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A hip messenger-bag company is trying to keep its factory in the Bay Area.
Can it beat outsourcing?

By Brad Stone
Newsweek, April 19, 2004

In a drafty old factory in San Francisco's Mission district, 20 Chinese women toil over sewing machines in jobs that should not exist anymore. The workers churn out 500 bags a day for a 15-year-old bike messenger-bag company, Timbuk2. In the global economy, where the rusting shells of former textile plants blotch the Bay Area landscape, Timbuk2's candy-colored bags can be made for one twentieth the cost in China. "Every day people ask me, 'When are you going to close your factory?' " says CEO Mark Dwight.

Dwight, a 44-year-old former tech entrepreneur, is not naive; he's moved half of the firm's production overseas in the past 18 months-while stubbornly holding on to the company's home operation. But privately held Timbuk2, with about $5 million a year in sales and 45 employees, has always swum against the tide. The distinctively flashy colors on its bags stand out in a sea of boring black. And while the company is known internationally for its bike bags, which are sold in outdoors-goods stores across the United States and Europe, it's also expanded into luggage and purses. Keeping the home factory represents the pinnacle of Dwight's unconventional wisdom. At a time when rivals have contracted with overseas labor to make all of their goods, Timbuk2 enjoys certain advantages by manufacturing its bags here. Because of that facility, visitors to the Timbuk2 Web site can customize their own $100 bag and have it delivered within three days. But Dwight is not a zealot. "As long as our factory pays its bills," he says, "we'll do it."

By contrast, Timbuk2's founder, onetime bike messenger Rob Honeycutt, did have rigid beliefs when it came to overseas labor. He regarded it skeptically, thinking it would give him less control over quality. In 2001, with Timbuk2's growth flagging, investors replaced him with Dwight, a Cisco marketing executive. While he was committed to saving the American plant, one of Dwight's first decisions was to contract with a factory in China. Today that plant not only makes new products like computer bags, but the trickier parts of the messenger bags, like pockets. Those components get shipped to San Francisco and assembled closer to customers.

Dwight will have to keep working at saving Timbuk2's San Francisco shop. Next year a 17.8 percent U.S. tariff on textile goods from China is set to expire, making goods manufactured abroad even cheaper. Dwight says he'll keep his factory open as long as proximity to the customer continues to pay off, and that "Made in the U.S.A." label has cache. "As soon as it doesn't, I'll go to the marketing guys and say, 'Would you rather put that money elsewhere?'" He hopes he never has to ask.


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