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Tom Kartsotis, the wealthy co-founder of Fossil, has no connection to the Motor City. He lives in Dallas, where he now oversees a handful of ventures he’s invested in. In early 2011, he decided to build a small watch factory that would sell high-quality watches that were priced, as he puts it, “at the entry point of luxury.”
He also wanted to make these watches in America. “So many big companies have sourcing infrastructures whose knee-jerk reaction is to head to China,” he said. He couldn’t compete with China at the low end of the market — nobody can. But he felt that the kind of watches he had in mind — priced between $450 and $600 at the low end, with a distinctive but classic design — could be made competitively in the United States. So he decided to put his new factory here in Detroit, a city once renowned for its manufacturing prowess that, in recent times, has needed all the help it can get.
That original idea turned into a company called Shinola. It has eight retail outlets and employs around 375 people, most of them in Detroit. Although those stylized watches are its biggest sellers — the company expects to sell between 150,000 and 180,000 this year — it also designs and makes bicycles, leather goods and other well-crafted, high-end products. Not only are those products built in Detroit, but Shinola also tries to buy the parts it needs from other American companies. Its leather, for instance, comes from the Horween Leather Company, a Chicago tannery more than a century old. Its bicycle frames are shipped from a company run by a fourth-generation Schwinn.
Although it was a philanthropic impulse that moved Kartsotis to set up shop in Detroit, it has turned out to be a very good business decision. The space Shinola needed to build its factory was cheap. There was also plenty of talent — engineers, for sure, but also former auto assembly-line workers, people eager to work who Shinola could train to be watchmakers. When I visited the watch factory recently, I saw rows of employees bent over their desks, focusing intently as they placed tiny, intricate parts inside the unassembled watches.
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