Burton Snowboards announced today (February 11, 2010) that it has reduced its global workforce by less than two percent, and reinstated the salaries and merit-based incentives that were cut/ eliminated in March 2009. TransWorld Business tracked down the company’s CEO Laurent Potdevin to get the details of this decision and an overall synopsis of Burton’s current business. Here’s Potdevin’s take on the recent announcement and the company’s strategy moving into 2010.
Obviously the decision to have a layoff is never an easy one. At Burton, which is not publicly traded, what’s the process for making these types of tough calls?
This is something we take very seriously. We have a very active board that we obviously talk to, but being privately held allows us to make decisions that the other guys can’t make … In many ways it’s a process that is very simple. We speak with Jake [Burton] and we move forward … Ultimately [we make decisions based on] if something is right for the sport [snowboarding] and if it’s right for our brands. It’s all about our commitment and passion to the sport and our long-term commitment to snowboarding.
Based on the press release Burton sent out, is it safe to assume the number of jobs eliminated is between 15–20?
It was seventeen.
What departments were most affected by the reductions?
It was really across the board. I’m sure that there are a couple of very small departments within the company that weren’t affected, but it was very much across the board—product, marketing, sales, finance, and operations. There wasn’t any specific department targeted.
Strategically, why does it make sense to make these reductions and announce the reinstatement of salaries and merit-based incentives at the same time?
They are done for different reasons.
A year ago, when everything went downhill very quickly, nobody really had a good understanding of how short and shallow or long and deep the recession was going to be. At the time we decided to protect our staff as much as possible and implement a temporary measure by cutting salaries and some of our benefits. A year later, the industry has contracted to some degree and the layoff is not only about being more efficient, but also about scaling [our business] to that size. The layoff reflects that reality.
The salary reinstatement, as well as the merit increase, is really about the fact that over the past twelve months our performance has been much stronger than the twelve months prior. People have done a really good job, and we have some of the best people in our industry. We are very committed to compensating them the right way as well as retaining, attracting, and developing those types of people.
It’s definitely been a tough time scaling to the size of the industry, but we’re very happy with our performance and the way things are trending, and we’re rewarding people as such.
As you mentioned, last March Burton reduced salaries on a sliding scale from 0–15%, Jake and Donna Burton eliminated their salaries all together, and the company decreased its 401(k) match. Does this announcement mean all those things are back as they were?
What has been reinstated as of February 1 [2010] is the salary that had been cut as well as the merit increases that had been given last July, but that had not taken effect … We have not reinstated our full 401(k) match.
The latest issue of Money Magazine reported that 35% of employers who had cut their 410(k) match plan to bring it back in the next six months. Does Burton plan to bring its match back up?
Yes, as soon as we can reinstate that we will.
With tradeshow season wrapping up, what’s the conjecture from your staff regarding next season?
Our crew actually just got back from ISPO [held in Munich] last night, and while I didn’t go this year, they say the vibe from the show was really, really good. Actually, the vibe from all the shows we attended—SIA, IPSO, Surf Expo, ASR/ CLASS, and Agenda—has been good.
That certainly doesn’t mean that we’re going to see explosive growth in all categories and across all brands … There are obviously less retailers in business this year then there were last year, but the ones that have weathered the economy are positive and optimistic at the shows. They had a good December and a really good January after a crappy November. They moved through a lot of inventory, and a lot of them reported that they were profitable as a result of greater maintained margin. All of those things are really good signs of the industry getting back on its feet and getting healthier.
Taking the information you’re getting from your retail partners and planning overall business, production, and inventories for next season has to be difficult. On one hand, if you don’t build enough product you could lose sales. On the other hand you could end up over inventoried. How is Burton approaching next season?
If anything, we’re going to err on the side of losing sales. When all the planets were aligned and the economy was strong the entire industry—including ourselves—was guilty of building too much product. Obviously we have adjusted very quickly to that and our strategy right now is to build what we think we can sell at pre-season—period. We’re not building any inventory that doesn’t have a home.
Moving on to some of the other brands in Burton’s portfolio, how are things going at Analog and Gravis?
It’s really fun to work with those guys and see what they do. The two brands don’t necessarily move the needle for Burton drastically in terms of scale, but Kevin Meehan has done a really good job with both brands and right now they are the brands that are growing double digits—not only their comps, but they are also opening a lot of new, really relevant accounts across the country. Also, their sell-through is good, which is ultimately what dictates our success. The demand for the product is growing within their current distribution and outside their current distribution, and we’re having fun with it.
How are retailers reacting to Habitat’s footwear launch?
It’s really too early to tell because the product is going to hit in Spring, and consumers haven’t necessarily seen the product yet. But the bookings for Spring were great and we kept them small purposely and what we’re booking now for fall/ winter is even better, so there has been a very good reception for the product, where it’s positioned, and who it’s trying to talk to. From a business standpoint, we saw that the opportunity was there and the guys in Dayton [DNA Distribution] know the business so well, and they are an awesome crew.
To read Potdevin’s thoughts on the integration of Channel Islands Surfboards under Burton’s umbrella, and new technologies in the works for surfboards—and much, much more—you’ll have to wait for the April issue of TransWorld Business.
TAGS: agenda, analog, asr, BURTON, ceo, channel islands surfboards, Gravis, ispo, jake burton, josh hunter, kevin meehan, laurent potedevin, layoffs, SIA, snowboarding, snowboards, surf expo, Transworld Business
