Riding The Wave
By Berne Broudy
Last February, high-end boat manufacturer Eddyline doubled its production space. Two weeks later, the world shut down. Eddyline thought its timing sucked. But by Memorial Day, hordes of people had discovered paddlesports—the ultimate social-distanced activity—overwhelming brands and retailers with business. Eddyline and every other paddlesports brand logged record orders.
But a COVID-19-induced shortage of fittings and raw materials; a deep freeze in Texas that shut down refineries critical to boat glues, resins, and plastics; shipping delays; and a waning workforce bolstered by extended unemployment benefits hampered production. The market couldn’t satisfy the spike in demand, and in some cases, brands weren’t able to deliver preseason orders.
“Early last year, the pandemic impacted the Asian supply chain,” explains Larry Baab, group vice president and Global Division GM at Johnson Outdoors. “We shut down in Aprilto address COVID-19, and things got behind before the demand was strong. With supply chains thin everywhere in the last decade, with brands running lean and using technology to forecast and plan, ripples in supply get felt a lot longer. Even a blip of a few weeks can have an impact.”
In early February, Wenonah maxed out its capacity to make boats for the season, so it quit taking orders throughout the season for the first time in 54 years.
“We’ll get retailers any orders on the books this season, and we’re doing our best to deliver those boats on time,” says Bill Kueper, Wenonah vice president.
Wenonah has enough polyethylene to make the boats it has committed to, and it is looking at alternatives that meet its quality-control criteria for the next batch. To make good on his promise, Kueper has been working weekends in the factory, and all employees are on a mandatory 50-hour workweek through Memorial Day, when 50 hours a week becomes optional.
Eddyline also made cuts to preseason orders. So did Johnson Outdoors. Most brands will open for 2022 preseason orders in June, with deliveries starting in September with restricted availability across brands.
“At the beginning of the pandemic, we stocked component inventory deeply be-cause we had space, we wanted to hit price breaks, and we anticipated supply issues,” says Scott Holley, Eddyline Kayaks president. “We moved to two sources for any component that wasn’t patented. We entered into master services agreements with key suppliers that allowed Eddyline to have preferential position-ing. And with a couple of suppliers, we made agreements for consignment inventory. We have some great advisors, and we were smart enough to listen to them.”Strong supply chain and retailer relation-ships also helped brands mitigate shortages.
“When other extruders were canceling orders or only shipping half-volume orders, we had no slow down or reductions at all from our partners, and that was entirely due to years of in-vestment in being good partners on both sides,” Holley says.
By definition, partnerships flow both ways. Eddyline’s contribution is providing forecast data, paying bills on time, and building direct and personal relationships throughout the supplier’s organization, not just with sales reps. Eddyline also doesn’t assume its problem is the only priority for its partners. “We try to differentiate between must-have and would like to have,” says Holley. “When we have to solve problems, we get our heads together, and we keep in mind that we’re dealing with human beings at another business that is also under a lot of stress.”Retailer relationships are just as important.
“We were struggling early on with how to communicate with retailers about when we could ship what,” says Baab. “We learned a lot. We didn’t have all the systems, processes, and reporting internally to be effective external communicators. But we’ve fixed those issues, and we’re now able to be clear. Retailers may not necessarily get all of what they want and the may have to go elsewhere to fill certain holes, but at least they now know realistic delivery timeframes.”
It wasn’t just a lack of grommets and latex neck gaskets that threw a wrench into paddlesports production. In Wisconsin, Wenonah Canoe has been trying to add extra shifts to catch up. Kueper blames generous and extended unemployment benefits. “If you’re not making $15–$16 hour, the incentive is to stay home,” Baab says.
“We’re having to modify not just preseason but government contracts,” says Jeff Turner, sales/marketing/design manager at Kokatat. “We’re running at 75% because we can’t get people to come back to work because of unemployment benefits.”
Labor shortages aren’t universal, however. In Old Town, Maine, where Johnson Outdoors builds most of its boats, the company has doubled its workforce and moved to three shifts seven days a week. For the past 12 months,Johnson Outdoor employees have worked six to seven days a week, even with increased production staff and hours.
RETAIL RESTLESSNESS
“I just want my preseasons,” says Darren Bush, owner of Wisconsin’s Rutabaga Paddlesports and a 30-plus-year veteran of the industry. “I’d be fine if I got those. But manufacturers are telling me to cut 10% of next year’s order now.”
Bush’s strategy is to place as many preseasons as possible, which he’s sometimes doing without having next year’s prices. He’s also aggressively opening up new vendors.
“We’re forcing orders on some vendors, even ones I don’t carry yet,” says Bush. “I’m not talking to sales guys anymore. I am calling CEOs and asking, can you make as many boats next year and the year after as you did this year, and can you order more? I’m demanding delivery in February. We’re forcing manufacturers who are in crisis mode and dealing with day-to-day to think long term. We want long-term relationships. “But if you can’t ship me product, I need to go down the block.”
To keep Rutabaga filled, Bush is stockpiling redundancies in his inventory, like ABS plastic boats, which he’s now buying from all the vendors who make them. He’s also building a bigger store with more storage. He’s also pre-selling boats. When a truck with 100 boats pulls into the Rutabaga’s parking lot, likely 40 are already sold.
