It was succesful. Which is why it so surprising to see Shinola struggling. The US-based brand was forced to fire 30 people to “refocus its strategy for future operations”. Some tanneries, specifically those located in the United States, fear for the future of their supply contracts.
What kind of brand is Shinola?
Shinola was founded in 2011 in Detroit by Tom Kartsotis (co-founder of Fossil). It is owned by a Texan investment group named Bedrock Brands. The name of the brand is that of the now-shut down shoe polish brand. Shinola started out making watches, then leather goods, jewelry and other accessories (bicycles, speakers, record players). The brand also has a hotel in Detroit. A team of craftsmen assembles luxury watches and high-quality leather wristbands by hand. The company had also announced the opening of its own leather goods’ production site in May, 2014. 1,300 square meters filled with Italian tech for a Leather Factory that also manufactures small handbags and other leather accessories.
At the beginning, the company grew quickly, surpassing the 20 million USD revenue mark in 2013 and reaching 124 million in 2016. At the same time, profits never got close to the same growth rate, due to high production and distribution costs. The company’s ex president, Panis, had stated in 2017, that Shinola had a “clear strategy to reach profitability within the upcoming years, if all went to plan”. It didn’t.
One of the reasons behind Shinola’s difficulties lies with the notice received by the company from the Federal Trade Commission. The FTC has called on the brand as it advertised to be making watches “100% in the USA”. While in reality the main components came from Switzerland and China. The company felt the hit strongly, as it was focusing on American patriotism and the rebirth of Detroit, still down from the automotive crisis. In 2017, for example, Shinola had saved the Roma Industries tannery, in Florida, with its orders.
From 2018 on, Shinola has changed president: Shannon Washburn substituted Jaques Panis. During the current month of November, news broke that the CEO, Tom Lewand, will leave the company at the end of the year, and that Washburn will take over the role. But most of all, Shinola announced its decision to let go 5% of its workforce. 30 people will be cut from a total of 610, a number that had reached 650 at one point. Shinola justified the decision by stating that it is “part of the company’s growth strategy”. This American dream has cracked.