GOP Gubernatorial Candidate Randy Boyd’s Company Chose China Instead of Tennessee as Location for Manufacturing

One aspect of his business career that GOP gubernatorial candidate Randy Boyd has not highlighted in his campaign commercials is this: Products that have helped make Boyd’s company Radio Systems Corporation highly profitable are manufactured in China. Boyd still runs the company as CEO.

The company, “the world’s leading dog and cat products supplier” including such brands as PetSafe and Invisible Fence, began manufacturing its products in China in 1993, two years after he launched his business, claiming that it was “a move that improved our product quality, prices, and reliability.”

Three years later his company reported $24 million in sales.

According to the offering memorandum associated with the company’s planned 2001 initial public offering, an offering that was subsequently withdrawn, “the  Company currently outsources virtually all of its manufacturing and assembly activities.”

For the year ended December 31, 1997, approximately 80% of the Company’s products, including its standard Radio Fence pet containment products, were manufactured or assembled in China by two manufacturers. Other of the Company’s products are manufactured in Israel and France, and certain of the components of the Company’s Radio Fence products are manufactured in Taiwan. The microchips used in the Company’s products are manufactured by a supplier in California.

The Company’s products and component parts are manufactured on a purchase order basis and the Company does not maintain purchase or supply agreements with its suppliers. Final assembly, packaging and shipping functions are handled by the Company at its Knoxville, Tennessee facility.

The 2001 offering memorandum reflects a plan to maximize profits from development, marketing and sales without incurring “significant capital expenditures” and relying instead on “cost-effective manufacturing.”

Maintain Cost-Effective Manufacturing and Product Development Techniques. The Company currently outsources virtually all of its manufacturing and assembly functions and certain specialized engineering and development projects. Management believes that the Company maintains a close relationship with its suppliers and takes steps designed to ensure that the Company’s product specifications and quality standards are met. Management believes that, by outsourcing certain capital intensive functions, the Company is able to avoid significant capital expenditures, benefit from the resources of its outside manufacturers and engineers and concentrate the Company’s resources on developing, marketing and selling its products. As a result of these and other decisions, management believes that it is better able to control its fixed costs.

Operations in China were subsequently expanded in 2005 to include the company’s China Development Center, which is located in Shenzhen, China.

In 2011, Boyd’s company tried to rely on its China location as a way to bypass U.S. patent law in an unsuccessful defense against a patent infringement suit.

According to the company’s website, it currently employs about 700 people in at least seven countries. In addition to U.S. offices in Knoxville, North Carolina, and Virginia, the company has a customer service center in Ireland, marketing offices in the United Kingdom and Australia, and manufacturing operations in China. Final assembly takes place in the United States.

Radio Systems Corporation remains a privately held company. The most recent estimate is annual sales are currently about $370 million.

The company has acquired several companies subsequent to its founding, and, since the company remains privately held, it is unclear what percentage of the manufacturing operations of those acquisitions occur in the United States, China, or other countries.

One question that Boyd has yet to be asked on the campaign trail is this: What percentage of the products sold by your company are manufactured in China, and what percentage are manufactured in the United States?

A statement released by Boyd campaign shortly after he announced his candidacy for governor in 2017 revealed the details of his wealth, which originated from his majority ownership of Radio Systems Corporation, as provided through his tax returns for 2015 and 2016:

According to the Boyd’s income tax summary and 1040 pages for tax years 2015 and 2016 indicate that he and his wife Jenny earned $42,489,000 from their business investments in total income over the two years, while generating $30,176,000 in taxable income, paying more than $8,598,000 in combined federal and state taxes, and generously contributing over $10,300,000 to more than 100 charitable and non-profit causes across the state during those two years.

(Though that statement is no longer available on the Boyd campaign website, it is available on The Tennessee Star article published at the time of its release.)

The expansion of Boyd’s company has not reached the distressed or at-risk rural counties in Tennessee, even though Chinese companies have moved some operations to Tennessee creating more than 1,000 jobs.

In December 2017, Venture Nashville reported that a legislative “West Tennessee Economic Caucus” would convene at the start of the 2018 Tennessee General Assembly. State Rep. Mark White’s (R-Memphis) position was that “West Tennessee is sorely lacking in economic development, as compared to the middle and eastern parts of the state,” despite the announcement one month earlier that Tyson Foods’ planned to open a new plant in Humboldt.

During Boyd’s term as Commissioner of Economic & Community Development, his department created the “Distressed Counties Website Enhancement Program,” which was intended to help the twenty-one distressed and at-risk counties identified by the state market themselves to potential business decision-makers.

Haywood County, where the Memphis regional megasite is located, is categorized by the state as an “at-risk county” defined as being “at risk of becoming economically distressed. [These counties] rank between the worst 10 percent and 25 percent of the nation’s counties.” Despite Boyd’s enthusiasm in trying to bring a major company to the megasite, he was not successful. The megasite which reportedly needs another $80 million to be “shovel ready” remains tenant-free.

Right after Boyd announced that he would run for governor, he talked to The Commercial Appeal about the Memphis megasite and has posted that piece on his campaign website:

The Boyd family has been in rural West Tennessee since 1832, so we know how important this opportunity is for our entire region. I am committed to making it happen….

We have to work together — our many partners in Memphis, Jackson, and the entire West Tennessee region, along with our key partners in state government, at TVA, and other– to land the transformational companies and investments we want to fufill the promise of the Megasite for our entire state and this region.

I’m excited about the opportunities this site can bring, and I’m excited about the future of West Tennessee. Let’s get it done.

While he was ECD Commissioner Boyd described the megasite as “the greatest asset we have in the state of Tennessee.” To date, there has been no mention by Boyd about whether the manufacturing of his company’s products might relocate to West Tennessee or any other location in the state.

Ironically, Boyd who self-identified as a political moderate when he launched his campaign for governor and was vehemently opposed to supporting Trump in the primary, has been spending money on TV spots and radio ads trying to convince voters that he is a conservative businessman who supports President Trump and is aligned with his immigration policies.

Taking his company’s manufacturing business overseas is only consistent with Boyd’s membership in and alignment with the big-business-cheap-labor lobby group the Partnership for a New American Economy.

Keeping a good portion of his manufacturing overseas–and in particular in China–is out-of-step with President Trump’s efforts to bring manufacturing jobs back to the U.S.

Boyd probably has a reason that he has decided not to locate more of his manufacturing operations in the United States. He has not, however, shared that reason with Tennessee voters yet.