Made in China (and Burnaby)

Arc’teryx manufactures critical products, like harnesses, in Burnaby

When to manufacture locally and when to send it abroad: a case study from local outdoor equipment manufacturer Arc’teryx

A buzzer sounds, and morning break time is over. The men and women at Arc’teryx Equipment Inc.’s garment manufacturing facility in Burnaby stop their casual chatter and walk briskly back to their work stations. Suddenly, the air roars to life with the whirring and churning of hundreds of machines: fabric cutters, embroidering robots, lamination presses and sewing machines. Human flesh turns into a blur, with hands crisply guiding reams of fabric past racing needles. Like a magician’s act, the workers’ hands seem faster than the human eye, but at the end appears a jacket or pair of ski pants instead of a rabbit.

For the past three decades, this scene has unfolded countless times at factories all across China as companies from around the world have sent their product designs there to be made. Arc’teryx—a North Vancouver-based manufacturer of cutting-edge outdoor equipment and clothing, with 700 employees worldwide and sales in 40 countries—has multiple contract factories in China. Demand for China’s cheap labour has created a manufacturing base with expertise and infrastructure that no country can rival. Yet China’s success has driven up its labour costs and fuelled the rise of competitors. The advantages of getting stuff made in China aren’t always as clear as they once were.

For Arc’teryx—which also has contracts with factories in Taiwan, Vietnam, Bangladesh, El Salvador and Myanmar—the rationale for manufacturing in China is simple: highly skilled labour that’s affordable. And despite rising labour costs in China compared to some competitors, it remains an advantageous location because of its ingrained expertise and logistical infrastructure that emerging manufacturing countries are still trying to figure out.

Arc’teryx often institutes new manufacturing processes when working with materials and designs that require a high degree of precision. The company needs a workforce that is both highly skilled and adaptable—and Chinese firms have expertise in training their workers to meet the demands of discerning Western firms. Emerging countries may have sufficient technical capabilities to produce simpler items like T-shirts and shorts but not to make more demanding items like insulated or water-resistant jackets.

“These other countries don’t have as much of a history in apparel manufacturing, and therefore they don’t have the whole culture around that, or the skill level,” explains Arc’teryx’s vice-president of operations, Lance Richardson. “So it takes time to build that up in order to make sure that you get the right quality you want with your partners. And being in more emerging economies, you also have to be more cautious and more vigilant on CSR (Corporate Social Responsibility), which is a key component.”

That said, the company’s need to protect its manufacturing secrets from other firms has meant that it maintains manufacturing facilities close to head office. (Chinese firms have long been accused by foreign companies of stealing their ideas and technology, and the country’s courts are viewed by outsiders as opaque, corrupt and biased toward local companies.) Arc’teryx has two factories in Burnaby and is planning to double or even triple its local manufacturing capabilities within the next two years.

“If we’ve got a product that needs absolute IP protection, we’ll do it within our own facility,” Richardson says. “We’ve had IP protection on our climbing harnesses. At times, we’ve had IP protection on some of our apparel and some of our backpacks. And so we want to protect that IP absolutely.” As well, for products like climbing harnesses, maintaining quality is literally a life-or-death matter. “Harnesses absolutely must not fail and so we keep that production in-house.”

Keeping manufacturing facilities close at hand also allows Arc’teryx to innovate more quickly. It can come up with new products at its North Vancouver design centre and quickly make adjustments to machinery and processes on the nearby Burnaby factory floor. “One of the advantages here is we’re 10 minutes away from our facility,” Richardson says. “If we have a problem, we drive there. It is not a 13-hour flight. It’s not a workweek away or two weeks away from home.”

PLUS: You’re invited to the BCBusiness “Doing Business in China” breakfast on October 27 at the Rosewood Hotel Georgia in Vancouver, sponsored by HSBC.