FLORIDA TODAY: "Surfing industry falters." China companies subsidized by government

February 1, 2007


Surfing industry falters

Industry adjusts to changes year after principal supplier folds

BY DONNA BALANCIA
FLORIDA TODAY



More than a year after the collapse of surfboard manufacturing supplier Clark Foam, the surf retail industry is facing some of its toughest challenges ever.

“The surfboard industry is dealing with a lot of different issues,” said Alex Joy, manager of Catalyst Surf Shop in Melbourne Beach. “The main thing about supply these days is nobody wants to have all their eggs in one basket. That’s what happened when most distributors and manufacturers relied on Clark Foam, so I know that we order from different companies now.”

Catalyst Surf Shop is owned by Matt Biolos and Mike Reola, founder of Lost, a San Clemente, Calif.-based surfboard manufacturer. Catalyst carries a variety of surf-related clothes and accessories, in addition to the well-known Lost surfboards, most of which still are made of polyurethane.

But much as surf shops continue to look for ways to diversify their inventory, surfboard manufacturers are looking for ways to use new technologies, like epoxy, Joy said.

“There are a lot of options out there today, and it’s not as dire as what was predicted when Clark Foam first closed down,” Joy said. “We’re predominantly still using polyurethane blanks, but we’re avidly using epoxy and alternate technology.”

In December 2005, local surfers and surfboard makers said the closing of Clark Foam, a California company that supplied the “blanks” that form the base of surfboards, was likely to lead to price increases and shortages of boards.

The sudden closing of Clark Foam, which made polyurethane blanks that were the backbone of the surfing industry for 44 years, has affected the surfboard industry in various ways.

While epoxy may have risen in popularity among manufacturers, the number of completed boards coming in as imports has taken over about 30 percent of the American surfboard market, industry experts say.

“We don’t have any laws in effect that protect our workers from imported goods, in the surf industry or many other industries,” said Greg Loehr, president of Resin Research Inc. of Indian Harbour Beach.

Loehr also has recently taken on the position as head of U.S. research and development for Cardiff, Calif.-based Firewire Surfboards. The Firewire boards, which are epoxy boards, are gaining popularity.

“If a company in China wants to make surfboards, it doesn’t matter if the company makes a profit, because the companies are subsidized by the government,” he said.

“We can’t compete with that. The surfboard industry is down, and has been down since Clark closed. It’s been significantly off. The downtime has played to the advantage of the imports. Anyone with alternative established business has done well, though. And, by that, I mean the guys who have mastered epoxy and alternative technologies,” he said.

Adapt to survive

The key, many say, is to adapt to stay alive.

“Business is very brisk for us right now,” said Roy Scafidi, owner of Oceansports World in Cocoa Beach. Scafidi was an early adapter of epoxy in the manufacturing of surfboards.

“There was no learning curve for my company to learn epoxy resins and EPS foams,” Scafidi said. “Now that Clark is gone, people are accepting alternative materials. I can’t make the boards fast enough. I’ve mainstreamed the epoxy for almost 20 years. When I first went into business, people said: ‘They’ll never buy epoxy.’ And, now, all of a sudden, I’m a genius.”

Most of the major surfboard companies now are going to epoxy, Loehr said.

“We tripled our business this year, and that part of the business is expanding and the other part, the traditional polyurethane polyester business, is shrinking,” Loehr said. “If we’re expanding and imports are expanding, well, then, what’s happening with the traditional business? We estimate 50,000 units with our technology were built across the industry in the year 2006. That’s a much-larger percentage than before. I would say epoxy has about 15 to 20 percent of the market, then the imports, the finished boards, comprise about 30 percent of the market.”

Loehr said there’s a better foothold in Florida with epoxy, but he predicts that, this year, imports could gain 50 percent of the market.

Tough business climate

Without the profit margins on surfboards, many surf retailers are relying on surf accessories and surf-style clothes to pull through.

But many say the days of the little surf shop making a profit by selling a few bars of wax and a couple of pairs of board shorts may go the way of the American-made hand-crafted surfboard.

“I’m not sure I’d ever start a shop or manufacturing right now,” Loehr said. “The reason is the numbers are down, and surfing is aging in the United States. You don’t see the young kids out there as much. They’re into Xbox or video games.”

Scafidi agrees.

“The biggest threat to the surf business is the cheap Chinese import boards,” Scafidi said. “I see problems in three to five years down the road. The entry-level market is gone. That will go to the Chinese. The guy who grew up with custom-made boards will have to pay the price.”

Joy said, by getting the neighborhood kids into the shop, he’s confident that the local surf shop still can be viable in an ever-changing market.

“The biggest key is customer relationships,” Joy said. “You have to make the customer feel like they’re No. 1. You have to have a great sales team, and you have to encourage the people to hang out. The prices need to be reasonable, though. You need to have the names, but you need to carry the shorts and the T-shirts that are reasonably priced.”

“It’s a very difficult business,” Scafidi said. “The margins are low. Don’t open a surf shop. Stay in school, go to college, and get a corporate job. The same materials I use to make my boards are being exported to China, and those boards are coming back here at half the cost of what I can make it for. You can’t compete.”