Black Diamond laid off 70 employees last week in its manufacturing division of the Salt Lake City, Utah, headquarters, a 22 percent reduction of the Utah workforce and 53 percent of the manufacturing division.
News spread quickly on Reddit. A screenshot of a Facebook post—with the original poster’s name blacked out—received nearly 450 comments. It read in part: “Black Diamond announced to its manufacturing crew that it was being sent overseas. They’re out of a job come September.”
Walbrecht announced the layoffs to all employees on Friday, after the VP of manufacturing gave notice to those 70 employees. He said the cuts are a culmination of Black Diamond’s multi-year strategy to migrate away from in-house manufacturing, seek the most capable facilities overseas, and boost its engineering and design staff.
Black Diamond is owned by Clarus Corporation, a publicly traded company.
Employees’ last days will be between Sept. 1 and Dec. 31. BD is doing everything it can to support them by hosting job fairs and career-building workshops, providing severance packages, and working with Utah to ensure unemployment benefits. Those 70 will also retain their employee discounts, even after their departure. Meanwhile, the 62 remaining manufacturing employees were assigned new roles at the company.
SNEWS talked to Walbrecht during an exclusive interview on Monday to explain the layoffs and how they factor into BD’s overall “innovate and accelerate” strategy.
Is BD ceasing U.S. manufacturing altogether?
It’s a tricky question. We will no longer manufacture carabiners, crampons, passive pro (stoppers), wall iron, and ice pro or machine any parts here in Utah, but we will continue to assemble Camalots, skins, and ice screws in the Salt Lake City facility. In the case of our Camalots, the complexity of the manufacturing process is in the assembly. So it’s not black or white. The machining of the metal lobes will now shift to another factory, but the cams will still be built in Salt Lake.
This decision was not a reflection of the capabilities, the performance, or even the progress of our manufacturing in Salt Lake City. It was driven by the ideology of being the most innovative, design-focused brand in this space and ensuring that our designs and our innovations can be manufactured in the absolute best places in the world. We’re looking at facilities in Taiwan, but it’s still undecided.
What went into the decision? Was the spate of 2016 recalls a factor?
There’s no question that recalls were indeed a consideration. It was one of the dark moments in BD history, six months before I came to the company. These recalls were largely the result of moving carabiner production from BD China to BD U.S. In reality, the recall impacted very few products. But the psyche impact to BD was huge. We take athletes and climbers and the community very seriously. We think we make the best product in the world, and if you don’t, what do you do?
This has been in the works for two years. We didn’t make this decision lightly. We sent engineers around the world to understand exactly what we could make, where we could make it, how we could make it better. Often, our question is, how do we know it will meet BD standards?
Quality assurance is of paramount concern for BD—no matter where we manufacture, here or anywhere else. When it comes to making protective equipment, the highest standards of QA are the price of entry.
Is it more profitable for BD to manufacture overseas?
In some cases, yes. But this isn’t driven solely off financial decisions. It’s the ability to gain access to technology that we don’t have. I don’t have those machines, I don’t have the technology, I don’t have the manufacturing capabilities or the knowledge to do that. In some cases, there’s one that does. We had to turn to facilities in the world that had this technology. As an example, we ended up in an electric automobile facility in order to develop the JetForce avalanche backpack.
Many will lament that you’re moving U.S. manufacturing to Asia. How will you respond to them?
That’s the world of design, development, and make. The world has shown us with China that the make world is always going to be in turmoil either by duties or hourly wages, and therefore your going to constantly be moving. Apparel that starts in China someday moves to Vietnam or Laos or Cambodia. It just keeps moving. That’s not a strategic initiative that you can protect. My belief is, and we’ve been saying this at BD, we can be number one as the most innovative and most disruptive equipment manufacturer in the world. We want to design, develop, and come up with items that nobody else is willing or has the investment to do. We look at all 33 categories of product and say, how do we make it lighter, faster, stronger, better than anybody else?
In May 2018, we wrote a story about Clarus doubling down on Utah and creating 140+ jobs in the next eight years. Is this a pivot from that?
Originally, that news was in response to Outdoor Retailer moving from Utah and whether BD was committed to Utah. BD is committed to Utah and its community in Salt Lake City and demonstrated this by reinvesting profits in developing new product lines—denim, rainwear, footwear, etc.—and new employees, including the best designers they could find.
The current layoffs aren’t a pivot from that original response. While this is surely a difficult situation, this transition is going to make BD stronger and our business more vibrant, which will ultimately allow us to further invest in our community in Salt Lake City and Utah.
A snapshot of the Black Diamond workforce as of July 23, 2019. The layoffs don’t go into effect until Sept. 1, 2019.
BD Utah workforce: 322 before layoffs; 252 after layoffs
2018 hires: 108
2019 hires (to date): 57
Do you plan on finding a different location?
At the rate in which we are hiring for design and engineer positions, we have no plans to change our Utah headquarters. At 57 hires already for 2019, we are likely to meet or surpass our 2018 rate of hiring. If you recall, we just added an entire footwear department for Spring ’20, hiring a category director from Oboz and a lead designer from Nike. That division will expand rapidly as the category grows.
How would you characterize morale at the company in general?
In recent years prior to my arrival, BD had had layoffs, bought and sold brands, had multiple presidents, had a recall, was up for sale, and saw the departure of employees. There were a lot of things. We tried to focus on all of that. It doesn’t happen overnight. Unfortunately, in the first three or four months of my time at BD, we made more changes in order to align the company with our vision for long-term strategic success. Today those employees are much happier. Every area is a continuous improvement and part of that comes with time. If we’ve offended someone in the past—as a company, a market, a retailer, a consumer, an employee—how many compliments do you have to give before you get back to neutral? One of the tough things is to keep this amazing BD culture, which borders on a cult, while at the same time be one of the most competitive performing brands in the industry. That’s not an easy feat.
This hour-long interview was edited and condensed for clarity.