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Epix Gear Exits China: How it Brought Made-to-Order Manufacturing Back Home

The COVID-19 pandemic has made retailers and brands consider reshoring their apparel manufacturing capabilities as consumers and the federal government call to pull supply chains out of China, but one made-to-order sports apparel company made that decision well before the virus spread to the U.S.

Epix Gear, which manufactured custom cycling gear and performance apparel in China since the company’s launch in 2009, moved its manufacturing operations to a Tempe, Ariz., facility in April, but committed to fully reshoring late in 2019. While the company still manufactures a small percentage of its products in China, Epix expects 100 percent U.S. production by early August.

In its brief time in the U.S., Epix Gear has since cut per-piece shipping costs by 70 percent, expanded its product line to include more performance gear for runners and even slashed production lead times by two weeks during the pandemic.

The venture, named Race Rabbit, produces the full range of custom-designed apparel Epix offers, including triathlon, cycling and running styles. The facility imports raw materials such as quick-dry polyester, chamois leather and other fabrics and trims for production, with the majority coming from Italy. The Italian fabric suppliers are a major catalyst in helping Epix deliver on its on-demand, customized value proposition, as  they enable the company to order materials in small batches of 100 yards instead of the 5,000 or even 10,000 yards often required by suppliers in South Korea.

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“We no longer stock our retail inventory, so it’s all made to order,” Jarek Barc, president at Epix Gear. “Not only is it made to order, but it’s also customizable, even our retail selection. That gives us a lot of flexibility because it can offer more design, more styles, because there is no inventory risk. Somebody orders something, we make it. If I were to compare to the watch industry, we’re not mass producing Seikos, we’re aspiring to make a Rolex.”

On a typical week prior to the pandemic, the manufacturer produced 200 pieces per week across its China facilities. The U.S. facility now has the capacity to make half that, which exceeds customer demand right now, with about seven or eight people working at a given time. The company has already ordered additional machines to fulfill more orders as the company scales up.

Both the ability to customize products and the small volumes of product manufactured made the move to the U.S. a no-brainer for Barc.

“For example, let’s say you’re a big-and-tall shopper, now we can tailor that,” Barc said. “Now, if you ask for something two centimeters longer or you want us to modify the inseam, we can do that just for you. That’s something we simply could not offer if we didn’t control our own manufacturing because the cost was prohibitive. We can offer a lot more—we can offer more product and we could develop faster.”

The move to the U.S. adds a level of transparency to the process as well, as Epix can show shoppers photos and videos of their product as it’s being created.

Barc opined that today’s apparel and footwear brands that outsource their manufacturing simply don’t have enough visibility into their own products or production capabilities.

“Essentially, the days where a shoe company would know all about their lasts and molds and making of a shoe are more or less disappearing,” Barc said. “What you have now is a marketing company attached to outsourced production. We didn’t really like that since we didn’t have a full understanding of the production process, instead relying entirely on the expertise of our OEM supplier. Having our own manufacturing makes us experts on a new level, which in turn allows us to develop the best product possible.”

Shifting full production from China to home soil required the company to rethink its investment priorities—Epix had a low overhead when its production was in China, with most overhead costs going to sales and marketing expenses. But with labor costs in China increasing alongside an ongoing trade war with the U.S., outsourcing these expenses to the Asian nation no longer held the advantages it once did. Now, significant production costs go toward payments for the facility itself as well as technologies like high-end printers, which can cost as much as $50,000 per machine.

“It’s interesting because the cost bucket sort of changes,” Barc said. “And I say bucket because they come in different costs. You have your production costs, shipping costs and your procurement and warehousing and all these other costs. For us, production is only marginally more expensive now, on average maybe 10 to 15 percent. Shipping is significantly cheaper—we are seeing at least 70 percent savings on per-piece shipping costs.

“For this reason, some products like a running singlet, which is relatively cheap to produce but very expensive to ship, is actually cheaper to make in the U.S.”

When the Epix team realized that running items including tights, T-shirts and shorts had a higher profitability rate when made in the U.S., the company was able to pivot its product line more toward running merchandise and offer cheaper prices on the items to the end consumer. For example, while the company had noticed growing demand for a running skirt in recent years, it had never been able to manufacture and offer that product due to complexities in production and shipping prices. Upon moving to the U.S., it only took a month to make them available.

Despite these wins, it hasn’t all been smooth sailing for Epix. Barc admitted that the COVID crisis has impacted the company hard, particularly because the company’s peak season is between January and April. Epix Gear makes approximately 70 percent of its orders within that season, so the reduction in sales hurt its ability to re-invest working capital back into the Arizona facility. What’s more, the company’s reliance on fabric from Italy meant there were a lot of suppliers that hadn’t been able to ship materials for months on end.

But at the same time, the COVID-19 pandemic and the slower pace of orders gave Epix more time to focus on improving the overall manufacturing process and the end product.

“We were able to reduce our lead time by two whole weeks,” Barc said. “Previously, we had a six-week lead time and now we have four without increasing costs. The whole point for us now is taking this whole year as a setup year.”

Barc advised brands that are looking to reshore to do their homework on the processes required to operate a successful manufacturing facility such as printing, laser cutting, stitching or even understanding machinery settings. He even highlighted that his brother, Tomek, who transitioned from lead sales representative to production manager as part of the reshoring, had to learn these skills on the fly through research and talking to partner suppliers.

“It’s one of the big shames that the U.S. has lost so much of that manufacturing expertise in many industries,” Barc said. “Even stitching, for example: how many people in the U.S. can sew on a professional machine? Fortunately, our facility is next to the design school at Arizona State University, so we’ve been able to hire some of the students there who are majoring in fashion design. That was a life saver, because without that, they would be really hard to find. Finding the labor to do this kind of manufacturing in the U.S. is hard.”

And while the company doesn’t sell its merchandise through other retailers, Barc hasn’t ruled out the idea.

“We are always open,” Barc said. “We haven’t worked with a retailer in quite some time mainly because we’re so focused on custom products and not on mass-produced merchandise. That being said, we’re always happy and willing to entertain any kind of retailer that is looking to stock our stuff, whether it’s e-commerce or brick-and-mortar.”