SITE ARCHIVE

Uncategorized

Lost Is Not Lost: Images can be deceiving.

If someone asked you who runs Lost Surfboards, who do you think it would be? After years ofunconventional ads and videos, you might guess its videosuperstar Randall. Some retailers seem to think so.

Image is importantto Lost. So when the company recently brought in formerGotcha mogul Joel Cooper, many expected that Lost appareland boards would begin to appear in larger chain storeslike Pacific Sunwear. That won’t happen.

Looking fora new venture isn’t easy. Cooper cofounded Gotcha in1978 and sold his share nearly twenty years later. He knowsthe unwritten rule: you can’t buy your way into anybusiness, and there’s no such thing as short-term success.Cooper approached Lost because he believed the company couldbe big. When he says big, he doesn’t mean a 100-million-dollargiant, he means international.

Cooper’sformula for Lost was simple–find a medium-sized businessand keep it ‘core all over the world. “The daysof huge labels are gone,” says Cooper. “In the80s, size mattered. Size doesn’t matter now. If I coulddo it again, I’d do it this way.”

He, along withpartners Matt Biolas and Mike Reola, doesn’t want togrow the surfboard part of the business. They want to keepmaking good boards–especially customs. They also wantto add more quality to the apparel while meeting the demandfor it.

Biolas and Reolaoriginally started Lost under Biolas’ shaping labelMayhem. At the start there was no money for team ridersor marketing. As a result they began making videos thatcreated characters and carried an underground image. Theycouldn’t afford a major pro, so they stood in the backgroundwhile characters like Randall and friends went ballisticat their famous San Clemente house.

“Everyonehas someone in their own town they can relate to,”says Reola. People–such as the new extroverted addition,Vince–are in tune with what kids are thinking.

The whole imageof Lost isn’t fake, and the owners don’t wantto change the rawness that kids perceive. Whether it’sthe kids’ letters the company published in an ad orthe fact that Randall gets mobbed by busloads of studentson the East Coast, the advertising formula will remain thesame.

Lost productcan be found in 300 ‘core shops; they’re in theseshops because the Lost staff has surfed with the retailers,not because the shop was in a good location.

Working behindBiolas is the experience of longtime shapers such as BrianBulkley. Sitting in the factory office taking orders isformer Stewart Sales Manager Rick Hazard. Anywhere you lookthrough Lost you’ll find a San Clemente family of well-respected,experienced, surf-industry veterans.

Lost is continuingthis tradition and building the infrastructure so it cangrow internationally. “Being able to grow internationallyis why we brought Joel Cooper in,” says Reola.

The companyis looking for license agreements in countries such as Braziland Australia. Any licensee it chooses has to follow thepath of Lost marketing with its own team and so on. Allcreative control and distribution goes through the U.S.According to Cooper, “The key to success is findingpeople who do it the way we do it here.” Lost won’thave it any other way.

Reola wantsto keep concentrating on videos and creating something noone else can duplicate. The latest video, Lost AcrossAmerica, is the first of a series featuring waves fromall parts of the country. It will highlight rare spots onthe best days, and locals who don’t usually attractnotice. “I think catching a shitty spot on an all-timeday is the greatest thing,” says Reola.

–AaronCheckwood

biz_editor

April 07 1999 | 110 views

Uncategorized

Capital Licenses Brands To Azita: Company tries to manage huge growth.

In early February, Capital Distribution, owner of Ezekiel clothing, Kastel shoes, and Blond outerwear, announced the licensing of its labels to Irvine, California-based Azita Corporation Manufacturing, LLC for domestic and international distribution.

Capital Distribution began with Ezekiel clothing by Vince De La Peña and Shane Lavoie in a Dana Point, California garage. The company later launched the Kastel brand of shoes, and Spare and Blond snowboard outerwear.

According to the company, it has grown more than 200 percent in the last two years and will have sales exceeding nine-million dollars this year. Capital expects to double its volume in the next eighteen to 24 months.

Although the company is experiencing huge growth, there are pressures. “Every department had a burden of finances,” says Royce Cansler, co-owner and sales manager. “That’ll be lifted with this deal.

“We’re not CFOs,” he continues. “We’ve gone as high as we could with the company as is. You’ve got to pick your battles. With loans you have to deal with high interest.”

“We’d hit the ceiling of what we could do with our own resources,” says Owner and Founder De La Peña. “After careful evaluation, it was obvious that to grow our labels with integrity and still be able to maintain total control of our direction, this was the logical solution and a win-win situation for both parties.”

“The brands of Capital Distribution are exploding, both domestically and abroad,” says Co-owner Lavoie. “In order to take advantage of the window of opportunity that exists for Ezekiel, Kastel, and Blond, we feel we must maximize our talents in the design and marketing of the product. Getting involved with Azita will allow us to focus on the product and relieve the operational and production aspects of our growing business,” says Lavoie, cofounder.

Under the terms of the arrangement, the owners of Capital Distribution will maintain total control of all product development and direction, including all aspects of marketing, merchandising, design, sales, and distribution.

In addition to the licensing arrangement, Azita will serve as the headquarters for the brands, handling all aspects of operations and product production.

In an unrelated move, the company has sold the Spare snowboard line. “We can cover a wider customer base with Blond than with both labels,” says De La Peña.

The owners are optimistic about the future of Capital. “We want to be what Billabong, Gotcha, and Quiksilver were in the 80s and early 90s,” says Cansler. Now with the support of Azita, the Capital management can concentrate on that goal.

biz_editor

April 07 1999 | 128 views

Uncategorized

Just Like Texas–Everything’s Big At Billabong

On February 4, Billabong opened its new offices and warehouse in Irvine, California with an industry gathering of team riders, retailers, and the media. Even though the rain was pouring outside, Billabong showcased the monstrosity now called its headquarters, staffed with a newly formed management team which has taken over operations from Bob Hurley’s organization.

This place is big. I was surprised some of the storm clouds outside didn’t move inside. It’s one of those warehouses that invite comparisons to football fields, or in this case, large bodies of water.

Utilizing a portion of the warehouse, the party was attended Billabong’s Global Owner Gordon Merchant, new faces such as President Paul Naude and Marketing Director Graham Stapleberg, plus top team riders Ross Williams, Shane Dorian, and Layne Beachley.

On the big back wall of the empty warehouse were immense video flashes of Occumentary, the new and highly anticipated Mark Occhilupo documentary.

The offices weren’t too bad, either. Decorated with pictures by Aaron Chang and lots of oversized furniture, the place even smelled new–just like when you’re breaking a new car in. The bare desks looked like the employees sat down for the first time the day before. Since the company is revving up, there were a lot of empty spots awaiting staff expansion.

The whole thing came across in an impressive way. As Enich Harris of Billabong marketing puts it, “It was a perfect vibe–a perfect night to see the new Billabong.”

–Aaron Checkwood

biz_editor

April 07 1999 | 177 views

Uncategorized

The Designers Speak

Some board ideas for 1999/2000.

John Moore, Sims Snowboards

After five years developing hardgoods for Sims in Canada, Europe, and the United States, John Moore has settled into his position as snowboard product manager in its Seattle, Washington headquarters. His job includes dealing with every part of the board design from the artwork to the economics of the business. SNOWboarding Business talked design trends with him recently. Here’s some excerpts from that conversation:

Where do your board design inspirations come from?

We have a vast amount of resources to draw upon for that, including riders, reps, retailers, and anyone who’ll give us feedback. I know I’m in a vortex here in Seattle and don’t travel that much-maybe three months out of the year-and I put a West Coast spin on designs because we ride big mountains. So I have to rely on people in other areas to give us feedback to see if a board works in different parts of the country.

Our team riders give us a lot of feedback, but for a while we had the same riders and they were saying the same thing over and over and things stagnated. Now we have some new riders and some of our mid-level riders are giving personal feedback like I’ve never heard before.

