Competitive strategies for small manufacturers in high labor cost countries

Abstract

Purpose – The paper aims to examine competitive strategies used by several small ski brands manufacturing in the USA. The motivation is to explain, while there are no major manufacturers in the USA, why many smaller manufacturers produce locally despite higher labor costs. Design/methodology/approach – The paper first describes mid-volume, mid-complexity manufacturing. It then describes customization and innovation. Descriptions of the ski industry, ski manufacturing and customization and innovation, especially among smaller ski manufacturers, then follow. Publicly available information is the examined to understand the competitive strategy of firms in this sector. This is followed by interviews with principals at several smaller manufacturers. Findings – The findings show that small firms do use innovation and customization strategies and are able to compete while producing their product within the USA. Research limitations/implications – The interview method limits the ability to perform rigorous statistical analysis. Results in this sector may not carry over to other sectors of similar size and complexity. Practical implications – The findings give an example of the ability of manufacturing to remain in higher labor cost countries if customization and innovation are significant market drivers. Social implications – The health of manufacturing in Western Europe and North America is currently of significant political interest. Companies and government entities may consider what actions they can take to encourage innovation-driven markets. Originality/value – The paper provides an explanation for the success of small firms manufacturing mid-volume and complexity products in higher labor cost countries. As innovation and customization are found to be major drivers, this can inform manufacturers in other segments where the products and market share characteristics with those found in higher-end downhill skis.