By On the occasion of our 20th anniversary
By Gustavo Arellano
By R. Scott Moxley
By Alfonso Delgado
By Courtney Hamilton
By Joel Beers
By Peter Maguire
By Charles Lam
Photo by Jeanne RiceMatt Biolos is covered in foam dust. He's spent the past hour or so massaging a foam blank with a hand sander, putting his expert's touch on a short board. He pulls off his respirator, grabs a high-pressure air hose and blasts the dust off his sunburned face and arms and from inside his T-shirt. Although he's a millionaire surfwear executive—he spends much of the year chasing waves from Spain to Indonesia—Biolos is also head shaper for the surfboard division of his company, San Clemente-based Lost Enterprises Inc.
After Santa Barbara's Channel Islands Surfboards, Lost is the second-largest surfboard manufacturer in the United States. Lost is also the last major U.S. surfboard company that doesn't use overseas workers, taking advantage of cheap labor, weak environmental laws and duty-free shipping to maximize profits. But that's about to change: next year, Biolos says, his company will introduce a new line of surfboards made in Vietnam. It's the only way he'll be able to stay competitive, he says, the only way to keep sending paychecks to his small domestic work force of hand shapers, polishers and board painters.
"All the larger name-brand boards are being made overseas and imported, and it's forcing more and more manufacturers to go overseas," Biolos says during an interview in his office, an unfinished, narrow affair with a desktop computer. Loaded with Biolos' designs, the computer runs a saw in the workshop next door.
"What is starting to fall apart is a very unique piece of culture that was invented right here in Orange County: coming into a surf shop, smelling the resin and seeing the sawdust, meeting the guy that's going to make your board."
Two years ago, Biolos decided to do something to protect that tradition. He hired an attorney to force the U.S. government to track foreign-made surfboards. At the 2004 Surf Industry Manufacturers Association (SIMA) Summit in San Jose Del Cabo, Mexico, Biolos attempted to rally a mini-revolution by denouncing U.S. surfboard manufacturers who were making their boards overseas.
"Biolos [. . .] announced that not more than 48 hours before, he and his attorney had succeeded in getting surfboards their own individual importation classification," Transworld Surf reported on July 22, 2004.
"Now we'll know how many boards will be coming into the country—not only in volume of dollars, but actual units too," Biolos told his fellow surfboard makers. "From that we can build upon and protect what we have here."
Transworld Surf reported, "The crowd responded with a vigorous round of applause."
The applause died fast. The tide of cheap Asian-made boards rose higher. To preserve his hand-shaped surfboard business, Biolos now says he had no choice but to create a new line of low-density polystyrene boards, called Placebo, which he'll import from Vietnam.
"The name is tongue-in-cheek," Biolos says, "'Placebo' being a word for 'fake.'" Instead of the extreme, skateboard-influenced artwork that's hand painted on Lost boards, the Placebo boards are almost entirely white—the only decoration a self-parodic drawing of a maniacal, robotic board shaper with a surfboard emerging factory-like from its abdomen. Biolos has several Placebo prototypes leaning against the wall, all of them made at a Taiwanese-owned factory just outside Ho Chi Minh City, Vietnam.
Instead of being shaped by hand from foam blanks made by Laguna Niguel-based Clark Foam, which owns the patent for the foam blank and holds a virtual monopoly on the market, Placebo boards are made of molded epoxy resin, PVC foam and extruded polystyrene—what you and I call plastic.
"We're losing our floor space to foreign-made boards," Biolos says. "So we've answered back with Placebo. These will be a high-end product, not a cheap Chinese knockoff. They will sell for more than our normal boards."
To find a suitable factory in Asia, Biolos hired Freddy James, who grew up in Cape Hatteras, North Carolina, where his father designed sailboarding equipment. Placebo boards, James said, have their origins in sailboard technology. James just returned from a trip to Vietnam to inspect the factory where Placebo boards will be produced.
"The materials that are used to make the molded boards produce a lot less waste than the typical polyester board built in the USA," James said, but the biggest savings to Lost will be the cost of labor. "The labor is so much cheaper because their cost of living is so much cheaper." By American standards, "the factory workers aren't getting paid very much at all, but to them it's a great living because it's so cheap for them to live over there; relative to their cost of living they make better money than most of the guys in the U.S. building boards—especially the ones building boards in California. If you look at what the guys who actually build boards in the U.S. make and the amount of work they do they should be making more money. But the surfboard market won't tolerate much more of a price increase. That is why more and more companies are looking overseas for boards."
