Leisure Products dives into new hot tub manufacturing facility

Later this month, the global headquarters of a tub and tanning bed manufacturer will be fully operational in its new Johnson City facility, bringing new jobs and revenues to the area.Leisure Products International Inc., makers of hot tubs, bath tubs and tanning beds, intends to begin producing tubs next week in the former Bosch Brakes plant on Twin Oaks Drive. The tanning bed assembly line has been in production for months at the site, mostly because the business outgrew its undersized facility in Kingsport.Company President Dave Hatley said more than $4 million was invested to buy and build out the 318,000-square-foot plant, an increase from the 94,000 square feet Leisure Products leased in Kingsport, and even more was invested in new machinery to allow the company to stop importing materials."A lot of our goods that go into our products are imported — like any company, they come from China — so we've decided over the last few years to control the quality of those," Hatley said Wednesday in his remodeled office in the former Bosch location. "The only way we can really do that cost-effectively is to buy the capital equipment and do it in-house."Buying plastics-molding equipment allowed Leisure Products to make its own tubing and siding for hot tubs, which created domestic jobs, but still kept costs comparable, he said.Over the past six months, the company reduced the amount of imported products by 40 percent, Hatley said, but the increased floor space at the Johnson City site was needed to house the new equipment.In the cramped plant in Kingsport, sales growth was maintained at 2 to 3 percent annually, mostly because of the lack of space to store products and increase production capacity, he said. With three times as much room, he expects rapid, but managed growth of up to 20 percent.At the beginning of the year, Hatley said Leisure Products employed 145 employees. Now, it maintains 160 jobs and expects to fill 25 more in the next 45 days. After that, Hatley expects growth of 25 jobs per year over the next five years, a total of 125.The company president and Elizabethton native founded Leisure Products in 2009, rebuilding it from the ashes of Infinity Spas, a former Johnson City hot tub manufacturer that filed for bankruptcy and closed in late 2008.Hatley said the failed business taught him some hard lessons about diversifying. He said Infinity's business model was entirely based on wholesale, and 60 percent of its business was from a single customer.When the economic recession struck, orders dropped by 70 percent and the majority-share customer began returning products to the manufacturer."This is much more diversified now," Hatley said. "We now have the tanning bed business, and we've added retail sales in with the wholesale."In addition to selling tubs to major nationwide retailers, Leisure Products operates 36 retail sites through which its products are exclusively sold. The number of locations makes the company the largest hot tub seller in the country.Last July, based on the success of its hot tub business, the company bought Izzi Bath, a manufacturer that supplied bath tubs to time share companies.Paired with the recovered and robust market for hot tubs, Hatley said the bath tub business is expected to remain flat but profitable. Despite a reclassification by the federal Food and Drug Administration making tanning beds medical devices and negative press regarding the apparent risk associated with tanning, he said the company's 80-percent share of the tanning bed market keeps its manufacturing profitable, but Leisure Products doesn't intend to expand the venture at this point.Echoing concerns voiced by educators and elected officials recently, Hatley said it was difficult to find qualified employees to perform the skilled labor needed at the plant."We have found it a little challenging to find people inside this area," he said. "That being said, only one out of the last 20 people we hired was from outside this area, and that one was for a very skilled position. We have been able to find them, but it's been a challenge and it's taken a lot longer than we anticipated."After production is ramped up, starting next week, Hatley said a ribbon cutting for the new facility will be held, likely in May.In contrast to complaints he said he'd heard regarding Johnson City's tough business regulations, Hatley said city officials were very supportive and helpful through the permitting process."They've been good to work with," he said. "You hear horror stories a lot of the time, but ours is the opposite."Email Nathan Baker at nbaker@johnsoncitypress.com. Follow him on Twitter at @jcpressbaker or on Facebook at facebook.com/jcpressbaker.