Enterprise Zone. Both programs offer numerous tax credits and incentives to lure companies, including zero long-term capital gains taxes, cash incentives of up to $10,000 per qualified job created, and a state tax credits of $2,000 per job created.

Dragoo says a strategic local economic-development plan goes a long way for OI manufacturers, no matter where they are based. "I think Montrose is a great example. They have a [QOZ] and are aggressive in their recruiting. They’ve become a partner.”

Other public-private partnerships are laying the groundwork for more growth on the Western Slope. A number of incubators and accelerators are working to foster the next generation of outdoor companies in Colorado. "Montrose of course has the Catapult Innovation Lab as its new location after leaving the Gunnison-Crested Butte area," Fey says. "They're expanding their accelerator to different locations around Colorado."

Likewise, outdoor gear retailer Moosejaw is working with Western Colorado University's ICELab on an accelerator program to help OI startups get early-stage traction. That project is now in its second iteration, having already launched three companies in its first cohort. "Obviously, having access to a brick-and-mortar retailer and placement for products that come out of that accelerator program is really exciting," says Fey.

Taking cues from advanced manufacturing, OI has plenty of runway to reshore in places once considered too far off the beaten path. In Colorado, companies can leverage the whitewater, powder, and singletrack for testing and iteration, and its central location and ever-improving infrastructure and logistics make manufacturing viable in the unlikeliest of locales -- say, a ski town or alongside a gold-medal fly-fishing river.

Then there's the cachet that comes with manufacturing in Colorado's rarefied air. Touts Fey: "There is a certain prestige that comes with being made here in the state and being part of the outdoor rec ecosystem."

This story was sponsored by Colorado Outdoors as part of a series of features and videos examining economic trends in the outdoor industry, culminating with the Outdoor Industry Summit & Manufacturing Expo in late summer 2021. Read the first story in the series here.