Fitness or Facebook?

Fitness equipment prince Jason Lo leans against a treadmill at his headquarters and lets a wonderful marketing opportunity slip through his fingers.

He never breathes a word at a news gathering about making the earth's citizens healthier.

Many of the journalists present would have expected Lo to claim to be on a mission to boost the earth's cardio mojo and muscle tone. After all, he runs Johnson Health Tech, the world's third-largest fitness equipment maker.

"Our holy calling is to use ellipticals and stationary bikes to make the peoples of the world healthier beings," Lo could have thundered. That might have been a bit over the top, but forgivable.

Instead, this affable Taiwanese, who in middle age is neither fat nor railthin, talks about the challenge posed by the widespread perception of exercise as one of the most boring forms of human activity.

"We're trying to make it much, much more fun," he says. "We have to help people to want to work out."

Johnson knows it will have a tough time making a treadmill more fun than Facebook, Angry Birds or Glee. That's why it has enlisted social and visual media to create an entertainment-exercise hybrid in which a console's electronics are almost as important as the gear that makes your heart beat faster.

For coming generations of equipment, Johnson's designers are exploring how to harness smart phones and tablets without letting exercisers get so distracted they tumble off a stairmill.

"The differentiation in fitness equipment will come from console technology," Lo says. "That's going to be our focus in the next few years."

Johnson is a study in how Taiwanese companies have evolved from hired guns to formidable brand names in their own right. Founded in 1975 by Peter Lo, Jason's father, Johnson spent its first two decades making equipment for others.

In 1996, it was ready to sell its own products. Over the next five years, Johnson launched three marquee brands: Vision Fitness, which supplies specialty retailers such as Fitness Town in B.C.; Matrix, which supplies commercial customers such as fitness clubs; and Horizon, which serves the home market through broadspectrum retailers such as Canadian Tire.

And Johnson's brands are a collective powerhouse: the Taichung-based company posted $369 million US in sales in 2010, and hopes to hit $470 million this year.

Johnson, which trades on the Taiwan Stock Exchange, makes the vast majority of its components at one factory in Taiwan and two in China. With R&D headquarters in Wisconsin, it employs 4,075 people globally and sells in 60 countries.

Nathan Pyles, president of Johnson Health Tech North America, says Johnson's strategy goes against the grain of the thou-shalt-contractto-others gospel spread by many U.S. business schools.

"It was an insight Peter Lo had that for a company to be more competitive, it has to be able to control the entire manufacturing process," Pyles says from his office near Madison, Wisconsin. "By being vertically integrated, we have much better quality control.

"If we hear of a problem in the field, it gets communicated to the assembly line making the product, and that can happen in a day."

The world's fitness-equipment market is expected to exceed $10.5 billion US by 2015, according to researchers Global Industry Analysts.

"Exercise bikes represent the fastest growing product segment," GIA says. "Treadmills continue to dominate the market, contributing more than a quarter of overall sales."

The recession triggered the sector's first sales decline in almost two decades as battered homeowners nixed purchases and growth in clubs and gyms slowed, it said.

But the aging of the world's population is working in the industry's favour - as well as the rich-country problem of obesity - as doctors urge older or overweight patients to stay active, Pyles says.

"Ten to 15 per cent of the population love to exercise. Another 10 to 15 per cent understand the benefits but will never exercise," he says.

"Seventy per cent believe in the benefits of exercise but have not made a habit of it. These are the people that want to be mentally engaged in something else and entertained.

"You don't want to go down to your basement and work out on fitness equipment looking at a blank wall."

Johnson, which releases 30 to 40 new products a year, tailors its equipment mix to the tastes of individual markets.

In the U.S., older equipment buyers prefer elliptical trainers, Jason Lo says. In Europe, the overall market gives indoor bikes the nod.

Asia likes treadmills. Rowing machines are hot in Australia, New Zealand, the UK and Germany.

And Canada? Pyles, who has a daughter attending Simon Fraser University, says exercisers here are united by a desire to stay warm rather than a fondness for particular machines.

"Proportionately, we do better in Canada than in the U.S.," Pyles said. "The longer winters and colder weather are a great incentive for indoor workouts."