It’s tough because everyone can give feedback, but you can’t compare what one rider says to what another rider says because it’s so personal. So you have to take it all individually. We try to get riders to say what the problem is with a board, and not just say that the board doesn’t turn well so it needs more sidecut. They aren’t accounting for all the variables that will make a board change.

Board shapes have stabilized right now. Snowboards have become almost a commodity with them all looking the same, and that will allow us to get ahead on the design front. All the shapes are the same, but the materials aren’t the same and there’s a lot to be done with those, flexes, and torsion.

What are some of the trends for next year?

Companies have been defining their boards as freeride, freestyle, and carving. Recently people have started calling their boards freeride/freestyle boards because riders are doing both. We’re calling the category fullride. It’s basically all-mountain riding and it’s what everyone needs and wants now with their boards.

I think the trend with boards getting longer has about peaked and we’ve hit the optimum size. Boards won’t go over 160, but will stay around 158, 159, or 160.

But we’re seeing it grow just a little bit more with one of our boards, the new Project Hex FC. It’s a super high-end, super-light, super-stiff board made of carbon. It’s so light and stiff that riders need to ride a longer version of it than what they’re used to.

I think there will still be a lot of changes in the flex of boards. I’ve studied it a long time and think that most boards right now have similar flexes. They have softer tips to initiate turns and stiffer tails to ollie. With Mark Fawcett, we developed the Burner race board that had a really stiff nose and soft tail. We’ve now taken that to the Daytona, a freeriding board, that has a centered stance, with stiff nose and softer tail. It’s meant to be ridden forward. There’s still a lot to do with camber, torsion, and flex of boards.

John O’Conner, Ride Snowboards

After working at Ride for four and a half years, John O’Conner recently became Ride’s product line manager for snowboards. In the past he worked in conjunction with Ride’s board designer Jason Kasnitz, but took over full-time with Kasnitz’s recent departure from the company. SNOWboarding Business asked him a few questions about next year’s board trends.

Where do your design inspirations come from?

We have one person, Bernard Gervasoni, working full-time on the future, looking for the next best thing like the Timeless board was. He’s trying to find the best thing in design, materials, whatever. He has his own budget and sometimes wastes a lot of money going down a dead-end road.

Then he shows us the ideas and our group will see if they will work from a marketing and team-rider perspective. We’re constantly working on things like the tip-to-tail woodcores, swing weight, and other ideas.

We have some new ideas that we’ve put on the snow already but if they were out now they would get laughed right off the hill because they’re so far out there. There definitely has to be a progression with the designs.

What are some of the changes in the line for next season?

We’re making more specific shapes in tune with what riders need. If they have larger feet, want to ease into a turn, want something that turns faster, or is stiffer, we’re trying to design it. We’re pretty much splitting hairs on the shapes now.

But have you over-specified and forgotten to make a good all-around board?

You still have the classic all-around shape, but riders and retailers are more educated and are aware of what boards do and how they perform. If someone has big feet, he knows he needs a big board. But he still wants a board that will float through powder all day and won’t get too heavy, but still has a good sidecut for turns and will still be able to handle in the park at the end of the day when the powder is all gone.

Materials in boards are changing so much that it takes a long time to test them and see if they work. We’re also changing the shapes at the same time, but they’re a bit easier to figure out if they work or not. An accomplished rider will know after the first run or so whether a shape works. But you have to work at both simultaneously.

It sounds like it can get pretty complicated.

I’m probably making it sound more like rocket science than it really is, but that’s why every company has a house at Hood all summer.

What are some of the basic trends for the next season?

More full-length woodcores, what we call three-dimensional cores, dampening, torsional stiffness. These are some of the different buzz words you hear people talking about now.

We’re also working more on sidecuts and getting away from radial sidecuts. You’ll see a lot more quadratic sidecuts, similar to what skiing did a couple of years ago with their super-sidecut skis. These will put the fun back in the sport and just make riding easier.

-John Stouffer

Boots Preview

Where do designers find inspiration?

By Sean O’Brien

Maurizio Molin is the primary snowboard boot designer for Northwave. He initially got into the footwear industry after winning a design competition held at his school in Padova, Italy. He started snowboarding eight years ago, because “I was getting tired of skiing.” Five years ago, Molin went to work at Northwave in Montebelluna. He’s 29 years old.

How far in advance are you designing boots?

Molin: We have prototypes going for ‘01/02-so usually about two years forward. It gives us the time to fully develop and test the boots.

Do you start entirely from scratch or do you update the previous year’s models?

I start by planning a collection for the year. Then we begin development on the most complex boot, and work our way from there. If we decide to change construction or cosmetics on an existing boot, we look at the collection as a whole and then see how those changes affect the line.

What are your primary considerations when designing a boot?

We listen to a lot of rider feedback. I get together with a group of riders over the season, and gather their feedback on the different boots. We want to make boots the riders are going to like, before we begin thinking about the marketing and sales.

What design influences do you use to choose the look and colors of the models?

I think I’m pretty lucky because designing shoes gives me the opportunity to take in all kinds of design and form as my inspiration. I’m always painting, drawing, and going to museums whenever I can.

This year it was a lot of car colors and designs-like the new Audis and Mercedes. I try to go inside the mind of the designer and figure out the essence of their concept. For me, I try to put a lot of art into the design of our boots.

Is there a balance between good style and performance?

Yes, because all of our technical pieces have a design to them that becomes the basis for the boots’ style.

Does binding shape and type affect your design?

Yes, especially with Drake. You can see the same design perspective in the boots as in the bindings. We exchange a lot of ideas about shapes and colors.

What are the major design and performance trends retailers will see from Northwave when they attend the SIA Las Vegas show?

To make a boot that shows its technical performance features in the overall design of the boot. We’ve taken a lot of the internal performance features and brought them to the outside as design elements. I like clean shapes and geometric designs.

Jamie Meiselman, Burton’s soft-boot product manager, has been tinkering with snowboard boots design since the late 80s when he experimented with a hard/soft-boot concept that was years before its time. Before taking the job at Burton, Meiselman worked at TransWorld SNOWboarding and SNOWboarding Business and was the North American sales manager for Generics and Blax.

Who comes up with new boot models at Burton?

Meiselman: It’s truly a team effort-there’s never just one person who comes up with everything. We have our industrial-design team, our graphic-design team, and then, of course, our team riders.

The team is probably the most influential group and we definitely bounce a ton of ideas off them about style and fit. Burton makes a point to talk about how the company is rider driven, so it makes sense to have them extremely involved.

Boot design definitely starts with the last, which means our industrial designers are responsible for getting the process started. We keep the different groups pretty separated-mostly because the engineering behind the designs is becoming incredibly sophisticated. The graphic design team handles the color combination and details like lace pulls and logos, but it’s the industrial design team that actually comes up with the shape of the boot and how it fits.

How far in advance are you designing boots?

Paul Maravetz, the director of the advanced product development team, works on ideas and technology that are more than two years out. It’s pretty amazing to see some of the things he’s working on. But officially, we’ve already been working on the 2000/01 line for quite a while now. But we also have the flexibility to make last-minute tweaks and changes. Production starts in January for delivery in August, and we really can make some changes as late as November.

How important is fashion to snowboard-boot design?

The trend we’ve been working on is definitely away from fashion. In the last couple of years, the entire snowboard market has been trying to capture and define the latest fashion trend. This year, our emphasis is on engineered solutions and a more scientific approach to flex. We’re really devoting time quantifying the flex patterns of boots.

Why is flex so important, and what are you doing differently?

