Are Consumers Getting Greedy?

Industry Talk
21

Mitch- your not MY enemy (not yet anyway). But I do think that your association with board production in Asia makes you a pretty large target. In my opinion the whole Chinese production concept is predicated on building CHEAP products. One thing the Chinese are REALLY GREAT at is making something LOOK good (especially when it comes out of the box). Usually that’s where it ends- the Cinese products (generally speaking) do not hold up as well. Unfortuneately by the time this happens, the consumer has the cheap Chinese price embedded into their brain and expects to pay that cheap price but get the quality of a superior product.

Therein lies the real problem here. The American Surfboard Industry has really done a piss poor job of differentiating itself from ‘knock offs’. All the local board builders are very vocal about how the Asian boards are not of the same quality- don’t surf the same- don’t last as long. But has anybody rallied the troops to start a campaign to educate the consumer about why boards made here by Custom Builders are better? I think not. I guess that either the American consumer is supposed to (hopefully) figure this out on their own or doesn’t care or is just not smart enough to tell the difference. In any case if the consumer can not and is not being made aware that Custom Boards ARE better then WHY SHOULD THEY PAY MORE? THEY NEED A REASON TO PAY MORE AND NO ONE HAS GIVEN THEM ONE!!!

Finally Mitch, in regards to your comment that “LABOUR COSTS IS YOUR PROFIT !!” I totally disagree. Labor cost is your pay for your work-PERIOD. It sustains you day to day existence on this planet. Eventually we will all be too old/tired/weak/dimented to work and must have some means to support ourselves. Since virtually no builder pays into Social Security (I doubt that most pay any taxes of any kind) there will be ZERO $$ coming back to them when they are old/gray (assuming the SS System even lasts that long). Unless there are other profit streams in a business there will be nothing to re-invest in the company and more importantly SAVE for the future. WITHOUT SAVING THERE IS NO FUTURE. So to say that you should just be happy doing what you are doing is ‘polyanna’. It’s great to have a positive attitude about where you are at today but unrealistic to ignore tomorrow.

Nels… I did mention something along the lines of ‘lean manufacturing’ when I said that “Automation” could help but let’s face it- Boardbuilding is NOT aerospace. Boardbuilding is basically a manual hands on process that is essentially labor intensive. Other than using a shaping machine how can you improve effeciency? Even the fastest shaper has his limits to how many he can shape an hour. This is simply NOT an industry whereby you can reduce your expenses (labor or otherwise) AND increase your output (which is the principal behind lean manufacturing is it not?). Maybe I am missing something here but I just can’t see it working out that way.

Las Olas… If you in fact believe what you wrote “well there is the problem. clearly paying more for a board is NOT in the consumers best interest and there is no way to (honestly) convince them otherwise.” Then effectively you are admitting that there is no difference between what you (and other Custom Builders) are making and the CHEAP Asian imports. Can this be true?? God, I hope not- if so then we are all doomed.

There IS a way to turn things around but it seems that everyone is more focused on minding their own humble hermit businesses and “doing their own thing”. While the campers are all sleeping, the bear comes and takes all the food.

22

what I meant regarding labours cost being profit,

was that- say you Labour for a brick laying company, They pay you a labourers wage, I know many people back in OZ that survive very nicely on a laboures wage, when I say survive, I mean everything, from eating to paying off loans to saving money.

And they consider it all profit, they had nothing, worked, now have money

How is it that when you build a product, that materials (and overheads) cost you 100$ and you charge 100$ for your labour and then add 100$ for “profit” that you forget that you actually earnt 200$ , yes you worked for 100$ of it, then the rest was added so you make more money… RIGHT ?

I know guys back in OZ, that make 1 1/2 boards a day, start to finish, 5 days a week, and make good money doing so. I think ist becasue at the end of the week they can honestly say, they started with 1000$ worth of materials, then sold 12 boards for $3000 Thus they actually made 2000$ Am I wrong in thinking like this ?

( I know you will say how do you finish 1 1/2 boards a day, But that is what they average, maybe on one board today and maybe 3 tomorrow, oh and UV catalist helps too)

anyways, you are on the right track , you should be able to convince surfers that a custom is better than an import, with out bagging the opositions work, because then the imports sellers would just turn around as say the opposite, that imported boards surf just as well, are made from the same materials, last just as long etc but are half the price because of greedy local manufacturers.
This additude does not help anyone.

There is a market for both types of board, much like buying any peice of Artwork or sporting goods,

The print on your wall still looks great and servs its purpose for 1/100th the price of an original.

as does the mass produced bassball bat, compared to a hand wittled one made by an old time baseball star.

.

