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Factory Flight

Fall Line
posted: 01/14/2003

K2, the renowned red, white and blue ski company based on the almost mystical Vashon Island, Wash., kicked off its fifth decade this fall with a catchy marketing campaign that recalled its irreverent past-and proclaimed itself an "American Classic." Few diehard K2 skiers would quibble with that notion, though they likely don't know the skis are now built in China, where the company says it is able to invest three times as much labor in each ski for a fraction of the cost.

Offshore manufacturing is hardly new in the sports world: Your sneakers and ski parka are likely from the Far East. But K2 is a front-runner as this painful, price-driven trend hits ski hardgoods companies, most of which are based in the traditional alpine countries of Europe. One ski executive predicts the majority of skis will be built in China within five years, while other manufacturers seek similar savings in Eastern Europe. Marker, a tradition-rich binding company, just shuttered its assembly line outside the pricey resort town of Garmisch-Partenkirchen, Germany, and moved production to the Czech Republic, where average labor costs are 85 percent less. The venerable Austrian brand, Fischer, builds some of its skis in the Ukraine; Elan has long relied on low-cost operations in Slovenia; and France's Rossignol builds some of its skis in Spain.

It's hard to find a more patriotic American than K2's general manager, Tim Petrick, whose father won a Silver Star on D-Day. Petrick says he fought the move to China "tooth and nail," and gave in only when he concluded that U.S. ski production was not a viable business. "It ripped my heart out," he says. The move eliminated 390 employees, many of whom had worked on Vashon all their lives, but it also boosted job security for many of the 230 employees who remain working on the island (K2 also manufactures and sells snowboards, inline skates and bikes).

Petrick feared the worst when the relocation was announced in late summer 2001, and he still gets an occasional angry email from a dedicated-and now disgruntled-K2 skier. But the general response has been: Look in your closet. Little is made in the U.S. "Unfortunately," says Petrick, "that is the reality."

David Ingemie, who heads up SnowSports Industries America, the trade group that represents ski suppliers, sees the immutable laws of economics in play in the ski industry. "Natural globalization is in effect," he says. "The companies will do the best they can to make the best affordable products. If that means moving a factory to China or Bulgaria, then it will happen."

Contrary to images of third-world sweatshops, K2 says it is helping fuel financial freedom in China and that its employees are well-fed, well-clothed and relatively well-compensated for their work. K2's retailers report that the company's skis have never arrived in a more timely or well-finished fashion, while its competitors are envious of K2's pricing (the K2 5500 has been a SKI "Value Ski of the Year" two years running). "We now have a business model that will allow us to invest in technology and growth," Petrick says.

K2, whose sister company makes Shakespeare fishing rods, enjoyed a head start in China since Shakespeare had been making gear there for a decade. K2 first started making snowboards and low-end rental skis in 2000 at the 81,000-square foot facility and, after working out the kinks, shipped the bulk of its ski presses there the next year. Importantly, research and design, as well as race-ski manufacturing, remain on Vashon, and K2 continues to employ a group of passionate engineers and skiers who push innovation. The company uses a website to communicate about manufacturing issues, and there are K2 managers on-site in China year-round.

Ski-making enjoys a great history of craftsmanship, dating back to the 18th-century European artisans who carved wooden skis by hand. K2's concession was to shift to a simpler assembly line in China, a cconcept pioneered by Henry Ford and his Model T. While one worker built an entire ski on Vashon, placing different layers and parts into a mold, in China employees are responsible for just one aspect of the process. With three times the labor, K2 says it has never had better quality control: When managers recently sifted through some rejected skis, they found blemishes so minor they would never have been noticed before.

Employees are housed and fed at the plant, which resembles a mini-village. Many come from impoverished towns to the north of the plant, which is located near Guangzhon City, 90 minutes from Hong Kong. It is not unusual for workers to sign three- or five-year contracts that pay them all their wages in a lump sum at the end of their tenure, leaving them with a stipend to return to their villages-and perhaps start businesses of their own. "This is the genesis of capitalism," Petrick says optimistically. "It will change China because people will have money in their pocket. That is my hope."

K2 has long been known as a place that employs people who are passionate about skiing. K2 managers have shared ski magazines and videos with factory workers, but the average employee is clearly not able to take up the sport. Perhaps even that will change: There is a new ski area-indoors, of course-about 60 minutes from the factory.

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