What we’re actually going to be doing is still kind of secret, but the approach we’re taking is that it’s like a snowboard, you want even, consistent flex. We’re working on individual flex pattern for different boots. Most patterns have been the result of the how the boot was put together. We want to actually build a boot with a specific flex pattern that will maximize power and control-and yet be durable and supportive.

What other trends will we see from Burton?

Things are really moving quickly. Really, it’s the board market that’s pretty stagnant. But with the advancements in footwear technology we’ve seen from Nike and other companies, the future is wide open for boot development.

Another direction is the integrated development of boot with binding, where the highback will match the boot and prevent pressure points. Of course, you could ride any boot with the binding, but the models that integrate with the binding will obviously fit better.

In terms of style, there are a couple different directions we’re going. We’re seeing demand for the conservative plain-leather look and several markets still want skate-shoe detailing. But to be honest, from a philosophic point of view, we’re over the whole skate-shoe direction. We’re capable of better. We shouldn’t be following anyone, we should be melding different looks and leading-no blatant modeling.

What’s weird is that the designs are all over the place. Jason Brown, a young skate-type pro, is riding step-in. It’s all over the place.

Apparel Preview

Input from top designers on what we’ll see next season.

By Robyn Hakes

Jose Garcia is the senior designer for Convert, Columbia’s snowboard line. This is his first year designing for the brand and he’s been at it for over six months. Before taking the job with Columbia, he worked in Fila’s activewear division designing tennis, golf, and activewear. Prior to that he designed custom apparel for hip-hop artists.

What are some of the trends you’re seeing in snowboard apparel for ‘99/00?

In general, I’ve seen more technical fabrics, lighter weight with subtle texturing. There’s a lot of fabrics coming out of Asia featuring full-dull yarns that don’t have a lot of sheen. That’s what a lot of manufacturers are requesting. For colors, grays are hot, blues are still in with a few accents in fashion hues-bright, in-your-face. Also army utilitarian colors will be used.

For sizing, there’s more of a technical approach. For backcountry you need a lot of room in the chest so we’ve added chest-entry pockets. And with pocketing, we’re seeing a new interest in utilitarian styles, stacking of pockets, giving them a new twist to keep the interest up.

What are some of the changes to your line for the coming season?

We’re introducing a new logo for Convert for fall ‘99. We’ve improved a lot of little things such as rubber pulls and tabs on cuffs that are easier to grab when you have your gloves on. The fit is new also.

We’re adding a hand warmer and utility stash pocket on the pants as well, and internal pockets for goggles and more.

Where do your inspirations and ideas come from for design?

Everyone who works on the product rides, so the design took a big turn this season. I like to research the automotive industry, the fashion industry, and I even look at golf for its attention to detail. I personally try to look at everything involved and look at other industries to get new ideas.

Andy Wightman is the product manager for Sessions snowboard apparel. He’s been working in that capacity for six years and is primarily in charge of implementing and engineering design ideas.

What are some of the trends you see in the outerwear market for ‘99/00?

People are really over the oversized, baggy thing. Sizing is more traditional. Not exactly fitted, but closer to the body yet still roomy enough to layer.

Colors are brighter, yet not radically bright like early 80s neon. Brighter blues, yellows, reds, not the earthy or neons-but more primary shades. We’re seeing the sixteen pack of crayons, not your basic eight or your broad 24.

What are some of the changes to your line?

The ‘99/00 line offers better value, performance, improved functionality, and overall improvement to existing features.

We’ve taken complaints we’ve heard and re-engineered the clothes to take out that ten-percent nuisance factor to make those improvements.

Customers are getting more for their money. Better fabrics, more functionality, more features in the lower-price categories. We’re addressing the specific needs of the women’s and kids’ markets as well.

Where do your inspirations and ideas come from for design?

Styling really comes from a few people within the company. A lot of design and style comes directly from the owners Cindy Busenhart and Joel Gomez because they have great experience and understanding of the market.

Joel and Cindy’s influences come a lot from the sporting-goods industry in general along with the athletic look that’s really popular right now. Any performance-oriented sport out there from car racing to basketball to hockey. But that’s just for the look and style of the garment, not functionality.

Sessions philosophy is to have good clean designs full of life, energy, and visual appeal. Simple and clean, nothing too wacky or crazy.

The team also has a lot of input. The more they’re encouraged and rewarded, the more they’ll offer their input. We’ve implemented an in- house rep program that also helps with design. We get feedback from reps on the spot and they never hesitate to pass along both compliments and complaints from the retailers.

Roger Sgarbossa is the co-owner/designer for Swag, Prom,and Twist snowboard lines. He started Swag in 1991, then Prom in 1994, and this is his second year designing the Twist line.

What are some of the trends your seeing in snowboard apparel for ‘99/00?

Cleaner designs that’re more functional, though people have really reached a level for functional outerwear. Almost every jacket in a line has to have functional features.

Silhouettes are more refined, meaning not necessarily fitted but better sizing. Fit is getting better.

We’re also seeing the functionality of women’s apparel really stepping up, as it has for the last couple years.

What are some of the changes to your lines?

Simpler styles. A fewer number of styles. We’re focusing in on one really good piece. Simpler color blocking. And we’re fine-tuning the existing technical features, moving stuff around, but not adding anything drastically different.

Where do your inspirations and ideas come from for design?

A lot of it comes from what we’ve done in the past. We use that of as starting point. We use a lot of our riders input on colors and what works and what doesn’t work. I don’t really look outside the industry much, like fashion or other industries. I think we’ve done snowboard apparel long enough to have fairly well evolved.

We also sent out a survey to kids. I bring all that research together and then put it into my view. I’ll come up with 200 or more designs and then we’ll choose what works. It’s a weeding-out process, fine-tuning the designs.

biz_editor

December 01 1998 | 86 views

Uncategorized

Money Matters World economic uncertainty affects the snowboarding industry. But how and why?

It’s never a great idea to start with a cliche;, but here it goes: I’ve got some good news and some bad news.

The bad news is the world economy is in a serious jam. Japanese banks are in the middle of a “monolithic, titanic f***-up” (as John Hildeburn of Hasco so aptly puts it) that makes the United States savings-and-loan crisis of the 80s seem puny in comparison. They’re sitting on a stratosphere-scratching mountain of bad debt-estimates range from 600-billion dollars to more than double that. The result? The entire Japanese economy has spiraled into its most severe recession in 50 years.

But it gets worse.

Weakness in the Japanese economy has hamstrung the teetering economies of neighboring countries; the Asian Tigers seem more like paper tigers each week.

Elsewhere, Russia’s unpaid populace is becoming increasingly grumpy in the wake of a devalued ruble. Brazil is slip-sliding along the brink of a financial meltdown that could take most of Latin America with it. Spasms are rocking the world’s free-market economies, and even Tom Brokaw looks grim, so we’re hosed for sure, right?

Of course, this is a gross oversimplification, which brings us to our good news: None of us works for De Beers.

If we did work for that giant diamond supplier, we’d see our global sales down by more than a billion dollars this year, and we’d be able to pin the blame directly on the shaky world economy. We’d be closely monitoring developments and gnashing our teeth each time more scary world economic news came pouring over the transom.

But since we work in the snowboarding industry, the effect the global economy has on our business isn’t quite so straightforward-or desperate.

After all, many of the financial woes are coming from countries on the periphery of the snowboarding world. “The financial crisis in Indonesia really doesn’t matter much to us,” says K2 Vice President Brent Turner, “because frankly we don’t sell much product there and we don’t have a factory there.

“Because of the global economy, what happens in one country definitely affects other countries-at least on some level,” continues Turner. “But severe economic problems in developing countries don’t affect the snowboarding business that much.”

Don’t Forget Japan

But the Land of the Riding Sun isn’t a developing country-it’s the de facto one-third of the world snowboarding pie, even as its market has gone through the business equivalent of shock therapy.

