Looking for a way to tap into the advantages of both overseas manufacturing and U.S. design while lowering the communications hurdle, Johnson Health Tech (JHT) will establish a global design and engineering center in the United States where both worlds will work together.
"What we want to do is build a central facility where we can have people from all over be stationed to do research for the Johnson group," Nathan Pyles, Johnson's director of brands in the United States, including Vision, Horizon and Matrix. "This should help all parties communicate with each other, communicate very effectively and make decisions more quickly."
"Johnson Health Tech North America"
This isn't a pipe dream, mind you. In fact, a director for the center and the new company branch it represents called Johnson Health Tech North America LLC (JHTNA) has been hired -- Tom Moran, former vice president of engineering at Precor who has worked at Watermark since November 2001 as a vice president of product development for the company that owns Yakima and leading watersports brands such as Perception and Dagger. Moran will move to Madison, Wis., where the center will be, on June 29 to start the ball rolling -- to decide where a center should be located, whether to rent or build, and to start hiring engineers and product developers. Pyles said JHTNA and the center should be fully running by December with as many as 20 employees.
"We get the opportunity to start from the ground up to create what will be one of the most exciting places to develop cool fitness products," Pyles said.
Currently, most companies based in North America that have Asian manufacturing spend a lot of time shipping designs back and forth and having managers travel back and forth, too. But the end results aren't always as intended because of the cultural and communication gap. That wastes money and time, and forces a longer lag before products can get to market, he said.
"If we can get product engineers and others in the same room, the speed to market gets accelerated," he said. "It was just taking too long."
Rumors had circulated, including news reports in other industry newsletters, that Johnson was desperate to hire people but couldn't find them. That wasn't completely correct, Pyles said. This center has been on the drawing board since about January, but the company has been looking for someone to lead the concept who would be just right, then that person would do the rest of the hiring.
They say they found the perfect match in Moran, who went to high school and college in Madison and still has family there, although he's lived on the West Coast for 19 years. For him, the opportunity was "fortuitous," he said; it all began when he went to the Health & Fitness Business show last August to poke around and to meet with various companies.
"This is starting with a fresh sheet of paper and building a culture from the ground up," Moran said. "I'll be taking all I've learned and building an exciting and innovative design center."
It'll be Moran's job to find others for the center -- including those not only from outside the industry but also from inside who may just find the concept of a global center in a place like Madison very attractive.
"This should be a place where you can do the fun stuff," Pyles said.
Johnson still growing strongly
And having this center should push Johnson closer toward its ambitious goal of being one of the top three companies in the fitness industry in the world by 2008, relying mostly on organic growth. Currently, JHT, which is headquartered in Tai Chung, China, but also has a factory in Shanghai, has about 1,900 employees in Asia. Founded in 1975, Johnson's revenues have grown about 30 percent or more in each of the last five years, Pyles said. It was listed on the Taiwan Stock Exchange early this year to help accelerate the spread of its name. In addition, the company opened a home fitness specialty retail store called Cava in Taiwan earlier this year, with plans to open "dozens" more this year alone, all of which will sell only Johnson product.
Moran said it is most likely the new center will be on the eastside of Madison and will at first be in a rented facility. In addition, the U.S. companies will for now remain separate geographically, but will likely have product managers who work closely with or even at the center. Since JHTNA won't go full-steam until early 2004 engineering products and building prototypes, the market won't likely see products touched by its work until 2005, Moran said.
"Most of our growth is among the U.S. brands," Pyles said of JHT, "and Asia and Europe are doing very well too. We see a tremendous opportunity with a company that is truly global in nature that offers the best of both worlds -- the manufacturing of Asia and the R&D and development in the United States."
SNEWS View: Piece by piece, Johnson and its brands are penetrating the market and making their mark strongly as THE players to watch. This step with such a global center is a forward-thinking one that could indeed take it the company a giant leap forward. And, yes, we wouldn't be at all surprised if engineers and product developers from other companies jumped ship to be a part of a new concept like this.