K2 Inc. has announced the company will shut its Grand Junction, Colo., factory, one of two snowshoe factories acquired when K2 purchased WinterQuest in October 2003. Production for Atlas snowshoes, some Tubbs snowshoes and possibly Little Bear snowshoes will move to the 1.3 million-square-foot K2-owned manufacturing facility in Guangzhou, China.
K2's China facility currently sources and produces a majority of K2 products including K2 and Ride skies and snowboards.
The 3,500-square-foot Grand Junction factory will turn off the switches to the production line by March of this year, affecting approximately 20 full-time employees. During peak production in August and September, the facility employs as many as 100 part-time workers. The plant produces over 100,000 pair of snowshoes annually.
Ed Kiniry, president of WinterQuest, told SNEWS that K2 is already installing machinery and will be ready for July shipments to retailers. However, until a consistent supply of quality materials can be sourced in China, which Kiniry does expect will happen, materials for producing Atlas and Tubbs snowshoes will continue to be domestically supplied.
While some have said the move to shut down a factory only three months after acquiring it may seem a bit rushed, Kiniry can't argue with the K2 decision from an efficiency and cost-savings perspective.
"When we were acquired, we knew that K2 had an enormous asset in their facility in China," said Kiniry. "However, the intent was to get through the current season before making or announcing any moves.
"We quickly realized, however, that if we waited any longer, we ran the risk of affecting the supply chain for our retailers, and that was not acceptable. In order to make the move we needed to make, in a fashion that did not affect retailers, our new product has to be on the water by June 1, and that necessitated our beginning the process to ramp up snowshoe production in China earlier," he added.
For retailers, quick delivery of product orders and fill-ins for snowshoes, with a very short sales window that is completely weather-dependent, is critical, and even a day or two late in a delivery can mean lost sales. That's why K2 has also committed to maintaining two distribution facilities, according to Kiniry.
"Distribution for the western U.S. is moving to K2's distribution facility near Seattle," he said, "while we will continue to operate the East Coast distribution facility here in Vermont."
K2 will continue to domestically manufacture snowshoes in the United States at the company's facility in Stowe, Vt., where most of the Tubbs brand's products are currently produced.
As for Little Bear, Kiniry told us that there was still no decision on whether the smaller brand's production would be moved overseas too or transitioned to Vermont.
SNEWS View: No surprise here really. In October, when we interviewed K2 President Robert Marcovitch about the WinterQuest acquisition, he did hint that moving production overseas was something the company was looking at. Neither Kiniry nor Marcovitch have made any secret of the fact that for Atlas, Tubbs and Little Bear to remain strong and continue growing, production costs need to go down, margins need to increase, and suggested retail prices need to come down -- and that can easily be accomplished with streamlined overseas production, K2 believes. K2 has wisely chosen not to shut down both factories in one bold move, but we're relatively certain that by this time next year -- IF all goes well with the production transition of the Grand Junction factory to China -- we'll be writing about the Tubbs facility also closing and moving overseas. K2 has also wisely chosen to maintain two distribution facilities -- one east and one west.