“That market is probably flat or down ten percent compared to a few years ago,” says Airwalk Category Manager Cec Annett, “but that’s a combination of the recession in Japan and the boom-and-bust nature of the snowboarding industry there. It’s been a double whammy.”

Others say the consolidation has obscured the impact of the economic recession. Viewed on the macro level, most Japanese citizens are holding on to their money. “There’s so much financial uncertainty in Japan that overall consumer spending is down,” says Turner, who notes that many of the 747s once full of Japanese tourists heading for Hawaii are now mostly empty.

But once again, the snowboarding industry is slightly insulated from these scenarios. “When the Japanese economy was good,” says Dave Schmidt, vice president and director of global sales for Burton, “the snowboard market became oversaturated and blew up, then flattened for some or dropped like a rock for others. All this happened before the economy went bad. Now the snowboarding business has actually stabilized, even though you’d expect it to be all doom and gloom.

“It comes down to the fact that in Japan the snowboarding demographic is tighter than anywhere else,” continues Schmidt, “and those seventeen- to 25-year-old kids are the least impacted by a recession. They’re going to continue to spend money on products like snowboards.”

Turner echoes the sentiment of Schmidt by saying: “In general, the typical snowboard consumer in Japan is in that wonderful period between high school and when they have to go out and get a real job. Many of them are parent-supported, so there’s been a pinch, but their spending is still mostly discretionary.”

The Yen Rollercoaster

But while the consumer market seems to be holding its own (judging by anecdotal evidence), retailers, distributors, and manufacturers have been more affected by the crunch-especially when it comes to exchange rates.

“The currency fluctuations have certainly affected Japanese distributors and retailers when it comes to pricing,” says Annett, “and when the yen was weak, it hurt. Most companies were trying to be compassionate, but at the same time, we needed to make our margins. A weak yen helped their domestic brands more than anything-but they really didn’t need any help.”

Scott Sorenson, minister of propaganda at Dragon Optical, says exchange rates put many U.S. brands in a bind. “When the Yen was weak, a few distributors and retailers wanted to raise prices to cover their currency losses. But raising prices in the middle of a recession isn’t the way to grow business.”

Fortunately for retailers and distributors in Europe and Japan, in October the U.S. dollar plunged against most currencies. In Japan, it was the largest three-day swing in 27 years, as the yen/dollar exchange rate fell from 135 to 117-an almost overnight drop of nine percent.

Turner says this was actually good for business, as U.S. goods become less expensive in Japan and savings were passed along to consumers. “We’re definitely going to try to be competitive in Japan,” says Turner, referring to the dollar’s dive.

“As a snowboard company, we try to stay focused on snowboards,” says Schmidt, “not the currency market. So we don’t have a lot of expertise on this subject. We do try to protect ourselves by buying currency futures and options. However, no company or person could have predicted the extreme volatility of the past several months. You hope you play your cards right, and any impact is for the positive, but it’s so far out of control you mainly try to minimize your risk.”

Running The Numbers.

Changes in the currency markets don’t just effect retailers. Manufacturers doing any sort of international business can be ruined if they ignore exchange rates.

Let’s say an imaginary brand-Team Bro/Brah-placed a November order for 50,000 boards in its European OEM factory. Imagine each board costs 200 deutschmarks (DM) to build. So, based on November 1997 exchange rates (1.725 DM per dollar), 50,000 boards would cost around 5.8-million dollars.

So, Bro/Brah opened a letter of credit (LC) for ten-million DM, with payment to be made upon board delivery. Here’s where it gets interesting.

If Bro/Brah took delivery on July 1, it’s stoked. Exchange rates hovered around 1.83 DM per dollar, and paying off the LC would only cost 5.48-million dollars. The difference, 317,808 dollars, could have gone directly to the bottom line or be passed along to distributors and consumers to grow the brand.

But say Bro/Brah took delivery October 15, when the exchange rate was 1.63 DM per dollar. Paying off the LC on those 50,000 boards then would set Bro/Brah back 6.15-million dollars-356,923 dollars more than it anticipated paying. With each board costing seven dollars more than expected, the entire business plan for the year is screwed before the first board hits the shelves.

So it’s no wonder most companies consider buying forward contracts on currencies when they open an LC. These are contracts businesses or individuals make with financial institutions to lock in the price of a currency to be bought or sold at a later date. The bank, or another third party, takes the risks-and the potential gains. The brand knows what it will pay or receive in its own currency.

Of course, manufacturers, distributors, or retailers paying or receiving funds in their own currency don’t have to worry about forward contracts. Lucky them.

Manufacturers can also hedge by asking distributors to pay in the foreign currency its dealing with. For example, if Bro/Brah asked its distributors or retailers to pay in deutschmarks, it has a natural hedge against fluctuations-since the cost of the U.S. dollar never enters the equation-and the risk shifts to the distributor/retailer.

And while most distributors are savvy enough to open futures or options to minimize risk, many retailers are not. According to Option/NFA’s President Geoff Power, that’s a mistake. “A lot of retailers think they aren’t doing enough volume to get involved with forward contracts on currencies, and that’s just not the case. It’s all about percentages, not volume.”

Bringing It Home

But does the global economy affect U.S. snowboard retailers? Yes and no. Companies wracked by tough times overseas might try to make up some of the loss in strong domestic markets-although how they would pull that off without anyone noticing isn’t clear.

The summer’s weak yen and the deep Japanese recession may have minimized gray market shipments from U.S. retailers, but the preexisting Japanese product glut and the crackdown on gray market sales by brands had already put a big dent in those sales.

So, does it matter? You bet.

When the dollar dropped, it was partially a signal that investors no longer believe the United States can be a safe haven if the rest of the world is in recession. And with the Consumer Confidence Index falling in October to its lowest level in nearly two years, even the bullish U.S. market is in question. If consumers pull back on their purchases, the economy will slow significantly.

During the ‘90/91 recession, total resort visits dropped eight percent. In this current climate of lowered margins and consolidation, the last thing the snowboard industry needs is to be hit with diminished participation.

But we may still dodge that bullet. Banking reform in Japan, as U.S. bailout of Brazil, European economic aide for Russia, and lower fed interest rates may all to some degree help keep customers buying snowboards.

Because like it our not, bigger forces are invading our world, and as technology and communication improves, and economies become ever more interdependent, what happens an ocean away can no longer be ignored.

biz_editor

December 01 1998 | 93 views

Uncategorized

The View From Over There John Hildeburn’s take on the Japanese economy.

We e-mailed Hasco’s John Hildeburn a few questions about the state of the Japanese economy in October (just after the U.S. dollar fell like a rock against most currencies), to find out what the mood is in Japan. What he sent back was so interesting that we decided to run nearly his entire message. We think it provides an excellent synopsis of the current Japanese economy and how it’s affecting the snowboarding industry. Hasco is the Japanese distributor for Sims. John is also involved with Morrow Japan; Morrow Snowboard’s Japanese distributor.

SNOWboarding Business: Opinion in the U.S. paints the new Japanese Prime Minister Kyzazo Obuchi as being very ineffective. Does the average Japanese citizen hold out much hope that the government will make the right steps to solve the current crisis?

John Hildeburn: Many in Japan and the United States were saying that Japan’s new prime minister, Obuchi-san, is a useless compromise; a faceless bureaucrat who will soon disappear and nothing will change. Basically nobody likes this guy. Then suddenly there seems to be real progress, and a bank bailout package emerges with cap figures larger than Australia’s entire GDP the total value of all goods and services produced in one year. Go figure.

Without getting into some big treatise on the Japanese government, it’s probably useful to have a little background. Japan is run by bureaucrats and the politicians just kind of rubber stamp. By bureaucrats I mean the guys-and they’re all guys-in the Ministry of Finance (MOF) or Ministry of Industry and Trade (MITI) and other such governmental organizations.

