By Gustavo Arellano
By R. Scott Moxley
By Alfonso Delgado
By Courtney Hamilton
By Joel Beers
By Peter Maguire
By Charles Lam
By Charles Lam
A few years ago, Biolos was shopping with his wife at Costco and noticed a line of shrink-wrapped surfboards selling for about $250 each—less than his cost to make a single board.
"It just seemed unfair," he says. "You look at the board and it doesn't even say where the board is made—there's just a small sticker on the wrapper." Despite being made in China or Thailand, the boards were prominently painted with words like "Hawaii" or "Santa Barbara," aimed perhaps at tricking consumers into thinking the boards were actually U.S.-made, or maybe just to give them coastal credibility.
Biolos discovered that the U.S. government wasn't even tracking how many surfboards were being imported. That's because, as recently as two years ago, the U.S. Customs Service was still lumping surfboards with water recreational equipment and pool toys. So in 2004, Biolos hired Taylor Pillsbury, a Newport Beach attorney, to request that surfboards receive their own tariff designation—and that Customs enforce U.S. laws that require product labels to reflect their country of origin. Pillsbury sent Customs officials several documented cases where Asian-made boards were being sold in the U.S. with such labels as "Huntington Beach, California, USA," "Hawaiian Design" or "Santa Cruz."
Thanks to the new tariff category, Pillsbury managed to obtain official proof that foreign-made surfboards have been flooding into the U.S. So far this year, Thailand has exported $5.4 million worth of surfboards to the US while China has exported $4.2 million—an annual increase of 786 percent and 2,133 percent, respectively, from the previous year.
Pillsbury says he is keeping tabs on those imports in case the U.S. surf industry decides to file an anti-dumping lawsuit against Thailand or China. But Biolos doubts that'll happen.
"For the most part, the U.S. surf industry has given up," he says. "It takes a united front to get an anti-dumping suit filed. That's something we don't really have in this industry. Most companies are just importing boards now."
Part of the reason for the rise in overseas production is the huge increase in the cost of making surfboards by hand. Most of the components—foam and resin—are made from petroleum products.
"Because of the oil crunch, our raw goods have gone up 50 percent in the past year," Biolos says. "We used to pay $350 for a 55-gallon drum of resin. It's going to cost almost $1,000 by the end of the year. While our costs are skyrocketing, we're unable to raise our prices because of the competition from low-cost importers. You can't tell your retailer you have to raise the price of your boards when importers are offering boards for less than $200 and it costs us $250 to make them."
If you're a major manufacturer, you might make up for the shrinking margins by selling more boards. If you work for a major manufacturer, like Lost's grizzled board polisher Vick Goddard, you try to work faster.
"I haven't gotten a raise in three years," Goddard says. "If they can't raise the price of the boards, they can't raise the price of the labor."
"It's been notoriously tough to be a board builder in the U.S.," says Sean Smith, executive director of the San Clemente-based Surf Industry Manufacturers Association (SIMA). "It's the nature of the business that the margins on surfboards are very low. Unfortunately, as an industry, I don't think we've done a very good job of talking about the craftsmanship that goes into a board. . . . It takes an artist to make a good board."
Smith doubts that cheap Chinese boards will ever replace high-quality handmade boards. "I don't think anybody believes that hand-shaped boards are ever going to disappear," he says. "Most hardcore surfers still have hand-shaped boards."
But Smith confirms that many surfboard makers, not just Lost, are moving toward foreign-made boards themselves. "What's amazing is that the technology has gotten so good that companies are able to make high-quality boards overseas," he says. "They're not focusing on discount starter boards, but high-end equipment."
"My hat is off to Matt," adds Smith. "He's raising, not a white flag exactly, but an off-white flag—with a middle finger raised. He's thinking as a businessman and not letting everything go up in smoke, while also keeping his integrity intact."
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Tom Reese, manager of Russell'sSurfboards in Newport Beach, which specializes in hand-crafted custom boards, believes that the oil crunch and foreign competition are conspiring to make surfboard manufacturing all but profitless. "It's having a big impact on us," he says. "The profit margin is pitiful right now as far as manufacturing, especially with the cost of petroleum products. You can't afford to have a company here because of the costs."
Low-cost foreign-made boards, Reese adds, aren't helping either. "Their work force is paid pennies and it's tariff-free. . . . We have to keep up with [labor and environmental codes], and in China and Vietnam they don't have those laws. You can dump your waste in the river or whatever. We have a ton of permits to keep up with, and their factories are huge and labor costs are minimal. It's so much cheaper for them that even Matt Biolos, who is adamantly opposed to it, has no choice."