How a Company Resisted Outsourcing--and Became a Success
In 1985, Emma Bridgewater designed her first piece of pottery. Twenty-six years later, she is employing over 200 people who turn out charming handmade hand-painted mugs, jugs, plates and celebration ware. This is an archetypal British company, full of pride in its traditions and craftsmanship. What it isn't is cheap, as the company has adamantly resisted moving operations to China, as so many competitors have.
We visited Bridgewater's factory on Day 3 of the Simmons College School of Management "Conscious Capitalism Tour." Not all of the tour was fun - but, for my money, nothing's much more fun than visiting factories. Especially one that creates gorgeous products with a strategic heart.
From the outset, Bridgewater was determined that her products would be made in Stoke-on-Trent, the traditional home of British pottery made famous - and, for a period, wealthy - by the likes of Wedgwood and Spode. But in the 1990s, they all decamped to China, leaving the town an industrial wasteland. In her determination to locate and keep her company in Stoke, Bridgewater was articulating her love for British traditions but she was also committing herself to a high cost structure.
Price Protects Brand
"The fact that I had to price my products high is what saved me," Bridgewater says proudly. "I couldn't afford to be cheap. And what that has meant is that we've always had to track our customers closely to make sure we were making what was relevant to their lives. We've had to understand sales trends."
Since competing on price wasn't ever going to be feasible, Bridgwater and her husband and business partner Matthew Rice had to keep well in tune with changes in lifestyle, creating less formal items that fitted into increasingly casual dining. The choices they made - to manufacture in Stoke and to keep their prices high - weren't sentiment; they were strategy.
"Being that close to our customers is a strategy," Bridgwater insists. "Just getting cheaper and cheaper isn't a strategy. Exporting a labor problem isn't a strategy; it's crap. Why aren't we ashamed to do that?"
Is China Cheap?
Even as she spoke, the chickens were coming home to roost. The Chinese government, terrified by popular protest movements in the Middle East, is increasing salaries by 20%. That's after an earlier pay increase towards the end of last year. Moreover, as Chinese workers get more skilled, they're changing jobs more often: starting in menial positions but swiftly progressing to more highly skilled well paying positions. For companies who moved to, and invested in, China, this is potentially catastrophic. After all, if labor isn't cheap, why be there? In the race to the bottom, they've lost their reputation for craftsmanship and they've abandoned any national identity they might have had. Quite what they're left with remains to be seen.
Emma Bridgewater wouldn't say she saw this coming. But what she did see was that competing on price can be a mug's game. If you make something you're proud of, you should be the last person to under-sell it.
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