As in any country, there’s a system by which government and big business work together. Many times in Japan a shipbuilder is also a bank is also an insurance company is also a real-estate holding company is also a trading company. A conglomerate like that has a lot of influence in the government. Just as R.J. Reynolds may have a friend or two-or 44-in the U.S. Congress, so Mitsubishi has a few bureaucrats to look out for them in the Japanese parliament.

This is an incredibly gross oversimplification, but if we understand that many banks in Japan are “hooked” up with groups of big companies and the big companies are “hooked up” with the government, it makes it easier to understand how they could get into such deep doo-doo. Basically they all loaned each other piles and piles of money to buy real estate and build buildings. This worked okay as long as the economy was growing and real-estate prices were increasing.

Remember when Japanese were buying Rockefeller Center and Pebble Beach and pretty much the entire Hawaiian archipelago? Sean Connery was in Rising Sun and we were all freaking out that the United States was turning Japanese? Well that was just an aside to what they were doing in Japan.

But since 1989 real-estate prices have fallen by half (sometimes more). So all those loans are basically bad. They can’t and won’t be paid. And by the way it’s a great time to buy a condo in Kauai.

We used to have banking crises in this country every few years until the government started regulating as part of the New Deal. We had the S&L crisis in the 80s but the government bailed out or closed the bad banks. That was not really comparable to the monolithic, titanic f***-up the Japanese now find themselves in the midst of.

So, in your opinion how is the current economic/financial situation affecting the snowboarding industry?

When banks are in trouble it means everyone is in trouble. Businesses can’t get loans or they have to pay back the loans they have. Some banks are getting shut down, and bankruptcy rates in Japan are setting new records every month. It’s the worst situation since World War II, and it’s particularly severe for small businesses like specialty retailers.

Hasco, the outfit I work with, is in a relatively good position because they’ve been around a long time and our banks are stable. This is not the case for many of our competitors. But throughout the economy there are layoffs and business closures, and that means more people with less money to spend.

The remarkable thing is that Sims snowboard sales are actually increasing a bit. We lost some ground a couple years ago but that had less to do with the economy and everything to do with an industry-wide Japan feeding frenzy.

A lot of brands are toast in Japan now. Retailers facing iffy economic conditions don’t want to handle iffy brands. At the specialty level, the imported brands that are doing well are Burton, Salomon, Sims, and Forum. Other brands may still be visible, but they’re fading. A weaker yen has improved the situation for domestic brands like Mizuno, Yonex and Ogasaka (i.e. Rich Man).

But in general, less money to spend means less snowboards sold. The amazing thing is that snowboarding is still growing as a sport. Maybe people don’t buy a new board every year, but they’re still sliding in increasing numbers. With Sims we’re already sold out of several models. I think it has a lot to do with the fact that we’ve finally shut off the flow of boards into the gray market. In this sense, Sims is the cleanest brand this year. Even gray-market Burton boards are widely available. That changes the retailer’s attitude in a big hurry. If he doesn’t have to discount everything to compete with the gray market discount ski and badminton dealer across the street; he’s stoked.

When the yen was trading in the 145 to the dollar range a few months back, did that greatly affect snowboard shops and/or manufacturers in Japan?

The yen trading in the 145 to the dollar range wasn’t a few months ago, it was a few weeks ago. It looked like it would hit ¥150 and yes, it scared the snot out of us.

It helped the domestic manufacturers like Yonex, Ogasaka, Mizuno and hurt the importers like us. Basically it’s not good for shops and distributors who make a living out of hawking imported goods, because the retail prices have to go up.

Suddenly this week in October the dollar has fallen faster than me trying to huck a Michaelchuk. Biggest three-day swing in 27 years and the exchange rate now seems to be wavering around ¥115 to ¥120. This is apparently not so much a function of Japan getting better as it is an acknowledgment that the U.S. economy cannot continue to grow like it has.

This means people all over the world who have been throwing their money into the U.S. markets are beginning to get out. If you get out of a dollar investment, it means you’re selling dollars. More dollars for sale means cheaper dollars means stronger yen, relatively speaking.

If I had to guess I’d say the yen will settle around ¥125 to the dollar, but what do I know? If I were really smart, I’d be rich. Right? By the time your next issue comes out the exchange rate could be anywhere.

President Clinton says part of the solution to the Japanese financial problem includes a greater degree of deregulation of the economy and the opening of the national market. So, do snowboard manufacturers stand to ultimately gain by the current situation?

Yeah, and two weeks ago he said he didn’t have sex with Monica Lewinsky.

So, deregulate what? If the banks had been more effectively regulated, Japan wouldn’t be in this whole mess. Japanese economic deregulation and ending protectionism are things the United States has been demanding since Vin Scully started saying, “Get your hands on a Toyota,” right after his bit about Farmer John at every Dodger game.

Clinton has to say those things because it’s the capitalist creed. It’s like Reagan talking about the “Evil Empire” twenty years ago. Now the Evil Empire is gone. We have to bitch about something.

After World War II, the United States helped Japan set up a projectionist trade regime. The country had been destroyed by the U.S. Air Force and we didn’t want it to go Commie, so protectionism combined with credit were used to stimulate the rebuilding of domestic industry in the hope that it would create jobs and develop a modern market economy. I think we can say this strategy was somewhat successful-Japan has the second largest economy in the world now.

By the 70s, the Japanese should have started opening up. They’ll say they did and to some extent that’s true. In the long run, they have to change because to do otherwise is just stifling their own growth. Many say that failing to reform is why the whole program ran out of gas in 1989.

But it’s never that simple. Eliminating protectionism always requires burning someone. Usually that very same someone is busy stuffing the politicians’ or bureaucrats’ pockets with cashish. Right now is not the moment to expect the Japanese to de-protect or deregulate anything. They kind of have a lot going on with this bank thing. De-protecting also involves throwing people out of work and with unemployment at a postwar all-time high, it just ain’t gonna happen.

Anyway, in our little world it’s not that big of an issue. There’s no duty on snowboards. There is duty on outerwear-around thirteen percent-and yes, that’s to protect domestic manufacturers like Fenix, Descente, Mizuno, Itohchu-none of whom need any protection.

For the purposes of the snowboard business, the real question has to be: “Why is the snowboard industry hurting so bad?” Then we start getting into the real shit and, unfortunately it involves some hard, cold truths about some of your advertisers.

Declining economic conditions in Japan are a small part of the overall story. What I’ve learned the hard way is you can’t make any profit if you have an industry that insists on producing more than it can sell. This isn’t a complicated concept.

For example, if you build a snowboard factory to produce 200,000 or more boards a year-but only have orders for 60,000-you have a problem.

In trying to reach economies of scale you may make too many boards. If you do, they’ll inevitably be gray marketed (and not just to Japan) and your customers/distributors will bum. The value of your brand will erode, your business won’t grow, and your banker will not be stoked.

biz_editor

December 01 1998 | 83 views

Uncategorized

Shift Into High Gear

MLY and Santa Cruz team with the auto industry

“Forget the financing, what kind of board does the car come with?”

When snowboarders go looking for cars this winter, they’ll have more options to consider than just power windows. In recently announced deals Santa Cruz and Ford as well as MLY and Toyota have teamed up to break into new areas of marketing for their companies.

“It’s a bigger relationship than, ‘Hey let’s just sell some boards,’” says Mark Miller, marketing manager of MLY, about a partnership between Toyota and MLY Snowboards where anyone purchasing a new RAV-4 or 4-Runner receives a new MLY snowboard, Emery bindings, and MLY board bag. The specially designed board will have MLY graphics on top and Toyota graphics on the bottom. Starting in January, the program will be offered at dealers located in the Northwest region that includes Washington, Oregon, Idaho, Montana, and Utah.

