LIKE ITS HOME state of Vermont, with its woodstoves and Subarus, the apparel maker Ibex has always had a pragmatic contrarianism about it. The company, which makes wool-based outdoor clothing, launched in the late 1990s—right when advanced synthetics were taking off. “People thought we were nuts,” says CEO John Fernsell, who sits across from me at Ibex’s headquarters in White River Junction, his bare feet poking out from under his desk.
Fernsell, who was an investment banker in Boston before starting Ibex with his friend Peter Helmetag, wore a wool suit every day but switched to synthetics for bike rides. “I couldn’t reconcile why, if polyester didn’t work in a business suit, the outdoor industry was so completely wedded to it.”
Fernsell’s hunch paid off. By 2006, Ibex had grown from two employees to twelve and had moved into an old warehouse in Woodstock; today the company has revenues exceeding $20 million per year. One unorthodox key to Ibex’s success is the ultra-soft, nonscratchy merino fiber it imports from New Zealand. Another, even more radical: it manufactures most of its goods in California and began doing so at a time when production was typically sent overseas. “In the investment business my mantra was, When everyone else is doing something, you don’t want to go that route,” says Fernsell, pausing briefly to glance over at a golden retriever named Shackleton that has padded into the office, one of a dozen or so canines on the premises. “Everyone was going to China; it would’ve been a complete layup,” he says. But “we wanted at least 50 percent of our production to be done in the U.S.—and we’ve never strayed from that.”
Not that it was easy. Casting about for a factory in the Bay Area—the manufacturing base at that time for outdoor giants like the North Face and Sierra Designs—the tiny startup had trouble getting attention from contractors with much bigger clients. “We begged factories to make our stuff, 100 to 200 pieces,” he says. Fernsell no longer has to beg, and the reason has less to do with Ibex’s growth than with the departure of all those other companies to China. About six months ago, he visited one of those factories. “The owner came up and hugged me and basically started crying,” he says. “She told me, ‘I’d be out of business if it wasn’t for you guys.’ We’re about 90 percent of her factory now.”
On paper, there’s no reason why Ibex shouldn’t make all of its products in China. New Zealand wool is an expensive raw material with a complex supply chain. Saving on labor would be a boon, and big Chinese producers can finance production. Then there are the duties: when Ibex sells its U.S.–made products in Canada, for example, it gets hit with a 37 percent tax. It would pay less if it sent goods to Canada directly from China.
Despite all this, Ibex is about to double down on Made in America. By 2014, the company will be out of China, though Fernsell downplays any flag-waving agenda. “It’s not a political thing,” he says, but he does admit some Ibex customers “beat us up” over the Chinese production the company still has. Rather, as if he were addressing his neighbors at a Vermont town-hall meeting, Fernsell makes it sound practical: “We feel like we a get a really good-quality product in the U.S.”
AS MUCH AS Ibex’s move runs counter to the dominant narrative in manufacturing, the company is not alone. Whether referred to as reshoring or insourcing, the return of U.S. manufacturing is emerging as a serious topic in the national conversation. Earlier this year, the White House sponsored a well-publicized forum called Insourcing American Jobs. A recent report by the Boston Group, a consulting firm, notes that more than a third of large U.S. companies plan to return some production to the United States, or are at least considering it. Meanwhile, U.S. manufacturing jobs, long in decline, have actually rebounded since 2010.
Whether it’s because of rising Chinese labor costs, the increasing value of China’s fiercely protected yuan, the desire for nimbler supply chains, or simply a need to guard against patent theft, some companies are finding U.S. manufacturing to be not only possible but profitable. That seems especially true in the outdoor industry. In 2009, footwear giant Keen, which still does the bulk of its manufacturing overseas, began taking another look at the numbers. “Seventy percent of Keen’s sales are in the U.S.,” says James Curleigh, until recently the company’s CEO. (He was hired away by Levi Strauss.) Among other things, Curleigh realized he could avoid transportation costs and the 37.5 percent duty for imported leather. Pair those advantages with new, highly automated direct-injection machines from Germany—which do away with stitching and toxic adhesives—and insourcing made sense. Keen opened a factory in Portland, Oregon, in 2010.
