Balancing Business and Culture: “Economical” boards are filling a demand, but at what price?

When it comes to selling surfboards, the surf industry has been stuck in an archaic business model – handcrafted products sold for minimal profit. These days it’s very rare to find any product available to a large market that is custom built. Even more rare still is the custom built product that costs less than its mass produced counterpart. But this is surfing, and backwards thinking is sometimes the rule and not the exception, especially in the case of board manufacturing… or at least it used to be.
Technology, for better or worse, has irreparably changed the business of surfboard manufacturing.

Catching Up

In a way, the surf industry is just now catching up to the rest of the world’s retail markets. The business model is simple, make quality surfboards at high volumes and non-discriminant of income so they are available to consumers of all skill levels around the world while maintaining the profitability of the product.

Filling Out the Market

For the last five years, Global Surf Industries (GSI) has been applying this model to fill in an apparent gap in the surfboard market. The nearly indestructible beginner epoxy boards from NSP have been available for years but recently GSI has worked on solidifying agreements with surfboard companies like Webber, Walden and most recently Channel Islands to provide high-performance foam and fiberglass boards at much lower price.
How does GSI do it? “Basically the biggest saving that we pass on is the material costs,” Mark Kelley of GSI said. “At our factory we make about 300,000 boards a year for worldwide production. As you can imagine, because we buy in bulk, we get the best prices on raw materials. We blow our own foam, buy fiberglass by the container load and are both FCS and Future’s biggest customer.”

Disappearing Act?

Just as big box stores like Costco and Wal-Mart push out the mom and pop stores, it is argued that the emergence of “economical” surfboards is making the local custom shaper disappear. In theory something that is “custom-made” should cost more than the same mass-produced product. In practice it’s a whole other story.
“The custom shape nowadays is becoming a true custom board… I think these boards on the market will help the local shapers get a real dollar for their product,” Kelley said.
Local shapers operating on a much smaller production scale disagree. “The main impact to me is that lowering the overall price of a board forces my prices to go down to compete. Local shapers have always been under retail price just to get customers, because price always matters,” K58 Surfboards shaper James Mangano said.

Making Boards Worth it

The ability to computer shape with hand finishing techniques on a large-scale has had drastic impacts on the ability for surf shops to make a profit. The cost for the average shaper to produce a board is typically so high that shops have to cut the profit margin in order to sell them. From the consumer’s standpoint, why pay more for a shop board when you can get a custom shape for the same price or even less? The custom price versus the shop price is a fight that has been going on for years. That is, until Costco started to sell surfboards. “I was doing pretty good with boards until Costco started selling surfboards… then things had to change,” K5 Surf Shops’ Tom Shultz said
With the introduction of boards like the Anacapa line of shapes from Channel Islands, surf shops can carry boards that will be able to turn a profit without requiring the huge, bulk purchases like Costco. “These boards are the way it HAS to go because that is the only way the shops can make money,” Shultz said.
Kelley from GSI justifies the Anacapa as a win-win for both comsumer and producer. “After Clark closed down and CI were forced to put up their prices, they saw a huge gap open up below their MSRP on CI boards” Kelley said. “Al’s shapes are some of the most ripped off in the industry, the idea behind this brand is to have an ‘authorized’ rip off in a way. CI gets a royalty for every board sold, and consumers get a Merrick designed board for a great price. Everyone is a winner in this equation.”

Unseen Costs

Ned McMahon, from the environmentally friendly foam supplier HomeBlown Blanks, says there’s another layer, one that’s overlooked, to the complex state of affairs. “These boards, while cheap at first, actually cost us far more than you realize,” McMahon said. “Besides the impact on local shaping businesses, the environmental impact of global shipping is the number one source of ocean pollution. I think it’s time we start thinking about sustainability. The old way --10% more each year -- is the true cause of so many of the world's problems, from global warming to water shortages.”
As with most products it is difficult for the consumer to understand and for the companies to integrate the collateral damage of making business work. However, HomeBlown actually purchases carbon credits to offset the impacts they have on shipping requirements.

Business and Culture

In the business of sport it all comes down to providing the right product for the right consumer at the right price. The success of any aspect of this equation really depends on the demand from the consumers. What type of surfers are buying boards? The future of the “economical” board will stir up conversations in the lineup for a long time to come, but providing the masses mass-produced quality boards is a hole in the market the surf industry is starting to fill up.




Pull Quotes

James Mangano from K58 Surfboards:

It all comes down to the type of surfer you are… how serious are you in the sport. In order to refine your surfing you have to go directly to a custom shaper. I don’t think anyone in the top 20 that are riding a mass produced shape.

Tom Shultz from K5 Surf Shop:

These boards might be terrible for surf culture, but the surf shops have never been able to have surfboards make money before.

Mark Kelley from GSI:

If anything it is enhancing it. Never before has there been so many excellent boards on the market. So many price tiers to suit the consumer’s wallet. So many different constructions. At GSI we have this company mantra: ‘Life is better when you surf.’ We all live by this. We think the world will be a much better place if everyone paddled out every now and then. People would have much more respect for the planet, the seas and themselves. The surf culture is alive and well. Nothing is going to take that away. It is only going to grow with people getting in the water and not just wearing the brands.