Miller thinks this is the start of a lot more things to come: “We want to walk before we run,” he says. MLY wants to see how successful the campaign is, but Miller hopes the Northwest territory is the first of what may become six regions in the future.

In a similar deal, Santa Cruz has teamed up with Ford for a statewide California promotion. Last year the companies teamed up in the Northern California region, but have expanded statewide this year. With the sale of every 4×4 during the months of December, January, and February, buyers will receive a free special-edition Santa Cruz snowboard. The 230 Ford dealers will offer a 158 cm board featuring Santa Cruz’s best-selling graphic, the Stinger, along with custom Ford colors.

The relationships have mutual benefits for all involved. The deals give the snowboard brands marketing power far beyond anything they could achieve by themselves. “The possibilities are limitless, depending on how national it goes,” says Miller. There will be a television campaign, but the specifics were not available at press time.

According to Rebecca Herath, Santa Cruz marketing coordinator, “We’ll get TV exposure we’d never be able to afford with this program.” The TV advertising used by Ford will use action footage by FLF Films featuring Santa Cruz riders such as Darren Cingle and Tracy Latzen. Creative input was welcomed by Ford and as Herath puts it, “We told them they absolutely can not use the word shred.”

For Toyota and Ford, the deal lets them reach a targeted demographic and provides an opportunity to improve brand images and increase sales in the youth market.

Herath says retailers will be enthusiastic about the promotion because it will broaden public awareness of the Santa Cruz name: “Most people who buy our boards are people who already ride our product and are familiar with the brand. This program draws more beginners.”

For Toyota and MLY the deal came about after company presidents went golfing together, and ended up discussing boards between bogeys. Both companies also give each other special purchase plans for their employees. In addition to the products promotion, Toyota will also be sponsoring Vegetate, an ecological benefit, snowboard contest, and concert at Mount Hood Meadows, Oregon, held next spring.

-Robyn Hakes and Aaron Checkwood

biz_editor

December 01 1998 | 72 views

Uncategorized

AASI Shows Its Hand To The Industry

The AASI/PSIA Team Training Week.

Contemporary, authentic, true to the sport, describing not defining, shaking things up and breaking the mold for the 38-year-old organization: These were the prevalent themes at the American Association of Snowboard Instructors (AASI) and Professional Ski Instructors of America (PSIA) Team Training Week held at Copper Mountain, Colorado, in the first week of November 1998.

After a successful launch last year, AASI was finally able to show the snowboarding industry and media some tangible results of its work-and also give some important indications on which direction AASI and the PSIA wants to take snowboard instruction.

With the debut of a new snowboard-instructor manual and video, and the announcement of some major changes in the selection process of the AASI national demo team, the focus of the entire week seemed to be on snowboarding.

AASI’s viewpoint is especially relevant to the snowboarding industry. By developing certification standards and educational materials for snowboard instructors (which parent-organization PSIA has done nationally for ski instructors for almost four decades), this nonprofit organization has become the “teacher of the teachers”-setting the tone and scope for snowboard lessons around the country. If it’s off message or out of date, thousands of riders could potentially be turned off to the sport.

In fact, at the annual media breakfast attended primarily by Alpine ski journalists, hardly any mention was made of the Alpine or Nordic teams. Instead, the group of journalists was shown the halfpipe portion of the AASI instruction video, and received a briefing on the new snowboard instruction manual.

In fact, it seemed AASI/PSIA was bending over backward to show how it had become more in touch with contemporary snowboarding and in synch with the industry’s desire to keep the lock-step, ski-nazi instruction mumbo-jumbo to an absolute minimum.

“I’m going to be interested to see what the industry’s acceptance and reaction to what AASI’s done over the past year,” says PSIA Marketing Director Mark Dorsey. “The manual is obviously the culmination of a big retooling for the entire organization. Now our folks are going to have to go out and show off the product, get feedback, and make sure it’s in tune with where the industry is.”

According to AASI, the manual attempts to describe-not define-snowboarding, and is in essence a work in progress. “The concepts in the book are simple,” says Brian Spear, captain of the AASI demo team. “This gives us the ability to come up with short, detailed papers about different concepts in the next three years as we receive feedback. For example, dynamic turns are defined in the glossary and mentioned in some of the instruction models, but we didn’t go off and write fifteen pages about it. Rather than have this thick manual, we’ll have piece on the Web or a magazine article in the Pro Rider AASI’s magazine for snowboard instructors.”

Spear says he hopes to continue to strengthen the ties AASI has with the snowboarding industry: “Our job is to connect what’s going on at snowboard contests, World Cups, and ISF contests with the general population. So the closer we are to the top, and the better ties we have with the industry, the easier it will be to get those progressive concepts down to snowboarders. A familiar complaint in the Alpine ski program is what we’re teaching is five years old. That can’t be the case in snowboarding-it’s changing too quickly.”

A good example of AASI’s industry ties could be seen at the foot of Copper Mountain on the Saturday demo day. Snowboard equipment suppliers such as Exo, Elan, and MLY were all busy getting the AASI and PSIA teams outfitted with the latest products. According to MLY’s Marketing Manager Mark Miller, the relationship the brand established with AASI is paying off. “A lot of times when people are taking a lesson, the first person they talk to about which product to buy is the instructor,” he says. “We want those instructors to have an opportunity to be on a MLY snowboard when they answer that question.”

MLY’s Marketing Services Manager Doug Howard agrees, noting, “In general, the PSIA is a non-factor to most manufacturers. It’s something they don’t consider in their marketing-which they should. It would be good to see some other companies come in, and create some recognition for the PSIA.” Howard mentioned that 500 MLY boards were sold through the AASI VIP program last year.

One of the biggest changes AASI has planned is in its selection process for the national demo team. National tryouts will be held next year instead of the hand-picked regional method used now. While some members of the existing team may return, the competition is going to be tough. “What prompted this is AASI really doesn’t have anyone who is a true freestyle teacher,” says Miller, “and that’s what the kids are interested in. You can explain how to ride a pipe, but you also need to be able to show them. Credibility-wise you need to do that, and from that perspective this group is a little outdated-but it looks like they’re making the change.”

Dorsey points out that it was the existing team’s decision to change the selection process. “The current team is limited in terms of some of the things it can do and in terms of the contemporary snowboard image we want to have,” he says. “But the selection process is not just going to be hot feet-you’re going to have to also be a good teacher as well.

“Our primary goal is to introduce people to the sport and stay true to its spirit,” he continues. “Where we’ve sometimes gotten a bad rap is some people thought that wasn’t what we’re about-that we were trying to take away the true spirit of snowboarding. I hope the snowboarding industry can see that’s certainly not the case.”

-Sean O’Brien

biz_editor

December 01 1998 | 117 views

Uncategorized

An Awakening Giant Rossignol focuses its attention on the U.S. market

Pascal Joubert des Ouches, snowboard marketing manager for Rossignol, guns the rental car into the foothills of the Spanish Pyrénées at a smooth 140 kilometers per hour. It’s raining steadily and he’s not sure where he’s going. He’s also simultaneously answering my questions about Rossignol, its strengths, weaknesses, and position in the market.

He chooses his words carefully as he mentally translates his answers from his native French into English. It’s quite a display of concentration-especially when he pauses mid-answer to power through a crowded roundabout outside Pamplona, then picks up exactly where he left off.

But it’s what he’s saying that’s fascinating. I look down at my tape recorder for the tenth time, making sure the tiny wheels are still spinning.

“I think today the typical customer for Rossignol is not what we want to achieve,” he says. “To be honest, the typical Rossi customer today is someone who is either crossing over from skiing or a more mature snowboarder than the core target of the market.

“We attract the twenty- to 25-year-old rider instead of the rider between twelve and twenty. They are looking for reassurance in terms of technology, service, and efficiency-not image.