23

“Nels… I did mention something along the lines of ‘lean manufacturing’ when I said that “Automation” could help but let’s face it- Boardbuilding is NOT aerospace. Boardbuilding is basically a manual hands on process that is essentially labor intensive. Other than using a shaping machine how can you improve effeciency? Even the fastest shaper has his limits to how many he can shape an hour. This is simply NOT an industry whereby you can reduce your expenses (labor or otherwise) AND increase your output (which is the principal behind lean manufacturing is it not?). Maybe I am missing something here but I just can’t see it working out that way.”

I worked for an aerospace hot metalspinning company - and that was complete hand crafted in our case (there are automated metal spinning machines, generally they can’t be counted on producing reasonably fininshed close tolerance parts right off the forming tools). The principles were created in the Bronze Age - literally. Incredibly opreator-dependant. The last leadman I had told me once it took him a year before he was making parts that had better than a 50/50 chance of being scrap. Two years before he could approach most jobs with confidence. The skilled spinner could sometimes produce work off the forming tool within .10" of final tolerances.

Since we were mostly a job shop, taking various different orders, we weren’t real great candidates for the whole lean manufacturing thing. For the people who really got into it, they would have these Kaizen events…and the more bully-like our customers were the more they would insist we needed to reconfigure in that style of thought. But it made no sense at all for a job shop to move and rewire machinery for individual orders. It was argued for hours and hours for years. Not all the principles behind lean manufacturing applied.

But a lot did. For your purposes it means efficiency. Materials and workspaces and transportation organized to maximize efficiency. Make sure your products aren’t “traveling” extra miles around, risking damage in storage or transit. Make sure materials and tools can be located. Make sure supplies/materials are available and locatable. Make sure packaging materials are available and affordable.

Bookkeeping! Purchase orders! Tracking orders that are out there. Tracking your customer’s orders so you don’t screw them up.

Examining the costs of manufacturing can turn up interesting things. Until you track it and analyze it…maybe sometimes it is better economic sense to have somebody else glass your boards. And maybe it isn’t. And maybe that can change with the economy, the local competition, or the season.

Depending on your level of manufacturing and sales you may already have this pretty dialed in…and in fact the old surf shop aspect of this or better old surfboard builder model may have had this dialed pretty good. But that doesn’t mean it’s as good as it can be done. Maybe a good example is that old thing about buying your lunch or hitting Starbucks every day. Figure out how much you spend every day, every week, every month…see how much it adds up to in a year. It may seem small but…

Nels

24
25

DS…I was hoping that you would jump into this thread and offer some words of wisdom! I’m glad that you did. I haven’t posted here in a while because honestly sometimes I feel like some of the more intelligent (or at least ‘focused’) ideas fall on deaf ears.

I agree with you that making quality Boards involves an element of one on one customer service to acheive a product that the Client feels has value (read $$$) to them. This factor translates into the basis for a (relatively speaking) small/closely held business-not a major factory pumping out thousands of boards per month.

The problem with this scenario is that it opens the door to the major manufacturer who will sit there and look at it and say… “Hmmm if people are willing to pay $50 for a bottle of this really good wine, but there are only 100 cases available per yer-all I have to do is figure out a way to make 100,000 cases of wine and sell it for less”. Well, along comes “Two Buck Chuck” and by the laws of attrition, some consumers will no longer be in the $50/bottle market because they are drinking ‘swill’ that they think they are getting a good deal on.

Apple Computer is a killer example of a company that really ‘stuck to their guns’ in keeping their product technology ‘close to the vest’ and using that to leverage their success. Apple never released the source code for their O.S.'s and to manufacture a 3rd party piece of hardware/software for one of their products you have to go through a very stringent qualification process. In runing their business this way, they effectively have made it impossible for imposters/pirates or whatever you want to call them to infiltrate their marketplace by introducing a bunch of buggy, unreliable products. True, Apple is not nearly as popular or as widely used as the PC however, that company remains strong and posts profits even in times of economic woe.

The point I am trying to get at here is that bigger is not necessarily better BUT, you/we have to find a way to preserve the smallness of the Custom Boardbuilding industry. This is going to take some organization and effort.

If this thread is any kind of an example, It seems that whenever someone stands up and says, “Hey we need to find a way to stand together” on this and establish ourselves as a ‘guild’ of craftsman who do not make SCHWACK and therefore can not compete with (or charge the same prices as SCHWACK) that instead of agreement, there are more guys that say, “That won’t work… I’m going back to my bay to grumble about how bad things are”. It’s a little demoralizing.

