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U.S Production Still Pays Off for Some

Published April 22, 2011

When Jason Schiers started his high-end composite wheel and components company in 2005, he chose to become better at manufacturing in the U.S. rather than better at sourcing from Asia.

“There are not many people left manufacturing in the U.S. It’s kind of a challenge to overcome,” Schiers said.

Now known as Enve Composites, Schiers, whose company is backed by two investors, recently signed a lease on a 20,000-square-foot manufacturing facility in Ogden, Utah, where roughly 40 workers produce about 1,000 hoops a month. Schiers sources American-made Chris King hubs as much as possible, but also imports DT Swiss hubs and Sapim spokes. Enve outsources production of its forks, bars, stems and seatposts to factories in Taiwan and China to remain price competitive.

To keep U.S. labor costs at bay, Enve has invested in elaborate tools to produce parts that don’t require a lot of finish work such as patching, filling and sanding.

“Those things are labor driven and we don’t do any of them,” Schiers said, adding that carbon fiber.

Another reason it makes sense for Enve to produce stateside is its wheels are sold primarily in the aftermarket and at a premium—retail prices run from $2,000 to $2,700—and the majority of Enve’s business is in the U.S. Because of that, factors such as paying import duties and skyrocketing shipping costs are removed from the equation.

That same philosophy to remain close to the customer has led companies like Zipp and Park Tool to continue investing in their domestic manufacturing facilities instead of following the trade offshore.

Park Tool has invested six figures on machines that will allow it to move production of 12 parts currently sourced from China to St. Paul, Minnesota. Of the 400 products Park Tool sells, about 85 percent are made at its Twin Cities headquarters where 26 people work on the production floor.

For Park Tool, which generates about two-thirds of its business from the U.S., manufacturing domestically shortens lead times, lowers freight costs, allows for better quality control and encourages innovation, said Bill Armas, director of marketing.

“When you have to buy 100,000 of something to get the right price on it you aren’t going to aggressively change it because you have to use 100,000 of that part,” Armas said.

Weighing the pros and cons of where to make a part or a tool is a constant balancing act and staff scrutinize the cost-benefit ratio of producing products in America versus Asia on a daily basis.

“We think it’s profitable for the company to make the things we make here, here. Some things are more profitable to make in Asia and sometimes we can’t beat the quality either,” Armas said.

Last year, Zipp invested $12.4 million to construct a 70,000-square-foot manufacturing, warehousing and customer service center in Indianapolis, cementing its commitment to domestic manufacturing, said Andy Paskins, Zipp’s marketing manager.

Zipp sources raw carbon fiber in the U.S. and molds all its carbon fiber rims in Indianapolis. It assembles most of the wheels there with Sapim spokes imported from Belgium and Swiss steel bearings. The aluminum rims for its 101 wheels are extruded in Asia and shipped to Indianapolis to be machined.

Since the company introduced its new Firecrest rim shape for its 404 and 808 carbon clinchers, it has added a second shift at its five-day-a-week factory in Indianapolis to keep up with the soaring demand, Paskins said.

He points to advantages like protecting proprietary processes and speed to market that outweigh the additional costs of manufacturing in the U.S. And because Zipp still does about 80 percent of its business in the aftermarket, producing in the U.S. keeps product close to its large distributors.

But if that changes in the future, for example if Zipp’s OE business continues to gain steam as it has for the past five years, the company will be open to change.

“You can never say never,” Paskins said. “You’ve got to be competitive, you have to be close to customers. As business changes, who knows, we may have to relocate.”

That’s a thought process that Fox Racing Shox is already undergoing. Since the suspension company started nearly 40 years ago, it has assembled nearly all of its shocks and forks in the Santa Cruz area and produces about 20 percent of the content for those products domestically. Companywide that model makes sense because many of its power sports customers are based in North America. But with 80 percent of its bike business coming from OEMs and 40 to 50 percent of product shipping to factories in Taiwan, the company is contemplating the best model for the future, said Mario Galasso, executive vice president of the bike division.

Last year, Fox opened a sales and quality control office in Taichung, marking its first-ever permanent staff in Taiwan. The goal going forward is to bring down the current 60-day lead time, Galasso said.

“I’d say that we’re here and have been here because this is where the company started and this is where the infrastructure got established,” Galasso said about Fox’s headquarters in Watsonville. “As we look long-term that formula may change. I think Fox as an assembler will be assembling product here in California for some time to come if not at some level forever as long as we’re here in California, which I don’t see changing anytime soon.”

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