Lessons From a Manufacturer That Successfully Shifted to Onshoring

Kent 2

There’s been a lot of talk lately about companies moving to onshoring, or shifting their manufacturing away from Asia and back to the United States. Bicycle maker Kent International is one company that successfully made the transition. A fourth generation, family-owned business from Parsippany, N.J. that’s been in business for over a century, Kent markets its bicycles and accessories through large retailers, including Toys “R” Us, Walmart and Amazon. We spoke with CEO Arnold Kamler, pictured above with his son, Scott, president of the firm, about his company’s onshoring experience.

CEOB: How much did the cost differential change from China to the U.S. that made the decision profitable?

AK: When we looked at the possibility of U.S. assembly and manufacturing four years ago, we calculated that our cost to produce a bicycle in the U.S. was about 25% higher. Our calculations now indicate that this differential is about 10% and by 2017, we should be able to produce a bicycle here cheaper than in China.

CEOB: How is that affecting your profit margins?

AK: We are a private company and have no pressure from shareholders. However, this will eat into our corporate profits for the next few years by as much as 20%. The good news is that our business is still growing and we are doing very well.