Sponsored by Oregon Business

Leatherman's promise to keep it local

| Print |  Email
Articles - June 2011
Wednesday, May 18, 2011
Leatherman's multi-tools are used in a wide range of activities, from camping to bike repair.

So the question arises: Why go through all this? All of Leatherman’s major competitors have moved at least part of their multi-tool production overseas, where labor costs are considerably less. Rather than spending the time and effort to re-jig the way the company runs its business, why not contract the work — or part of it, anyway — to a facility on the other side of the Pacific?

The answer is simple: Six years go, Jake Nichol made a promise, and a gambit.

In 2004, the company’s venerable founder and chairman, Tim Leatherman, came to a realization: He wasn’t very good at strategic planning. Leatherman had done a lot for his company. He invented the first multi-tool  — first called “Mr. Crunch” and later “Pocket Survival Tool” — after a disastrous experience in a Fiat during a 1975 trip to Europe showed him that a simple pocketknife was not enough.

He and co-founder Steve Berliner filled the company’s first order in 1983, for 500 multi-tools to be sold in a Cabela’s catalog. He led the company through its exponential expansion, from those first 500 tools, to a company with 36 products selling millions of units annually in more than 85 countries around the world. The company now reports more than $80 million annually in gross revenues. It says that after a difficult 2008, revenue grew 18% during the past fiscal year.

But strategic planning was not his forte, Leatherman, 62, says now. “I thought we had a strategic plan, but the employees couldn’t recall the meetings,” he says. “Because there weren’t any.”

In 2004, at the company’s first strategic planning session, Leatherman was on the verge of stepping down from full-time duties at the company. He included in the plan a list of what he called the company’s “guiding principles.” Chief among them was a pledge to keep the company, and its manufacturing plant, in Portland for as long as possible.

Those principles became a kind of contract for the company’s next chief executive. If a candidate agreed to adhere to the plan, they’d talk. If not, there was nothing more to discuss.

Leatherman set up an interview with Nichol, who brought with him a quarter-century’s worth of experience of the tool industry, both at Stanley and at Danaher, the Washington, D.C.-based group that makes tools for Sears under the Craftsman brand. At Danaher, Leatherman says, Nichol was in much the same position, having to devise ways to make hand tools in the U.S. when many rivals had moved production elsewhere.

Nichol agreed to follow Leatherman’s principles — and to take the job. That agreement has shaped the way the company has operated ever since.

So the company’s disadvantage is a permanent one, at least as permanent as such things get. Nichol and Leatherman both say that the pledge to remain in Portland presents obvious challenges — balancing quality and cost, always fending off competitors that offer good concepts at often-lower prices.

But Nichol says the pledge has been a kind of blessing as well. The jobs the company provides in Portland are, in a way, its promise to the area, something Leatherman, a native Oregonian, cherishes. With the agreement between Leatherman and Nichol in place, those promises can be kept. Company executives tell employees, government leaders and suppliers that it’s going to stay here. It’s empowering, Nichol says.

“The empowering part of that is that there are no off-ramps,” he says. “There’s no ‘If this doesn’t work we’ll go do such and such.’ It’s really helped us build a clear business strategy.”

The endless battle against costs and inefficiencies continues. Two years ago, it was a plan to make a $30 multi-tool. That plan has come to fruition. But Nichol says every year comes with new plans, and with them, new ideas about how to squeeze waste from the company and new, faster, more efficient work habits to embrace. From Nichol down to the workers on the factory floor, it’s again time to stretch.


More Articles

Video: 100 Best Nonprofits to Work For in Oregon 2015

The Latest
Monday, October 05, 2015
100-best-NP-logo-2015-video-thumbVIDEO BY JESSE LARSON

Profiling some of the organizations featured in the 2015 list.


Grain Food

September 2015
Wednesday, August 19, 2015

A Power Lunch at Bob's Red Mill Whole Grain Store and Restaurant.


Big Geek

October 2015
Monday, September 28, 2015

To attract technology companies, the U.S. Bancorp Tower repositions itself as open, light and playful.


Cutting Edge

October 2015
Monday, September 28, 2015

“There wasn’t a reason shaving with a straight razor should have been taken over by shaving with disposable razors.”


Counterpoint: CLT not as green as people think

Contributed Blogs
Wednesday, September 16, 2015
photo-flickr-glasseyes viewthymbBY GREGG LEWIS | OP-ED

The issue of green-washing remains a significant challenge to those of us who would like to see the building sector in this country do more than make unverifiable claims of sustainability. Transparency about the impacts of a given material is the only way to allow designers to make intelligent choices when selecting building products.


5 takeaways from the rural Oregon economic report

The Latest
Thursday, September 10, 2015

The Oregon Office of Economic Analysis released a report on the vitality of rural Oregon this week.  Media reports focused on the number of Californians moving to the "Timber Belt," but the document contained other interesting insights regarding regional challenges and successes.


Living the dream

Friday, August 21, 2015

smugglespearsthumbRenee Spears, founder and owner of Portland-based Rose City Mortgage, is hot to trot to sell pot.

Oregon Business magazinetitle-sponsored-links-02