This situation reminds me of the Native American tribes who had they decided to put aside their differences to fight for a common goal very well could have defended themselves a lot better than the way it went down. Maybe I am just to optimistic thinking that there is a way to stand together preserve part of our culture/lifestyle/work ethic/quality- I hope not.

26

Ok, so we get together and start the USABBG (this is sort of a repeat from the other China thread). We set up a system of qualification standards, say made in the USA, and all workers (glassers, sanders, polichers, ect.) paid a living wage. setting up quality standards might be more difficult but i’m sure people could think of ways. different shapers and glass shops who meet the established standards could, for a fee be a part of the “guild”. members of the guild bounce business off of each other (shapers use member glass shops, and glass shops refer business to member shapers) and secure materials at volume prices. the fee is used to establish healthcare pools and provide self regulation, maybe even a pension plan while we’re at it.

This all sounds great, if people have more ideas on how to actually make it a reality im all ears. i just feel like its a bit idealistic, maybe im just jaded. i’ve thought about the model, its the execution i just dont know about.

27

DS , regarding the collusion i wrote up a little diagram with the idea explained using game theory and when i tried to scan it to post my scaner took a s@#t on me. technology.

your right though, in some cases breaking the deal does lead to higher profits and in some it does not, it depends on the structure of the market in question. however, in either case breaking the deal to collude does result in greater market share for the firm that breaks away, and while it may not mean greater profits for that firm it is nevertheless advantageous.

my point is that either way the agreement of collusion is unstable in the long run, especially in a market structured like the one we participate in.

i was not trying to be a doom sayer or a fly in the champagne regarding hodads coment and i hope i clarified that above. i just meant that getting everyone together and making them agree to start charging higher prices wont work. maybe something like the USABBG i mentioned above would. i have my doubts like i said but i would love to be proven wrong.

28

Some of what is suggested makes sense.

But most guys I know, and who I worked with making boards, wanted to go surf when it was good. To get a solid 35-40 hour week out of any of them would be difficult, especially to justify a salary

29

Wildly, The good news is…most of the guys you know will soon have PLENTY of time to surf since there won’t be a need for their services if things keep going the way they are.

30

“We set up a system of qualification standards, say made in the USA, and all workers (glassers, sanders, polichers, ect.) paid a living wage. setting up quality standards might be more difficult but i’m sure people could think of ways. different shapers and glass shops who meet the established standards could, for a fee be a part of the “guild”. members of the guild bounce business off of each other (shapers use member glass shops, and glass shops refer business to member shapers) and secure materials at volume prices. the fee is used to establish healthcare pools and provide self regulation, maybe even a pension plan while we’re at it.”

A halfway loose structure for a guild might work, or co-op…but too much in the direction of qualification standards and fees…too much regulation and I think you get into the territory already mined by the ISO people. And if you want to know how well all the International/European standards requirements work, check into the artisanal cheese business in France today…regulation is killing family businesses that run from decades to centuries old. Plus you always have to remember we are talking about the Great Ape, human beings…flawed at best. Eventually the “established standards” test will exclude enough people for reasons of quality or simple finance that competition will rise up, or at least ill-will…

All of which is no reason not to try though.

31

I was trying to stay away from mentioning a co-op system. I have worked with them before and they have too much beuracracy involved. My other question is who is going to preside over the guild? and how/how much are they going to be paid to do so?

Another idea is you get all the members under one roof- like the sugar mill in Oahu. Then u can reduce individual overhead and transportation costs. You have shapers, laminators, sanders, screen printers and a retail showroom under one roof and accesable to all members.

Again, sounds great, too good to true almost. There is still the problem of managment and logistics. A different guild for every region; SD, OC/LA, SC or one main central location?

32

As a consumer I think $450 is a reasonable price for a high performance PU/PE shortboard. I’m not willing to pay more simply because these boards only will handle maybe a year at most of heavy use. If I look at other stuff I can buy for that price, most other products last much longer. I can get a comuter bicycle that’ll I’ll ride 5 days a week. After maybe two years I’ll have to start replacing parts on it but I’ll still be using it. I can get a netbook that I can use everyday and maybe I’ll need to get a new power supply after two years. After two years of daily use a performance shorty, if it hasn’t snapped or creased will be brown, beaten and won’t feel anything like it did when I first surfed it. The bike and the netbook will however be functioning the same as they did when I bought them.

33

Pinhead...An interesting and compelling argument but IMO it's another "Vote" for China.

