Small Business

In Waterloo, Wisconsin, a passion for 'Made in USA' bicycles

Made in America: Trek Bicycles
Made in America: Trek Bicycles

When Richard Burke and Bevil Hogg founded Trek Bicycles out of a barn in Waterloo, Wisconsin in 1976, they weren't dreaming of one day outsourcing their manufacturing to Asia. Instead, armed with high-end road models, the upstart wanted to capitalize on the 1970s U.S. bike boom.

Nearly 40 years later, as most bike production has moved overseas, Trek is holding on to a bit of its "Made in USA" history.

Trek Bicycles is the largest U.S. bicycle company, making everything from kid models to professional road and mountain styles. And they're the only major manufacturer still producing two-wheelers in the U.S. Overall, Trek makes roughly half of the bicycles manufactured here in the United States.

The company will make "somewhere between 20,000 and 25,000 bikes this year" in Wisconsin, says Jim Colegrove, Trek's senior composites manufacturing engineer.

That might not sound like a lot. But it's noteworthy when you consider about 56,000 bikes were made domestically last year. Remaining, domestic bike production is dominated by smaller companies like Waterford Precision Cycles, which makes about 2,000 custom bikes a year in an old Schwinn factory.

Read MoreThe comeback of 'Made in USA' in manufacturing

Despite Trek's American-made legacy, U.S.-made bikes account for only about 1 percent of Trek's total production. But Colegrove says domestic production creates opportunities for greater production control. "We control and drive all aspects of manufacturing bicycles here in Waterloo," he said.

Workers craft Trek Bicycles in Waterloo, Wis. Most bikes, however, are manufactured in Asia.
David Grogan | CNBC

So what's Trek actually doing on U.S. soil? A trip to the company's headquarters in Wisconsin in July offered an inside look at how some American-made bikes are produced.

Trek's U.S. operations have been headquartered in Waterloo since its founding nearly 40 years ago. The small city is about 25 miles outside Madison, a pleasant drive through lush farmland and small towns you might miss if you blinked.

You're likely to pass cyclists on Trek bicycles heading to the main office, which is the same building where they do a majority of their domestic manufacturing.

Arriving at the Trek campus, it's immediately clear the company encourages pedaling to work, carpooling, and the use of electric vehicles.

Once inside, you realize how strong the Trek culture is. Many employees looked like they spent a lot of time on a bicycle or in the on-site gym—and of course there were a lot of shaved legs—even among men, something most serious cyclists do for aerodynamics. There's a bike technician on site, who will tune your ride while you work. Plus, a full-time barista keeps everyone caffeinated.

Colleagues and friends are introduced as a "good rider" or described as "really fast." Watching Trek employees arrive to work looks like a large meeting of Trek team riders, most dressed in a colorful Trek "kit," a riding outfit that includes a helmet, jersey, shorts and shoes.

The carbon fiber bikes are the top of the line that Trek makes. They're the same ones the pros ride including their latest model, the Émonda, which the company claims is the lightest ever and costs nearly $16,000.

Colegrove says Trek makes a total of four, high-end models in Wisconsin. "They are the ones that pro racers would want, would demand. And so we feel by manufacturing them here in the states we have better control and also better connectivity to making the kind of product that those people want, the kind of performance level that they need."

Walking through the factory floor you discover how much of bike manufacturing is done by human hands. From cutting, sanding, bonding, and the painting of bikes to assembling tires and chains—making bikes requires skilled people.

Read MoreHow one entrepreneur is reviving 'Made in USA' wool

And while American-made bikes are produced in small quantities, demand for quality is growing. "A lot of people are definitely looking for the good dollar value and that type of thing. But I think that there is a definite segment that really wants to make sure that they are getting American-made product because they feel strongly about that."

"People do seem to be more considerate about what they invest in and U.S. made product seems to be part of that," said Trek Brand Communication Manager Eric Bjorling.

Trek Bicycles, founded in 1976, has kept a portion of its production in America.
David Grogan | CNBC

More recently, Trek's level of domestic versus Asian production has become a hot topic in the Wisconsin governor's race.

In recent political ads, Republican Gov. Scott Walker has criticized Trek for outsourcing so many jobs to Asia. The country's largest bike manufacturer employs about 1,000 American workers.

Walker's comments are more targeted as the biggest challenger in the upcoming election is Mary Burke, a Democrat, who also happens to be the daughter of Trek's founder Richard Burke.

Has Walker's negative ads had any effect on Trek? "Other than people publishing politically motivated inaccurate information about us, not really," Bjorling told CNBC.

"We have done what we can to correct the facts while trying to remain out of it. We're not a political company, we're a bike company," Bjorling said. "We have 40 years of history in this state and have received a lot of support from the people of Wisconsin."

Trek does produce the majority of the 1.6 million bicycles it sells annually overseas. But so does the rest of the bicycle industry. According to the National Bicycle Dealers Association, more than 16 million bicycles were imported to the United States in 2013, mostly from Asia.

"The bicycle industry is predominantly centered in Taichung, Taiwan, where the vast majority of manufacturers are based," Colegrove said. "Also, that has drifted over to mainland China."

Virtually no American companies make smaller parts that go onto a bike like the brakes and the gear shifters. "Those products are made overseas," Colegrove says.

Read More'Made in USA' sparks manufacturing hubs in fashion

But Trek pursues domestic production when it can for higher end models, including manufacutirng larger components including high-end carbon frames. These bicycles get a "Handbuilt in the United States" label.

It's a distinction more bike consumers value.

Joanna Gutierrez and her husband Nelson Gutierrez own Strictly Bicycles in Ft. Lee, New Jersey. Joanna says most customers who come in to buy high-end bicycles are very savvy. "They've done their research before they come in. They know which bikes are made in America."

Before picking up the Trek brand in their store two years ago, the couple visited Trek's Waterloo operations to see how the bikes are made. They liked what they saw, and say in-store Trek sales are doing "very well."

—CNBC's Kevin Kane