Shift Changes: Sleek Audio abandons its Chinese Factories
Faced with rising shipping costs and poor quality control in China and an increasingly competitive business environment in the the U.S., many small manufacturers are saying “zài jiàn” to their Chinese factories and bringing production back home:
As part of their special report on the reshoring trend, Fortune recently profiled Sleek Audio, a manufacturer of in-ear headphones based in St. Petersburg FL. The early days of Sleek Audio were characterized by a trajectory familiar to most other small companies that began manufacturing goods in the mid 2000’s: Come up with a great product idea, start a business. Source out potential manufacturers in the U.S., gawk at high price quotes from said American manufacturers. Get quotes from Chinese manufacturers, breathe a sigh of relief over the low cost…and set up all production overseas.
Unfortunately for Sleek Audio, their fairytale low-cost relationship with a Chinese manufacturer soon ended after they endured a string of communication problems, extensive travel, rising shipping costs and most damaging--a ruined shipment of 10,000 sets of headphones. For owners Mark Krywo and his son Jason, enough was enough: it was time to move production back home.
"It became very difficult and taxing on us," says Jason. "Now we control the quality of the product. No more waiting for production has been a wonderful thing."
Though it costs more for Sleek Audio to manufacture their products domestically, the company has replaced a cheap Chinese plastic component in their headphones with a high-end American-made part that has resulted in a better quality product with a higher retail value. And the industry has noticed: Sleek Audio's redesign of the SA7 earphone won a 2011 Best of Innovation award from the 2011 Consumer Electronics Association.
Are the Kyrwo’s happy with their decision to re-shore Sleek Audio? Absolutely:
"Even though there's a tremendous cost savings when you go to China, in the end it really isn't that much," says Mark. "It's the hidden costs -- the delays, the shipping costs, you pick all that up on a learning curve.
"Our long-term goal is 90% to 95% of everything we make made here in the U.S.," says Jason. "We've been getting thank you emails for bringing it back to the U.S. It feels very good."
We’re glad that Sleek Audio’s torrid relationship with a Chinese manufacturer resulted in an American-made happy ending, and we hope that their saga serves as a cautionary tale for other American companies considering offshoring to China. Though the allure of China’s cheap factories may be enticing at first, everybody wins when an American company Keeps it Made in America.
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