Let's do some simple Calcs to see why:

Blank    $45

Shape   $100  (just an estimate but I feel a fair minimum amount for the design I.P. and the labor)

Color work  $25

Glass job  $175

SUBTOTAL = $345

So, if all Customers bought direct from a builder your amount of $450 would MORE than cover it.  However, most people don't buy direct- they buy through a shop.  Now- The shop is going to want to tack on THEIR share to cover their overhead in paying for shop real estate & hore sales staff to show/sell products.  Typically this is DOUBLE their cost (or 'keystone")  I imagine there is a little 'wiggle room' on this so let's say the shop marks up 65%.  That would equal $569.  This is $100 over what you said was fair.

Furthermore, comparing a Board to a Laptop isn't really fair.  Laptops (& bicycles) are MASS produced by the TENS of THOUSANDS.  They are stamped out of robotically operated production lines at incredible rates (which lowers their cost).  They are designed to be sold to Consumers whose numbers are in the 100s of millions.  There are only 20 Million Surfers worldwide- it's a totally different and much smaller market.

What you say makes sense about durability and value.  But Boards are a handcrafted time consuming product to make.  They are really more like fine bottles of wine rather than jugs of 'grape juice'. 

34

I didn’t say a “fair” price. I said a reasonable price for the amount of enjoyment I will get out of the product. The price I’m willing to pay is based on what I get out of the product not what you put into it. Make em so they don’t start falling apart after 6 months and I’ll pay more and I don’t want more glass, I like my boards to weigh less than 2.5 kgs

35

[quote="$1"]

90% of the working population are still employed...

[/quote]

g'day Dean, I am still employed and currently my status in the surfboard world is one of consumer. I see things a bit differently to you due to the economic climate (and i'm sure there are many like me) My employment is currently on rather shaky grounds - the parent company is in huge debt and they are selling the business unit for which I work for. Normally I wouldn't worry about this situation, but job adverts in my field (computing) are down.

So although I'd like another surfboard (small wave shortboard would be nice) I do have enough surfboards to tackle everything that comes my way and now just doesn't seem the sensible time to buy another indulgence. So what I'll do is wait for things to stabilize - either my current employment is involved in a successful takeover and the inevitable "restructuring" doesn't lose me OR the economy improves and job adverts go up (not going to happen soon). THEN I will buy another surfboard. I realise that I am acting like the collective masses and its people like me who send the recession deeper and prolonged. But I have to look after number one and what would you do in my position?

When the economy is bad deflation happens - prices drop in a desparate attempt to sell. So I suppose if i was to approach some local builder and try and take advantage of the situation and bargain them down in price then I would consider that greedy. I'm not going to do that - I suppose i'm atypical in that i'm only interested in expensive sandwich boards so I'll wait ...

36

a board cost me abou 280$nz us and i can sell for about 500$ nz

with fcs being 70$ blank about 90$ and up to 40$ for shipping on blank if i buy one at a time

resin is 10$ a liter and glass 6.50$ a meter then you have tape and blades sanding discs etc

so i make 220 i sell the boards for cash without sales tax although i pay income tax on the 220$

so i make 200 bucks for a days work. pretty shit

in a year or so i think i can get 600$ for the board and that will be okay money as a good sideliner

into my fortys i hope to be earning 400 a day in the hand work a couple of days a week and surf an hang with the whanau

i have no aspirations in life other then to do this until i die.

and enjoy work so no point in ever retiring

i have no desire to own a house or  attain lotsof money . those days are over unless you

A. dont have a life.

B. a lying thieving barstard.

C. lucky

i
dont think anyone should try and get more then the basics in life. if i
had money i wouldnt know what to with it. so i would give most of it
away. although i would like to own a house, i cant see any point with
house costing 300,000 . work your whole life to pay interest and
mortgage so you have a house to die in

37

Some one has pre shaped blanks for sale here at 30$ a pop,

if they started as nice shapes, and some one  has minimal skill, that should make a nice board right?

Of course not a Custom Designed (using my rockers and outline templates…?)

But a stock model, made for money, buy it at 30$ glass it for 30$ install some cheap fin system 30$, or glass on some home mades…

spray some art on it and walla ?   right ?   sell it at 250$ and you make 190$ for your time and labour ?

 

I know, factory based or home based … this sounds easy, allready setup…,…, got the equiptment etc…

38

I don’t think you are glassing anything for $30…maybe a skim board or something. There’s been a lot of posts since my last comment and plenty of them are insightful and revealing. Some from a general consumer’s perspective and others from a builder’s view that have individual needs and/or situations.

I suppose there will be many different approaches that will manifest over the next decade. Some talented builders will just up and quit while others will take on jobs due to economic necessity. Collectives, co ops, guilds, joint ventures, whatever you want ot call them will undoubtedly happen as well. Changes in the global economy and individual country economics will play some part in what happens as well. Undoubtedly some countries are prone to coups, overthrows, revolts, war, inflation, stagflaion, deflation, recesson, depression and many other factors that cannot be foreseen.