* * *
Biolos grew up a good 50 miles from the surf, in Chino, but his dad lived on a boat in Dana Point Harbor. He started shaping surfboards for Herbie Fletcher, the San Clemente surf shop, in 1987, fresh out of high school. "I also started surfing on the side, but just half-assed," he says. Biolos signed his boards with the moniker "Lost," and soon began printing T-shirts with the same name. The shirts were the first product in what would become a major surf apparel business. By the mid-1990s, Biolos was also manufacturing surfboards in a small factory on Los Obreros Street in San Clemente.
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."
* * *
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."
One of Biolos' biggest customers is Ron Abdel, owner of Jack's Surfboards—which has stores in Huntington Beach, Newport Beach, and Corona del Mar. His shops sell only hand-shaped boards made in the U.S.
"At Jack's, we boycott the China boards," Abdel says. "Real surfers come here and want real boards. Many people come and approach me saying they have surfboards for $170. But if you sell those to the customers, they don't go anywhere in the water—those boards don't work. I see a lot of people who buy Chinese boards from Costco and want to trade them in to us, but we never take them."
But Abdel adds that selling hand-shaped surfboards is so unprofitable, it's essentially "cosmetic," a way to draw people into the store. "There's no money to make in boards," he says. "We only make $100 per board. A new longboard from Lost costs us $800 and we sell it for $110 more, but we give a commission to the kid who sells the boards. We make all our money on clothes."
Selling clothes, in fact, is what also keeps Biolos and Lost Enterprises in business. His company licensed its clothing line to Irvine-based La Jolla Sport USA Inc. five years ago. "We also license Lost Energy drinks to Hansen's, and the sales have been through the roof," Biolos says. "But the drink is mostly just marketing our name—we make most of our money from clothing."
With the exception of Lost T-shirts, which are assembled in the U.S., Biolos adds, just about all that clothing is made in Asia.
* * *
Surfers trace their roots back roughly a millennium to ancient Hawaiians who rode unwieldy 20-foot solid-wood boards. Islanders held a monopoly on the sport until the 1930s with the introduction of hollow wooden boards. The advent of plastics made boards even lighter and paved the way for Gordon Clark's 1961 founding of Clark Foam, now the largest manufacturer of foam blanks. Clark made it possible for anyone serious enough about surfing to make his own board.
With the rise of surfing's popularity in Orange County during the 1950s and 1960s, a whole generation of surfers hit the waves riding boards of their own making. "In the beginning, all the board makers were famous surfers," says Mike Bruno, an avid surfer and amateur board shaper who lives in Orange. "If you wanted a new board, you'd either make it or one of your friends would make it. All these guys knew each other and would show up at each other's surf spots all the time. People like Gordon Clark, Greg Noll, Robert August, Dale Velzy, who just passed away, and Hobie Alter—they all made their own boards."
Each surfer had his own style of riding waves, Bruno adds, which dictated the craftsmanship that went into their custom-made boards. That spirit of artisanship, Bruno says, explains why serious surfers will never buy cheap plastic boards imported from Asia. "What's missing is the relationship you form with the guy who's shaping your board," he says. "A good shaper will ask you questions about your lifestyle and what kind of wave you surf. If you surf a steep, hollow wave like at 56th Street in Newport, you need a board that will make that wave."
Bruno agrees that there's not much money to be made from shaping surfboards, regardless of whether you're a small-scale shaper or a major manufacturer. But he insists that as long as there are waves, die-hard surfers like him will still be shaping their own custom-made boards out of styrofoam. "The foam is so soft, it's easy to manipulate," he says. "When you're making a board, it's like being out there in the water waiting for a wave. You are thinking about that wave everytime you run the sandpaper across the board. You feel every inch of the board, trying to even it out, trying to feel how the water will interact with the outline. You can make sure there's a lot of pitch in the nose so you can ride a steep wave."
To Bruno, in other words, shaping surfboards is an art form—an irreplaceable human skill—that can't be replicated by computers or assembly lines. While he agrees that there's almost no money to be made from his craft, he doesn't believe cheap Chinese imports are truly hurting big companies like Lost. "Lost isn't really there to mkae surfboards, but to make money," Bruno says. "O'Neill started out making wetsuits, just like Rip Curl and Billabong—they started out with clothes and suits. For these companies, boards are an afterthought—they're making all their money on clothes."
While Biolos is the first to admit that he makes the vast majority of his profits on clothing, he insists that something crucial to his business—and to Orange County's home-grown surf industry—is being lost because of globalization and the rise of cheap Asian imports.
"Gordon Clark, the Patterson brothers and other guys who are now in their 70s and 80s invented this process here in Orange County," Biolos says. "You can still see some of these guys at the beach. We have a direct lineage to that tradition, but we have the strictest rules and the highest manufacturing costs in the world. . . . The times are changing, whether you like it or not.
"Telling the market that it's okay to manufacture in China, it's one of the final nails in the coffin."