US Economy

In Detroit, Shinola is ĞMade in USAğ success story

From the outside, there's nothing much to say about this nondescript, hulking building in downtown Detroit, once the cradle of American industry.

Shinola bicycles are seen on display at the sompany's store in Detroit, Michigan
Shinola bicycles are seen on display at the sompany's store in Detroit, Michigan (Jeff KOWALSKY | AFP)

DETROIT - From the outside, there's nothing much to say about this nondescript, hulking building in downtown Detroit, once the cradle of American industry.

But inside this former General Motors research lab, the fifth floor has been transformed into a state-of-the-art workshop producing watches and high-end bicycles.

Welcome to Shinola, a young American luxury lifestyle company breathing new life into the "Made in USA" label -- a designation championed by President-elect Donald Trump.

The firm, which shares the building with a design school, has built an open factory space with wooden desks reminiscent of 1950s movie sets and high-tech machinery.

Watches, handbags, appointment books and other accessories carrying the "Made in Detroit" label are turned out here, while the bikes -- made from parts designed in neighboring Wisconsin -- and turntables, a new product, are assembled at the flagship store located nearby.

Dozens of employees work here -- most of them African Americans, who make up the majority of residents in this blighted working-class city, forced into bankruptcy in 2013 under the weight of its massive debt.

Detroit suffered hugely from the decline of US manufacturing and especially the difficulties facing the "Big Three" -- auto giants General Motors, Ford and Fiat Chrysler.

The unemployment rate hit 10.4 percent in November, compared to the national average of 4.6 percent, according to official statistics.

Shinola CEO Tom Lewand poses for a photo at the company's watch factory in Detroit, Michigan
Shinola CEO Tom Lewand poses for a photo at the company's watch factory in Detroit, Michigan (Jeff KOWALSKY | AFP)

Success story

Shinola's marketing pitch, a narrative built on the city's woes, differentiates the company from most high-end brands around the world.

"The rich heritage of manufacturing in Detroit makes it natural," says Tom Lewand, a lawyer and former president of the Detroit Lions NFL team, who took the helm of the company in June.

"When people hear the story of Shinola, when they hear the story that new jobs have been created to manufacture, whether it be handbags, watches or bags, they appreciate that."

Former US president Bill Clinton, who owns a dozen Shinola watches -- which run between $500 and $1,500 -- is one of the fans.

"We need more American success stories like Shinola in Detroit," he said in October 2014.

Shinola was launched in 2011 by the Greek-born billionaire Tom Kartsotis, co-founder of the popular watch brand Fossil.

The company, which took its name from a defunct shoe-polish manufacturer from the 1960s, marketed its first watch in 2013, the Runwell.

The company currently employs 600 people, after starting with just nine. It has 18 stores -- two of them outside the United States, in London and Toronto -- and boasts a turnover of $100 million.

Detroit-based Shinola currently employs 600 people, after starting with just nine in 2011
Detroit-based Shinola currently employs 600 people, after starting with just nine in 2011 (Jeff KOWALSKY | AFP)

Made in Switzerland?

The company, which has not yet made it into the black and has not ruled out going public, took something of a body blow last year when the Federal Trade Commission asked it to stop boasting that it manufactures in the United States.

Indeed, it imports most of the parts for its well-known watches.

The Swiss specialist in quartz movement Ronda AG, which is a shareholder, supplies 70 percent of the quartz movement parts. And the watch faces, crowns and hands come from Asia.

For employees, many of whom are former auto workers, the FTC's argument is meaningless.

Shinola "is revitalizing (Detroit). It's producing jobs, it gives us something positive going forward," says Damon Love, hired without training in the leather department nearly three years ago after being laid off by a local automotive supplier.

"We can do the same things as the Swiss, even better," said Koko Mary, who works in watch assembly. The former employee of a radio provider for Cadillac now has health insurance and a retirement savings plan -- new and welcome benefits.

The minimum hourly wage is more than 15 dollars, said Lewand, compared to about $8.90 in the rest of Michigan.

Late this year, the company will market its first audio headphones to compete with Beats -- and then hopes to take on the lucrative eyewear market, a product it plans to produce on Chicago's South Side.