CTO Steve Hoogendoorn has implemented a plan to reshore hardware manufacturing for the company’s mountain bikes, an industry anomaly.
Yeti Cycles is one of Colorado’s most iconic outdoor brands. Founded by John Parker in California, the company made turquoise-hued mountain bikes for the racing market, relocating to Durango, Colorado, in 1990.
Schwinn acquired Yeti in 1995 and sold it to Volant in 1999. But that era was short-lived, as employees Hoogendoorn and Chris Conroy acquired the business in 2001 and moved it back to Colorado.
For the subsequent two decades, Yeti Cycles — like most of the bicycle industry — relied on a largely Asian supply chain. But that’s changing in 2022, as Yeti brought hardware manufacturing to the U.S. via a deal with PartsBadger, a CNC shop in Cedarburg, Wisconsin.
Hoogendoorn says that a snarled supply chain meant some parts would not arrive in time for production. “We have a lot of obsolete inventory, because we had this plan on what we were going to bring in and sell,” he explains. “All of a sudden, when one supplier stumbles, that changes your plan.”
Case in point: A frame manufacturer in Vietnam had to shut its factory down for a few months in the face of COVID-19. “That changed our entire forecast for the year,” says Hoogendoorn. “All the suppliers from the component perspective — like bolts, axles, and that sort of thing –they pushed their lead times way out because of availability of raw material.”
The mismatch of lead times made for “massive obsolescence in all these parts that we ordered,” says Hoogendoorn. “We didn’t have the frames to put the parts with.”
Hoogendoorn says he connected with PartsBadger via LinkedIn in search of a domestic manufacturing partner. “What we needed to find was a manufacturer that was going to be able to be flexible with their rates,” says Hoogendoorn. “PartsBadger is making everything that assembles the front of the full-suspension bike to the rear — so all of the hardware, everything from aluminum to stainless steel to titanium.”
PartsBadger has installed a dedicated production line for Yeti’s orders. Sample deliveries were underway as of spring 2022, with full production slated to come online in October or November. The Ozaukee County News Graphic reported on the five-year, $13.8 million deal, which is expected to create 12 full-time jobs.
“We pay for material and we pay for machine time that’s discounted, then we pay for all of the finishing steps, whether it’s anodizing or some kind of coating,” says Hoogendoorn of the contract. “Those machines are all capital equipment and you need to use them as much as possible, so we needed a company that understands that if there’s a way to automate and use those machines during down time where you normally wouldn’t be pulling time on that machine, it’s going to be beneficial to them, too.”
Hoogendoorn says unit costs will roughly triple in comparison with the preceding manufacturer in Taiwan, the added flexibility is worth the premium for Yeti. “At the end of the model life, we can throw out $100,000 of assembly parts we were on the hook for,” he explains. “The benefit is we’re much more real-time with getting deliveries. We don’t have this obsolescence. Secondly, it gives us a lot of flexibility going forward to be able to change things.”
Yeti continues to rely on suppliers in Vietnam, Japan, Taiwan, and China for carbon-fiber frames and other key components. “Everything comes into Golden and we do some bike assembly if it’s a complete bike or pro deal,” says Hoogendoorn. “If it’s for a dealer, we just do parts and a frame in a box, and the dealer will assemble the complete bike.”
The COVID-19 pandemic catalyzed demand in 2021 and 2022. “We haven’t been booking the actual demand — we’re only booking what we can supply,” says Hoogendoorn. “So we throttle it based on what we know we have coming in.”
Challenges: “I think supply chain is going to continue for a couple years being a challenge, whether it’s working with manufacturers overseas or it’s trying to get the steamship lines to get your stuff to your door at a decent time with a decent rate,” says Hoogendoorn. “Currently at the factory in Golden here, it’s really tough to find employees. . . . Finding people who can do the job is not that easy right now.”
Opportunities: “Especially in the high end where we play, it’s always going to be technology,” says Hoogendoorn. “The latest and greatest on the technology side is the new e-bike we launched last fall. We have a new patented suspension system for that. Our traditional pedal bike has a SwitchInfinity on it, and it works really well on a pedal bike, but we couldn’t get that to fit, packaging-wise, on an e-bike.”
The solution is Sixfinity. “That’s a six-bar linkage that drives kinematics for our e-bike. It’s been received really well. . . . Globally and domestically, the demand is way more than we can fulfill right now.”
Needs: Hoogendoorn says there’s a long-term need to find “the next home for Yeti.” The company currently occupies about 130,000 square feet in Golden, but the next building will likely double that footprint. “Over the next five to six years here, we need to make a decision on a direction for where that next building’s going to be,” says Hoogendoorn. “That depends on what we do in other markets. There’s always some potential to do something in Europe. If you move some operations over there, it obviously limits what you have to do domestically.”