“Today, the Rossignol Snowboard image is a patchwork,” he continues as the road ducks into another tunnel. “It’s inconsistent worldwide, and to be honest it will be very easy to do much better. I know where the weaknesses are.”

He says he knows Rossignol Snowboard’s image in the United States needs to improve. He admits the product didn’t meet the needs of U.S. retailers a few years back and to succeed he must regain their confidence. Yes, he knows the graphics were wrong for the most important snowboard market in the world.

At the very least, it’s one hell of a surprising conversation.

But as he continues, it dawns on me that his frank answers are more a product of Rossignol’s strengths than weaknesses. The impression is that if Rossignol has been able to become one of the major brands in the United States despite these miscues, imagine what it will become now that it has its act together.

The Strategy

“We’re the third-largest brand globally,” says Marc Bujold, the U.S. snowboard division manager for Rossignol. “According to the SIA Retail Audit, we were the fifth brand in board units in specialty stores in the United States at the end of the ‘97/98 season. It’s our plan to move into the top three within two years.”

Rossignol’s strategy seems simple: Fess up to past blunders and clearly explain solutions. Emphasize Rossignol’s unique product technologies and how they enhance performance and fun. Highlight the state-of-the-art factory in Spain where all Rossi snowboards will be constructed. Explain how product development comes directly from hardcore snowboarders and how the entire snowboard division is staffed with riders passionate about the sport.

Finally-and perhaps most importantly-show the brand is in touch with riders by combining all these elements in a clear, consistent marketing message that brings consumers to the shop predisposed to buy Rossignol products.

And this isn’t some low-stakes game here. “The ski market is shrinking,” says Joubert. “Some years ago, six-million pairs of skis were sold in the world. Now it’s dropped to 4.5-million. However, 1.5-million snowboards are now sold worldwide, so we’re still talking about six-million units of snow-surfing equipment.

“So there’s a transfer of consumption,” he continues, “and therefore we must strengthen our position in the snowboard market. That’s why we’re putting more resources behind snowboarding; it’s crucial for the company. In a few years, the overall number of snowboarders will equal skiers-it’s not foolish to say that.”

It’s also not foolish to say the overall health of the Rossignol brand rests with its success in snowboarding. For the first half of the year, sales of Rossignol wintersports equipment fell more than 25 percent to 752-million frances, while sales in the snowboard division rode 17.5 percent to more than 65-million francs. The company says it expects to maintain an annual growth rate of fifteen to twenty percent a year-due in large part to the low cost of production in Spain.

The Factory

I’m taking notes as fast as I can as Joan Duocastella, Rossignol’s director of production, literally leads me by the elbow through his 46,000-square-meter factory.

His eyes sparkle as he enthusiastically explains each step of the production process; his face alternating between beaming smile and earnest seriousness as he explains each whirring machine.

Located an hour northeast of Barcelona, Spain in the tiny town of Artes, the factory opened in 1972, employs 182 year-round workers, and serves as the town’s dominant employer.

Three years ago, all Rossignol snowboards were made in France, where under the company umbrella three facilities are located: two factories at the company headquarters in Voiron and the Dynastar facility near Chamonix.

For ‘99/00, Rossignol snowboard production will be entirely in Spain and Original Sin will soon follow-moving production out of the Chamonix Dynastar factory to take advantage of Artes’ volume.

The factory operates in two shifts: 6:00 a.m. to 2:00 p.m. and 2:00 p.m. to 10:00 p.m., but since maintenance is done at night, the factory is rarely empty. This year, more than 120,000 snowboards and 333,000 skis will ship from this small Spanish town. The factory has the capacity to do 250,000 snowboards and the company expects to soon be at that level.

In the more than twenty years he’s worked here, Duocastella has supervised not only the construction of millions of skis and snowboards, but he’s been responsible for the design and implementation of most of the production line. The majority of welcome datacompthe machines are fabricated in-house in a separate 3,300-square-foot machine shop.

It’s been time well spent. The degree of automation within the factory, the utilization of technology along the entire production line, and the uniform cleanliness-coupled with the factory’s size and production volume-makes this the most impressive of the twenty snowboard factories I’ve visited.

The tour starts in the ski and snowboard core fabrication area and it’s a good introduction to the high-degree of automation and quality control found throughout the factory.

On the day of my visit this area was churning out ski woodcores. A block of wood approximately three feet long and shaped roughly like a four-by-four enters one side of the snaking, fully automated production line and fully milled, cambered, full-length woodcores came out the other side. Tolerances are measured in millimeters and one employee can make 1,400 ski woodcores in a shift.

Manufacture of the snowboard cores, which are offered in Microcell, wood, and THC (Microcell, wood, and Isocore) combinations, don’t have the same degree of automation, but Duocastella says this will be in place by next year.

A nearby room houses the new ultrasonic die-cutting machine. Vibrating more the 20,000 times a second, the computer-controlled blade quickly cuts the bulk roll of basesheet material into the needed board shapes and sizes. It also produces amazingly detailed die-cut bases-a feature sure to be prominent on the ‘99/00 board line.

We make a shortcut outside and re-enter the factory in the press room, which houses twelve Alpine double presses, three Nordic double presses, and seven snowboard double presses. It’s here that each board is laid up by hand, before being placed in the computer-controlled steam press. Temperature, time, and pressure are monitored on both the top and bottom of the press, and this data can be monitored from Duocastella’s desk.

This year, the Artes factory is only producing sidewall-constructed boards (cap and Dualtec boards have been made in France), but the ‘99/00 line features full-cap and half-cap models, Dualtec, and sidewall models.

After the boards come out of the presses, they head for a large automated finishing area. Once again, only a few employees are needed as a series of machines sand the board edges twice, rough belt sand the bases, mill the sidewalls, and belt polish the base. Then each board undergoes four passes of manual belt sanding-depending on the model-before a five-axis CAD/CAM machine does the final finishing.

Close to the finishing area is the four-color silk-screening department. According to Eric Bobrowicz, technical manager for Rossignol, silk-screening technology has improved greatly in the last four years.

“Back then it was very difficult to make something tech with silk-screening,” he says, “but that’s not the case now. We made lots of tests with sublimation and other technologies, but the benefits of silk-screening are very strong.”

After the boards are sanded and polished they are transported to another wing of the factory where they receive a coat of varnish, inserts are drilled and checked, and the boards are shrink-wrapped and bar-coded. This is also where the final quality control checks are made. With skis, each is checked for weight and flex after varnishing-a system that will also soon be in place for snowboards.

On-Snow Development

Of course, the most dazzling factory isn’t worth dip if the design of the product is wrong. That’s why Joubert and Bobrowicz go to great lengths to explain how the genesis of each board occurs on-snow.

“Four years ago, some people thought it was possible to design everything on the computer, but it’s impossible,” says Bobrowicz in his heavily accented English. “Computers are a big help, but the feeling comes from the snow. We can go onto the snow every day of the year. It’s something very important.”

As head snowboard designer, Bobrowicz first tests design ideas on the computer, then molds are made on Rossignol’s CNC machines in Voiron.

“Afterward, we send the mold to Artes to make the first prototype,” he says. Prototypes are sent back to the French Alps for testing. “For the snow test, I have three guys working with me testing the boards, then I make a lot of tests with the team riders.

“I really want to have a Rossi style on the snow,” he continues. “I don’t want to make a Burton board or a K2 board. For me, it’s something very important to keep our specification to our style. It’s one of the reasons we developed the THC.”

THC cores were introduced last year and use lengthwise strips of Microcell foam and wood. “THC gives you the feel of Microcell (which reduces vibration and makes the board stable), the snappy liveliness of Isocore, and the lightweight qualities of wood. The idea is to take the best from each material.”