“I’m taking risks; I’m taking stuff early; and I’m paying in advance at this year’s prices where I can, so I don’t have to pay higher prices next year,” says Bush.
Bush says his customers are understanding and patient. And Rutabaga is selling the boats it can source in markets from Texas to Florida.
KEEP THE STOKE ALIVE
During COVID-19, the world rediscovered paddlesports, but engagement and growth won’t continue without support—it’s up to the industry to keep the momentum going.
“We should all be spending a lot of time helping people who got into paddling during COVID-19 develop a love and commitment to the sport, helping newcomers and paddlers who rediscovered boating have fun and be safe,” says Turner. “Over time, that will translate into gear upgrades. Double down on your customer service and diversify your marketing efforts to be more inclusive.”
“COVID-19 was the ultimate in putting butts in boats,” says Bush. “Now we have to do something with that. Now we have to take the enthusiast or emerging enthusiast and move them into better product as it becomes available. We’ve got to keep that person engaged, so when you have the specific paddle the customer wants, call them and they’ll likely come buy it. If a consumer is willing to give you their info, take it, and, when you can, get them what they want.”
“We’re ordering nine months out,” says Bush.“I wish I had done it last year. We lit a fire under people, and they’re gonna keep paddling; they’re going to continue to upgrade their boats and gear. I am confident that the spike in paddlesports will continue.”
Bush isn’t just paying lip service to the growth in popularity of paddling. That new shop he is building will be at least 50 % bigger.
Part of Bush’s confidence that Rutabaga will ride the wave of paddlesports popularity into the future is the infectious excitement of his staff, which gets customers dreaming, and the personal connection he makes with anyone who buys from Rutabaga.
“I still write thank-you cards and stick them in every order, and people like that,” says Bush. “Paddling isn’t a commodity for us. We are paddlers. We care about the people who buy from us. I love getting people into boats.”
Bush says Rutabaga did a lot of things this year that it will continue because they add value to the customer experience. Those include appointments for boat pickups and concierge service. “It’s fun,” says Bush. “It makes people feel important.”
PADDLE ON
As brands deepen their supply chain relation-ships, in a time when production can’t meet demand, they’re also strengthening bonds with key retailers. Both for their own good and in the interest of brand partnerships, Holley counsels retailers to look at their digital presence. “By the time a consumer walks into a store, they are so well informed. Moving forward, the dealers we see as being critical strategic partners will have invested in social media, web presence, and online customer support, which will make them a best-in-class retailer.”
Holley believes that by July, the supply chain should catch up, but others aren’t so optimistic. “The guidance we’re giving retailers is that you need to know what you want even though we may still be under an allocation model. You’ll have visibility into allocations and the amount we can deliver so that customers will have a timeframe,” says Baab.
Johnson Outdoors is working with consultants to find production efficiencies. It’s investing in overseas partner factories to improve capacity. It’s paying to expedite shipments. “We’re very willing to invest to satisfy the demand for as long as we need to,” says Baab. The big unknown is how long the boom in paddlesports will last. But everyone agrees on one thing: It’s a trend, not a fad.
“Instead of a special order, if you want a boat sooner rather than later, you might have to settle for what retailers have on their shelves,” says Bush. “If you find what you want, buy it. If you come back tomorrow or next week, it’ll likely be gone.”
“We have looked at all processes for efficiency gains,” says Kueper. “I would open again for2021 orders if I could find the capacity and could still deliver this season. We’ve hired a lot—we have a 50% larger workforce than we did a year ago. That’s 38 full-time jobs. But my commitment to HR and my factory managers is that I won’t staff at an unsustainable level. I see this level of business continuing; I believe we can sustain this headcount going forward. But I don’t want to bring on new staff just to have to let them go down the road. Bringing people on is a disruption in short-term efficiency. I am trying to stagger new hires. I’m asking both existing and new employees for adaptability and flexibility. I’m extremely proud of all of them for their can-do attitude and flexibility. It’s the best workforce we’ve ever had.”
Kueper says that working on the factory floor on weekends has been a great experience for him. “It’s been a gift to get to know my staff better than just someone’s name,” he says. “When you work alongside someone, you get to know them as a person.”
“At some point, supply and demand will balance,” says Baab. “I’m not sure which end of the equation will have a more notable shift—will demand slow or will supply catch up? But I don’t see a long-term discrepancy. We’re addressing the imbalance right now by trying to be transparent and accurate with retailers and by planning together. There needs to be flexibility.”
One of the ways Johnson Outdoors is maintaining efficiency is by sticking to its production schedule. “In the next four to six weeks, historically we’d be willing to make adjustments. If a customer says they had to have a certain boat in a certain color, we’d do what we could. Now every time we make a production-line change, we’re losing a boat. If we have downtime to switch molds or colors, we lose time that we have to figure out how to make up. By telling retailers our plan, we’ve been able to stay focused on our production schedule. It’s not a sophisticated change, just discipline that helps us maintain efficiency and quality.”
“The knowledge economy changing physical location from urban areas to areas with outdoor rec isn’t something that is going to turnoff,” says Holley. “I’m bullish about outdoor rec in general, and paddlesports has proven that it’s a great sport for all people. It’s a new renaissance in paddlesports, with diverse participants, and I couldn’t be more excited.”
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