Is there an industry more challenged by its success than the Outdoor Industry?
Take Nike, a colossus of OI. Phil Knight's now famous sojourns to Asia to establish a shoe manufacturing beachhead opened the floodgates for American brands to offshore en masse, and boy, have they. Still today, brands of all sizes follow Knight's Orient Express to ensconse production in thriving, world-class shoe and apparel factories, primarily in China.
The results have been stunning. Chinese factories are so capable that today "the likes of Balenciaga have started manufacturing in the country," according to GQ. (Did you know that a $700 cross-trainer was even available? Neither did I.) The investments in infrastructure and people have transformed China into an OI manufacturing superpower.
But as business media reports, Nike, Adidas, and others are leaving China in search of cheaper labor in other markets -- like Vietnam. It's part of a modern shell game brands now manage, one precipitated by their own success in creating centers of manufacturing excellence offshore that are, by definition, increasingly expensive to operate. Qualified labor, benefits, advanced technology, and materials -- the price of world-class manufacturing -- are becoming as pricey in China as they are in Detroit.
After helping transform China into a economic behemoth, sights are now set on other Asian countries where major investments in infrastructure can be offset by lower labor costs. It's the offshore playbook, out of print and updated for an iPad.
Here's the rub: Today OI brands are motivated by more than profit. It's an industry packed full of change agents who are moved to steward public lands, develop "authentic" brands, preserve finite resources, and generally make the business world a more sustainable, friendly place.
How to rationalize, then, the inherent unsustainability of an Asian supply chain? Or rural unemployment and dogged underemployment in states home to the same brands that are investing in jobs and production infrastructure in overseas communities? Or how to justify a lack of credible environmental oversight in countries home to the apparel factories of U.S. OI brands, as the industry wields its considerable power here to punish states for public lands policy?
As uncomfortable OI brands are with this paradox, they're not showing it. Domestic manufacturing is making a comeback, but in OI circles, the question of where its products are made is largely a back-burner issue. The Industry still operates under a halo of tacit approval that brands must offshore production to stay in business, or, that it's okay to relegate manufacturing to remote destinations. We've embraced the methodology of U.S. brands pouring profits into the development of world-class manufacturing facilities offshore, not here.
For one, there's a vanguard of companies challenging conventional wisdom, companies that have simply said that offshore production will not be part of corporate or product DNA. CompanyWeek Editor Eric Peterson reminds us of several Colorado-based companies that fit the bill, this week.
Alchemy Bicycle Co. is first on the list and in the alphabet, but Ryan Cannizzaro's mission and accomplishment is not trivial. Alchemy, like Utah-based ENVE, maker of the wheels mounted on most all of its frames, decided composite frame manufacturing could be established in the U.S. despite Taiwan's hammer lock on the sector. Today Alchemy is battling for market share against U.S. brands made in Taiwan at the same time it challenges the notion that OI products have to be made offshore.
But it's consumers who may force OI brands to follow the lead of Alchemy and others. Buyers unerringly force companies to keep their brand promise, and if OI is to live up to the lofty ideas and rhetoric of its spokespeople, the contradictions of its manufacturing strategy may move from back burner to center stage.
We'll be there to celebrate the shift.
Bart Taylor is publisher of CompanyWeek. Email him at email@example.com.