Made Here: A reputation that ‘goes beyond price’

Michelle Di Gangi
Posted by Michelle Di Gangi
Small Business Banking

Manufacturing in America is alive and well. In our new series “Made Here,” we talk to some of our manufacturing business clients and learn about how they’ve flourished in spite of some tough odds that have challenged this sector in recent years.

Closeup of Doug White outdoors, wearing a puffy gray down jacket.Doug White has been making bicycle parts since the late 1970s. Working from a small machine shop in Petaluma, California, White Industries Inc. manufactures bicycle parts sold directly to cycling shops across North America and to distributors in Europe, Asia, Australia, and New Zealand. Over the years the business has manufactured components for other industries as well as for original equipment manufacturers (OEMs) in the bicycle industry.

In the Q&A with Doug below, I was fascinated by his company’s route into exporting; never underestimate the potential of trade shows!

Q: Given what we hear about high costs, regulatory constraints, and other factors, how are you able to compete manufacturing in the United States? A: There are some high costs associated with manufacturing in the United States, but I don’t think it’s as big a deal as people make out. We can compete because we have a name and reputation that goes beyond price. We have to charge more than the large Asian companies or the other companies in the United States that have their products made in Asia. That’s how we do it, by reputation and good people. It would be difficult to arrive at our place in the market if I started right now, but we were fortunate enough to get in the game when there were no U.S. manufacturers in our space. We had products that people were interested in and excited about, and we developed a name and kept going from there.

What’s your biggest obstacle?

Probably getting really good people, because nobody wants to be a machinist anymore. When I was young it was thought of as a good position, a valuable job, something worth having. Now it’s not as desirable. Most of the kids want to be computer guys or something like that, so it’s difficult.

If you could do it all again, what would you do differently?

I would try to manage the growth a little better, because it almost put us out of business. We grew really fast. We lost a lot of business — the OEM business, because with those guys when you’re hot you’re hot. If they feel doing business with you is not going to add to their brand, then they will drop you like a rock. Then you’ve bought all this machinery to do all this work that they wanted, and all of a sudden you don’t have the work. But we made it. We are versatile. I can do other work that’s not bicycle work. That’s what we do when it’s slow; I just find other work. We did a lot of other stuff, and over time the bicycle business came back, and it’s bigger than ever now.

As an exporter, what advice can you give to other U.S. manufacturers looking to sell overseas?

Make sure you have a good situation going in the United States. You have to start close to home and have something reliable, and then branching out is great. We did it by going to trade shows. The biggest show in the United States — people from overseas come to that, so we could meet them. Eventually we found people who were good, and so it’s an ongoing process.

The world is going to change. In another 10 years we’re not going to use distributors, unless language barriers are so extreme that we can’t get through to the bike dealers. We’ve started to sell direct in Australia, and it works very well. We’ll probably go to the U.K. next. It saves us so much money, and our product is so much cheaper when we don’t have a distributor.

How’s business versus a year ago?

It’s getting better. We never really felt the recession. We don’t know where we might have been if it hadn’t happened, but we always kept steady or improved through the recession. Sales are up 10%, maybe 12%. When that happens profits go up, because our cost structure doesn’t change.

What’s your outlook for 2015?

It seems bright. But the world is a funny place, it can change real fast. We’re busier than heck, and its wintertime. We are rocking. And we’re going to add a product line. We’ve been working on it for two years very slowly and hope to get it going this year. We already have all the equipment; we just need to concentrate on getting it going. It’s in the bicycle business, so I think we’ll be OK so long as we make a good product. That’s why we are taking our time. Once you build up a good reputation you don’t want to wreck it.

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