But production of high-end footwear is expensive. Other then sewing machines, no technology exists that can help workers generate high production runs of leather shoes. Further, production of the average shoe involves from forty to a few hundred stages.

Workers principally in China and the Philippines produce the rest of the 126-year-old company’s baseballs, mitts, and equipment. This year K2 also bought Worth, a softball equipment producer in America, which has been based in Tullahoma, Tennessee, since 1912. In 2004, Mendenhall says, K2 will look at transitioning “certain aspects” of Worth’s production to K2’s plant in China.

Today’s sports brands, Mendenhall contends, are “all about quality and price points.” As long as these are taken care of, customers no longer care where the product is made. In any event Mendenhall says, “You cannot compete in retail if you manufacture in the USA.”

Mendenhall claims that his company can get the same (or better) quality for a product made in Asia, while paying up to twenty times less for the labor as the company could get in the US. He believes strongly that K2 enjoys the number one spot because “other ski brands are completely hung up on producing principally in Austria or Central Europe, which are not as competitive as Asia.

“There is always room for a high-end European product or pair of skis, but they will not be able to lead categories,” he explains. “Atomic makes a big deal about manufacturing in Austria. But they are losing market share because there are only so many people who want to part with $1,200 for a pair of skis (€1,028).”

When asked what the overall quality of the workmanship of the skis was from China -- where there is no tradition of either skiing or ski manufacturing -- Mendenhall insists, “The quality is better. Not the same. Better.” The K2 5500 Ski has been named the Best Value Ski of the Year for two years running by Ski magazine. Similar to the situation with Geox, research, design and communications for K2 remains in the company’s home plant, which is based on Vashon Island in Washington.

While Mendenhall is emphatic that his brand suffers “absolutely no stigma” from K2’s ski production in Asia, a quick browse of the Internet, does find hold-outs making noise about human rights abuses and other issues of offshore production. Given the culture of the hardcore ski and boarding crowd, it is not surprising that sites like Fourt2.com, which promotes “online guerilla warfare,” take a dim view of K2’s move to Asia. One contributor goes so far as to make the claim that “the skiing community as a whole supports the ‘free Tibet’ campaign,” and therefore, cannot support K2’s move to China.

Possibly, however, most consumers -- and perhaps some activists -- are simply unaware of the extent of outsourcing in the world today. A case in point would be the cut flower industry in Europe, which depends heavily on imports from Kenya. England’s national flower, the rose, is mainly grown for the British by Kenyans, citizens of the country’s former colony.

Sally Peters, in the London office of the Kenya Flower Council, says that close to 80 percent of the roses bought in the UK come from Kenya. Kenya is the world’s biggest flower exporter, she says, accounting for 25 percent of the cut-flower export market into the EU, to a value of €153 million yearly ($179M), making cut flowers Kenya’s second largest industry behind tea. On Mother’s Day in the UK, roughly 30 million Kenyan roses are sold in the UK alone. “The majority of people do not know the roses are grown in Africa,” says Peters. “People just are not concerned about where these flowers are coming from.”

Sometimes there is an outcry from the public, as witnessed recently in Canada, but generally it is never expected to heavily affect business. On May 14, 2003, an internal memo sent by the president and CEO of CN Rail, Mark Hunter, barred CN employees from using the word “Canadian” in describing the company (formerly known as Canadian National).

The Canadian Press reported Transport Minister David Collenette calling the situation “obscene,” adding that the 84-year old brand is “a great Canadian institution, one of the best railways in North America and we shouldn’t apologize for being Canadian” (from an article by Maria Babbage September 19, 2003).

Canadian in spirit the company may be, but in 1999 the company merged with American-based Illinois Central. The memo suggested that continued use of the title Canadian National in the company’s correspondence, email and voice mail would “lead to confusion with our customers and the general public.”

Still the brand stewards believe the outrage will subside without lasting effect to the brand. Mark Hallman, spokesman for CN Corporate Issues, dismissed the outcry as merely a “tempest in teapot.” He notes that, “The CN brand was voted one of the top 50 corporate logos of all time in 2000.” (In a panel sponsored by the Financial Times and Report on Businessmagazine, CN was voted number 38.)

Referring to the study, Hallman says, “It was the only Canadian brand to make the list, and the CN name is based on that corporate logo. We are trying to get consistent brand identification across the entire system in Canada and the United States. This is purely a branding exercise, and really, much ado about nothing.” He does admit that the immediate resentment the move has caused on the part of both employees and government ministers was “not anticipated.” But, he points out, in today’s business environment, dropping the identification with Canada and making “the brand name the same as the corporate logo, simply makes the best ‘brand sense.’ ”    

[6-Oct-2003]