In an unprecedented move in the snowboard industry, the St. Louis, Missouri-based Heelside snowboard-boot company has bought the New York-based Momentus snowboard factory to compete in the rental-package market.
“We've been boxed out of big rental deals and we realized having a board brand would let us compete in that market,” says Heelside Marketing Director Dave Hollenbeck. “We were going to sell 300 pairs of boots to Eldora Mountain rental department this year, but they pulled it from us and went with Rossignol because of the board, boot, and binding package Rossignol could offer them.”
So a decision was made by Heelside management. “We started considering buying the factory in the summer, then toured it the factory, and rode the boards before the deal was finished,” he says.
Momentus was located in Ellicottville, New York and had produced its own brand of snowboards, Function, as well as OEM products for clients such as Type A. “We bought every asset of the factory, including all the materials and equipment,” says Heelside President Jim Ferguson. He would not disclose the price, other than saying it was a “good deal,” and noted that three of the main production staff members would continue to work at the factory.
Heelside plans to move the snowboard manufacturing equipment and employees to Hood River, Oregon in April and combine it with the company's warehouse and main offices that will be moved from St. Louis at the same time. Heelside will continue to maintain a team and marketing office in San Francisco, California.
With the move and consolidation the company expects to cut down on overhead. It will also be much closer to year-round riding and will be able to test all of its products more easily.
Of course, the deal has the company's reps' approval. According to Hollenbeck, after the reps were asked about buying the factory, they said they were confident they could sell the packages and open up more accounts. To make the deal break even, Hollenbeck believes the company only needs to sell 4,000 boards.
Packages will include the new self-produced Heelside snowboards, plus Asian-made Heelside boots and bindings. There will be rental and retail packages, but retailers will be able to sell the products separately if they choose.
In addition, there will be a rental package with Switch step-in bindings. Hollenbeck says 30 percent of Heelside's boot business is now in the step-in category and he believes that will continue to grow.
But why not outsource the boards? “We would have to add the markup on the boards and sell them for the same price as any other OEM client would,” says Hollenbeck. But with its own factory Heelside can sell at manufacturing costs instead. He says the company will be selling boards at 145 dollars, 155 dollars, and 165 dollars wholesale, as compared to an OEM client who would have to add an additional 80 dollars to the price and then offer it for 225 dollars.
According to Ferguson, the boards will have cap construction, with sintered bases, full tip-to-tail woodcores, and fully wrapped metal edges.
“The problem in the board business was that companies didn't own their own production,” says Ferguson. “They'd have to mark up the prices, then justify the markups with big marketing programs to show the retailers why the boards were more expensive.”
Of course, Hollenbeck knows the market will remain competitive. “The big companies are offering two-year dating and other things like that,” he says. “We're not going to be offering two-year datiing.”
Ferguson adds that the Heelside brand has been built around product sold at a good price, offering a good value. “We put our money into making good product and offering good customer service,” he says, “not marketing.”
Hollenbeck believes Heelside is one of the top-ten suppliers of snowboard boots in the market. He says the company sold 33,000 pairs of boots last year, grew 65 percent in that time, and is profitable. Although retailers originally took a chance with the new brand, Hollenbeck says Heelside has won over retailers by offering a 50-percent margin, delivering its product on time, and has only had less than one-percent return rate. “I think we can continue to grow,” he says.