High-tech manufacturing can give American companies an edge at home.
Prevailing wisdom has it that the path to cost-effective manufacturing is through the East: Low-cost labor in China, Taiwan and other Pacific-rim emerging markets is seen as the key to low-priced consumer goods in the United States. Keen Footwear, the Portland-based GOOD Company finalist, is bucking the outsourcing trend with a broader view of the costs of supply-chain maintenance and a new factory churning out American-built boots for American workers.
The 15,000-square-foot facility opened last year just five miles from the company’s headquarters and has two full production lines creating steel-toed boots and casual shoes. The machinery relies on a direct injection process that uses fewer oil-based adhesives and requires less energy than traditional manufacturing techniques.
Keen's success isn't just due to the feel-good branding, although that doesn’t hurt the company’s image in these economic times. President and CEO James Curleigh says the cost-benefit analysis that leads clothing firms to outsource production is too narrow—something he knows firsthand, since the bulk of Keen’s sandals, shoes, and boots are still produced in Asia; other bags and apparel are made in the U.S.
Maintaining an American factory, Curleigh says, makes sense for a number of reasons: It keeps the company’s intellectual property safely at home and not across the world, where knockoffs (and the associated legal costs) proliferate. Keeping production close allows the company to keep a closer eye on quality, ensures that cheaper materials aren’t subbed in for more expensive ones, and gives Keen a venue to experiment with new styles and manufacturing techniques. In addition to creating savings on direct transport costs, the move also reduces the carbon impact that comes with shipping consumer goods halfway around the globe to their final retail point.
“Labor’s too cheap in China,” Curleigh says. “There is no incentive to innovate.” At Keen’s Portland factory, which requires high-levels of automation to be cost-effective, the company’s high-tech facility produces two pairs of shoes a minute with just 20 employees.
The factory also gives Curleigh some leverage in dealing with his other suppliers by providing an inside look at the challenges of production.
Most of all, though, the factory provides an alternate sourcing point for the company as economic changes continue. In China, increasing labor costs are already leading manufacturers, like technology giant FoxConn, to move toward more automation or shift factories further inland, away from more prosperous coastal cities. As emerging markets catch up the United States, experience and infrasture for high-tech manufacturing will become an increasingly important competitive advantage for American firms.
Photo courtesy Keen Footwear.