Chaco moving operations to China

Headquarters will remain in Paonia

Sharon Sullivan
Grand Junction Correspondent
Glenwood Springs, CO Colorado
November 15, 2007

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PAONIA - Chaco sandals will no longer be made in the small western Colorado town of Paonia, though the company headquarters will remain there.

The company is in the process of moving the rest of its manufacturing operation to China.

When the remaining line of Chacos still being assembled in Paonia moves overseas, sometime next summer, about 50 jobs in Paonia will be eliminated, though 10 or 12 of those jobs are expected to be absorbed into other departments within the company.

The remainder of the employees will be offered severance packages, said General Manager Ed Wieland.

Founded in Paonia in 1989 by owner Mark Paigen, Chaco remained a tiny company for about a decade before experiencing a growth spurt in 1998-99. Its sandals are popular with the outdoor crowd.

The company has less than $25 million in sales. "We are growing very rapidly," Wieland said.

"It's important to understand, with the exception of the Headwaters line - we were already producing in China for the past four years," Wieland said. Popular with river runners, Headwaters sandals can be worn in water and for hiking.

In August, Chaco employees learned that one of the Headwaters' models would be manufactured in China. Two months later, the company announced it would move the remainder of its production to China as well.

"Starting in 2009, 100 percent will be going to China," Wieland said. "It's been coming for a long time."

China makes 95 percent of all footwear in the world, Wieland said. "They are the kings."

The cost of making a pair of sandals in China is significantly lower than in Paonia, he explained.

The defect rate is also lower in China than in Paonia, he said.

In addition, the Paonia plant doesn't have the technical capability to produce models on the drawing board, Wieland said.

The company hasn't been able to claim "made in Paonia" for a long time.

"The majority of the components come from abroad," Wieland said. Foot beds come from New England, webbing is from France and China.

"We couldn't even use the 'made in USA label,'" Wieland said. "They're assembled in Paonia."

Chaco headquarters will remain in Paonia, and its distribution center will stay in Delta, together employing approximately 60 people in the areas of sales, product development, customer service, information technology, finance and marketing, Wieland said.