Craig Wolfe founded custom rubber duck manufacturer CelebriDucks in 1997 with a factory in China. When he signed up a crop of new clients in 2011, he decided he wanted to bring rubber duck manufacturing back to the U.S. for the first time in decades. During the yearlong process to make his first batch of American-made ducks, he bet his company's future on the more-expensive manufacturing process stateside. After a disastrous start, CelebriDucks's U.S. arm is in the black, and the San Rafael, California-based company will generate more than $1 million in profits overall this year. Below, read Wolfe's story.

Almost every home in America has a rubber duck. They're almost as popular as teddy bears, and they were invented in New York. Yet not one rubber duck was being made in this country before we started it up again three years ago.

There's a reason why no one makes them here anymore, which I had to learn the hard way. You cannot do it cost-effectively. You have to adhere to regulations, and the skills required to make them are hard to come by. We took a huge risk and could've lost my U.S. division, a third of my revenue, and our brand reputation.

When I first came up with the idea to make rubber ducks that look like celebrities, I figured it would be a side project, but it just kept growing from our first product, a Betty Boop duck. In 2000, the Philadelphia 76ers heard about our ducks and we made an Allen Iverson rubber duck for a game promotion. The Yankees called, then the Chicago Cubs. After the sports teams made their orders and everything was successful, I realized I had a real company here.

Business was solid and my Chinese factory was getting everything done. But in 2011, I had this strong feeling that we could bring rubber duck manufacturing back to America. We could show other businesses that if we could do it, they could do it and the country could start making more things here. 

What I did not realize is just how decimated the industrial sector was for our kind of product. I found an old factory in Ohio that used to make rubber ducks for Disney, so I figured some of the old timers would still know how to do it. They may have known how to make them in theory, but in practice it was a disaster. At this point, Harley-Davidson, Future Farmers of America, and State University of New York had put in orders for a total of 4,000 rubber ducks, but our U.S. factory could barely make duck number one. They couldn't paint them, they couldn't mould them correctly.

I knew how to innovate things, but nothing prepared me for how difficult it is to make a rubber duck. We were blowing through tens of thousands of dollars and these deadlines were looming, while the painters could paint one duck every half hour. I have never been so stressed in my life.

At the eleventh hour, an engineer from the Future Farmers of America told me about a factory he found in the Bronx, which used to make Ernie's rubber duck for Sesame Street. It was, and still is, the last factory in America that knows how to make these things and paint them all in the same place. 

Here we are at the factory in the Bronx, where I had shipped everything from Ohio, and I was blown away--these guys could do it. After the last-minute switch, customers started to come out of the woodwork. Everyone wanted a rubber duck made in America. Business had never been so good and thanks to the press I was getting, companies like Marquis, Monkey See Monkey Do, and Ducks on the Pond made orders. 

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The turning point of my success was when one of my competitors called to say he was getting his ass kicked in China. He was having his moulds stolen and getting ripped off, but he had a big order from Disney. He asked if I could make them in my U.S. factory. That's how I got an order to make 300,000 ducks, with up to a million in the future, for Disney. We had to make them in my Chinese factory to meet his price point, but if I hadn't had the U.S. factory, my competitor would never have paid attention to my business. My American products were getting me buzz and raising my profile. 

My other customers, which range from the Texas Rangers to Zappos, have the choice to have their ducks made in America or China, and more and more are requesting my U.S. factory. What was the greatest risk I ever took is slowly turning into a godsend. The company was doing OK before I took the risk, but now everyone wants an American-made rubber duck. We were featured on Conan O'Brien's show, Entertainment Weekly put us on their top 100 gifts list, and we were nominated for Martha Stewart's American Made this year. 

Looking back, I realized the only reason I took this risk was because I had no idea what we were getting into. If I had known the state of manufacturing here I would not have tried it. But instead of destroying us, it transformed my business. All those losses were made back thanks to our U.S. division. The Disney job alone, which I got because of the press, is going to make millions. I remember the head of licensing for King Features, which owns the rights to Betty Boop, laughing at me when I asked about fees and royalties for making my first product. It all sounded crazy back then, but for some reason CelebriDucks works and people love them.