According to Bujold, getting consumers familiar with THC will be one of the marketing cornerstones next year. Part of this push includes small, transparent die-cut view ports in the ‘99/00 board topsheets. “If consumers are skeptical about our core technology, then it’s important for them to be able to see what makes our boards different,” says Bujold.

Joubert points out, however, that Rossignol’s task is to explain the benefits of this technology. “I want the consumer to know that our product is really technologically advanced,” he says, “but not just for technology’s sake. What we’re doing is producing boards that take the benefits of technology and increases the rider’s pleasure and comfort.”

A Consistent Message

So, the factory rocks and the board technology is first rate, but image is what drives the market, right?

Altering the image of a 70-year-old brand is like turning a super tanker, but improving Rossignol’s snowboard image is a task Joubert says he can tackle. “You have to consider Rossignol Snowboards a mainstream company,” he says. “Because of the name, the size of the company, and the resources we put into it, we have to go after a wide spectrum of customers-from the opinion leader to the 30- to 35-year-old beginner crossing over from skiing.”

But this is a benefit, not a disadvantage, adds Joubert. “I don’t imagine Rossignol snowboards as ever being a super image brand for the twelve- to eighteen-year-old customer. This is not our task, and being just an image brand is a dangerous position. In this segment, consumers change their mind very often and fashion trends are very important. They’ll drop a brand just as fast as they consider it. We can’t afford to do that.”

He says the brand’s distribution strategy is clear. “At the present time we have the biggest market share in the rental business,” he adds. “Where we are weak today is in retail, because the graphics were all wrong in the past years.

“Last year we had something that didn’t fit the U.S. market,” he continues, “and the retailer was stuck with boards that weren’t selling. We’ve got to regain their confidence and show them we understand the U.S. market and we developed the product just for them.”

Joubert’s main focus is to penetrate retail with a complete package-not just at pricepoint but at top price. “To regain retailer confidence, we’ve already produced a consumer catalog that appeared in SNOWboarding magazine. Our goal is to bring consumers to the shop wanting to buy Rossignol products. The task is to build a strong message so the consumer will realize the benefits of the brand-not only in product, but in terms of image. We need to show that we have the same culture, that we think like them.”

Joubert says retailer’s see some concrete benefits when they deal with Rossignol. “We’ve tried everything in terms of board technologies, in terms of topsheets, bases-whatever. We have a huge R&D department dedicated to all the winter activities. So when we build a snowboard, all these experiences add up, and the retailer and the consumer both benefit.

“We also have decades of experience servicing the retailer,” he continues. “When we launch a product, we make sure it’s something that’s been tested and something we can supply and service. We haven’t been doing that for just a few years, we’ve been doing that for close to 70 years.

“So, I would say experience, technology, reliability-and we’ve always offered exceptional specs-on-price ratio-which is a guarantee the consumer will have a really good product for a low price.”

But that’s a fine line. Although Rossignol has products that reach across the spectrum of prices, its critics call it nothing more than a pricepoint brand. Some competitors even assert Rossignol gouged prices to an unprofitable level in an effort to gain market share.

“We didn’t drop the overall price of our offering,” says Bujold. “We introduced a new price point 250 dollars to round out our offering and make it easy for people to get into snowboarding. You bet we’ll gain market share with those boards, but that wasn’t the reason we offered them.”

Joubert maintains Rossignol’s pricing structure is a benefit to the brand-and the industry: “If we can afford to do a good business for the company by offering good product at good prices for the consumers, hey come on, the consumer won’t be fooled for very long. One day they’ll stop buying only image product and they’ll recognize where the truth is.

“Sure, we have lack of image today-which we are trying to fix-but it’s also because our boards at low price and middle price are so good that it’s difficult to go further.

“All the experience we have in terms of technology gives us the ability to organize a production line that’s so efficient that we can afford to offer the boards at these prices,” he continues. “We’re not there to dump the price. That is not our goal, because it would play against us. But we’re also here to open up the sport to newcomers. You know, if the board is inexpensive and good, I think it’s a good service to the entire industry.”

An Awakening Giant

So, what are you left with?

The factory is incredible, and the entire testing and design process authentic and first rate.

The graphics for ‘99/00 look significantly better than last year’s, and last year’s were three times better than the year before. It seems the company’s focus is on snowboarding, and it’s dedicating the resources the division needs to grow.

And yet the remaining task appears daunting. Rossignol hopes to appeal to the image makers while offering products for all wallet sizes and rider types. They want a stronger identity in specialty stores while acknowledging the market is heading toward multi-sport and chains. The dynamic between ‘core and mainstream-especially as it relates to image-isn’t easily mastered.

But try as I might to remain analytical, I couldn’t avoid being carried along by the enthusiasm people like Joubert, Bujold, Duocastella, and Bobrowicz have for the brand and where it’s going. The trick will be getting retailers to feel the same way. But if they do, the possibilities for growth appear substantial.

Bujold likes the analogy that Rossignol was a sleeping giant that’s starting to wake up. I’ll go one step further, the giant is awake-and he looks hungry.

biz_editor

December 01 1998 | 114 views

Uncategorized

Midwest Report

Kyle Cabaya, manager of Alternative Bike and Board in Minneapolis, Minnesota says there’s been a lot of consolidation in his area. A large retailer with five stores recently went out of business. Even though there are still some smaller chain stores around Minneapolis, he says snowboard specialty shops are still strong: while ski shops are hurting from old inventory, low cash flow, and falling sales. There’s been no need to cut prices, he says, since discounters couldn’t last-they offered no service, no warranties, and the small board companies they carried went out of business.

Alternative Bike and Board carries brands such as Burton, Solomon, K2, Nitro, and Grind. It’s avoiding competitive mistakes by providing service with an in-house grinder, overnight tune-ups, and lifetime warranties. If a customer with a warranty has a blown edge or needs a tune-up, the shop only charges five dollars-something that also brings customers back.

Jocelyne Ninneman, assistant manager at Corky’s Surf Shop in Roseville, Michigan, also says customer service is an advantage for her shop. Corky’s opened two additional stores in high-traffic areas and there are only two other snowboard shops nearby. The closest chain competition is a ski store that added more snowboard inventory. Corky’s has addressed its situation with increased customer service. By adding mailing lists, company demos, shows, swap meets twice a year, and giveaways, Ninneman says, “We have more continuous business where the others get one or two visits a year.”

According to Beth Mackey, assistant manager of Flying Fish, in Madison, Wisconsin, competition has grown enormously in the last year in their area. This season alone a variety of non-snowboarding stores have started to carry snowboards. In addition, there has been an influx of large discount stores moving into the community. “Early sales are down,” says Mackey. “We’re in the stages of ‘gotta do something’.” There is also competition coming from low prices on the Internet, which is tough on Flying Fish’s meet-or-beat policy. Mackey says, “We’ve always been big on customers.” So the shop’s customer service includes a large mailing list, coupons, and swap meets.

“There’s no such thing as a specialty snowboard shop in this part of the world,” says Michael Boatwright, manager of St. Bernard Sports in Dallas, Texas. The stores in Boatwright’s area carry a variety of products because of their sunbelt location. The past few years have shown an increase in competition-however, if anything his prices have gone up. According to Boatwright, the big chain stores carry snowboards but try to sell them when they don’t know anything about them. With brands such as Burton, K2, and Lib Tech, Boatwright pays to have riders/technicians trained to know what they are talking about.

Amos Kolbo, the seventeen-year-old owner of Amos’ Fifth Board Shop, says his is the only specialty board shop in North Dakota. Some other stores carry boards, however, Kolbo feels his exclusivity puts a damper on everyone else. This has also given him an advantage in obtaining more brands. Kolbo’s prices are the lowest, and he says this has forced competition to drop their prices. His shop offers tune-ups, warranties, and repairs as part of their customer service.