Manufacturing a sore spot for otherwise booming, progressive outdoor industry

For outdoor enthusiasts, the twice-annual Outdoor Retailer trade show in Salt Lake City is a feast for the soul. Last week’s Outdoor Retail Winter Market, the smaller of the two seasonal gatherings (small being a misnomer), again seemed a wild success, with nearly 1,000 brands and suppliers showcasing the latest in outdoor apparel, gear, materials -- and opportunity. The optimism on display here is palpable, fueled now by the realization that outdoor industry has crashed the national scene. Smiles, and profits, flow freely at OR.

With growth comes new challenges though, and as brands scale up to meet growing demand, the industry faces an interesting crossroads. Most companies exhibiting at OR make things outside the U.S. But increasingly, the progressive ethos that informs the tastes of consumers and company development is running counter to the realities of offshore manufacturing. Offshore manufacturing is often everything that brands assiduously avoid. How will industry respond? Where and how will industry manufacturing evolve?

Today making offshore is assumed to be a prerequisite for growth brands. Expertise and margins often demand it. As we've chronicled, the offshoring of entire industrial sectors, like apparel manufacturing, has left little in the way of a domestic supply chain for U.S. brands. What’s here is expensive. There’s also a lack of a contemporary blueprint to develop new employees; the 'institutional memory' companies rely on in other sectors has faded.

As a result, supply chains stretch from Boulder or Jackson to Ho Chi Minh City or Guangzhou.

But for brands that value sustainability, and B Corp status, and the virtues of place in the development of 'authentic' U.S. or regional brands, explaining where one's products are made and why, especially to a discerning millennial buyer, is increasingly challenging. Making offshore can be inherently unsustainable. Travel and shipping overseas is resource-intensive. Developing and prototyping products can be a messy, wasteful process, especially for small brands. Working conditions in overseas factories, greatly improved from a decade ago, still can be a cause for concern.

And how to impart brand values to such a significant part of one's business, from thousands of miles away?

It’s hard to find a more progressive company than apparel-maker Toad&Co, founded in Telluride, Colorado. Their mission: "To lead with integrity and weave optimism into everything we do; To create meaningful change through socially & environmentally smart business; To inspire people to live their fullest lives." It's powerful stuff for Toad&Co's target buyer.

Toad&Co manufacturers offshore. Marketing Director Sarah Matt, responding to a Q&A in Outdoor Retailer Daily, said this about the high standards the publication ascribed to its 'foreign factories': "We believe the factories we partner with are an extension of our brand, so we work hard to ensure they meet our standards for quality and sustainability, as well as providing fulfilling and humane working conditions."

It's a reasonable response, similar to one that a hundred brands would offer.

But Matt would acknowledge that Toad&Co manufacturers overseas primarily because of cost -- meaning the factories would certainly be an extension of the brand if Toad&Co was a discount retailer. That's not the case. To the contrary, most brands exhibiting at Winter Market are premium retailers. These companies earn, and deserve, higher price points because of quality and a value-add mission.

A truly sustainable, social-driven mission would involve manufacturing closer to where products are designed, prototyped and purchased. Shortening the supply chain would 'green' a company's logistical operation. Investing in factories or contract manufacturers here would further embed brands into local communities and strengthen the authenticity of U.S. brands. Most powerfully, shortening the supply chain would create domestic, middle-class jobs and create fulfilling working conditions our communities need.

How to reconcile the dissonance of offshore manufacturing with the progressive vibe outdoor brands seek? The answer, of course, lies in the development of a more robust domestic supply chain.

Acknowledging the massive investments brands have made in overseas manufacturing is also part of a solution. It's easy to throw stones; it's harder to actually build and maintain a profitable business from several thousand miles away. And so many companies have navigated the complex, difficult process brilliantly. How else to account for the riches at OR?

Celebrating their success as both public and private voices contemplate a resurgent domestic supply chain is our path. More on the journey in the coming weeks.

Bart Taylor is publisher of CompanyWeek. Contact him at btaylor@companyweek.com.