At this point the only realistic view is to depend upon one’s self and do what you need to meet your needs. There is nothing wrong with embracing idealistic concepts…the ability to dream is an important building block in realizing Maslow’s Hierarchy. Life favors the brave: take inventory and reinvent yourself.

Without hope, life becomes meaningless.

Upon reaching the gates of Hell, the sign reads something like “any hope you have, leave at the door”…

39

hey mitch , would you ship small orders of glass and fins fystems. they are robbing me blind.

maybe 300 meters and 20 or 30  sets of plugs and fins

40

We could kick around everyone’s personal numbers and needs here probably, forever. But if it comes down to cheap product and trying to sell the most of it without regard or concern given to anyone else in the business, and IF I wanted to be the Darth Vader of all surfboard manufacturers, I would do it something like this:

Preform molds from concrete that are finished shapes or very close to finished. This could facilitate both EPS and PU foams, adjustments for each could be relatively straight forward. These molds would be made for certain ‘utility’ boards that are time tested and easily accepted. For instance 9’0"x22-1/2"x3"x18-1/2" Nx14"T or  a shorty like 6’3"x18-5/8" x2-3/8"x11"Nx14"T …and so on.

Others would be programs that are CNC shaped:a secondary system of upgraded CNC capability  using inflatable drums eliminating any hand shaping except perhaps for nose and tail detailing although I would probably be able to eliminate that as well.

The next challenge would be to eliminate any hand labor including color work and laminations. Choices would be vacuum bagging cosmetically appealing alternative skins that could conceivably have a shock absorbing mid layer that adheres between the outer skin and the core. If this were the case, I would then eliminate the need for the secondary CNC shaping using the inflatable drums., this would be due to the mid layer’s ability to accept the fine cuts from the first cutting head. This would be key, as use of abrasives reflects an expenditure that I would want to minimize. Amortization of cutting heads would be preferable and acceptable.

Application of appealing veneers and synthetic pre colored veneers could be utilized that are designed to accept sprayed finish coats that are durable, UV stabilized, scratch resistant and waterproof.

Our other option would be to develop a clear coated multi directional reinforcement system that allows color sprays onto the completely machine shaped cores utilizing transparent lightweight hollow core fiberglass strands that are applied through a spray system then have a choice of using our CNC inflatable sanding system with a satin aka ‘speed’ coating sprayed on afterwards. Or we can use the same spray system for further high gloss finishes that do not necessitate hand labor polishing. The chopper gun type application of hollow strand would yield a very high strength to weight ratio and could eventually be developed to the point where a wrap or more precise methodology of applying this layer would configure to not require any sanding instead simply smoothing out to a filler coat that could either be clear or colored much like gel coats.

The technology is already there if one wants to do it. One only need to look into the leading edge marine, auto, furniture, aviation and a few other industries to borrow from each then go about putting everyone else at severe disadvantage.

Is the investment worth it? The technology would be applied to other products so the expense of initial set up and break even could be realized faster while providing disversified market positions? If one market was slow another could provide relief, and so on. The eggs would not be in one basket.

The savings from getting rid of dosmetic labor, cheap offshore labor, skilled labor, etc. would allow for major branding aggressive advertising, widespread distribution and enhanced profit incentives for retailers.

The aforementioned “two buck Chuck” that enjoys vigorous and consistent sales year after year through “Trader Joes” supermarkets, is a testament to creative business thinking. The actual label “Charles Shaw” was purchased from Charles Shaw, a quality oriented vintner in the Napa, Sonoma, Mendocino Valley while going through a particularly nasty divorce.

The label was used by a fellow Northern California winemaker who created the new “Charles Shaw” brand by purchasing overages of grapes grown by the many neighboring vineyards and wineries. He then blends the grapes to develop  distinctive wines from stock that he purchases for pennies on the dollar.

The story of “two buck Chuck” was carried on a network show some years back, and Charles Shaw stated that if he “had known his name would be used in this manner, he would never have sold his name”.

Sounds like sour grapes to me for someone else’s success and vision.

I won’t go excessively into the incredible success and wealth that Mondavi created through the concept of branding his wines…suffice to say it made him a billionaire. If you want to use that as a business model just rent “Mondovino” from your local video rental store.

With every challenging time there is new opportunity. With every catastrophy a new rebirth.

This kind of thinking pretty much eliminates everyone I have every known in the industry and stands to put me oon the hit list of all my industry friends and adversaries…oh wait, I don’t have any adversaries because it’s not worth being in this business in the first place. And if that is truly the case, then why do we have people from all walks of life vying for market share?