Protect and Serve:Never Summer wants to help specialty retailers

The demos were full of punks with attitude. At least that’s what Tracey Canaday, co-founder of Never Summer Snowboards, remembers. It was 1989 and Tracey and his brother Tim were stuck in California, attending college.

“We went to a couple of on-snow snowboard demos at Snow Summit and we thought they were a joke,” remembers Tracey. “Nobody was helpful, and there was a lot of attitude. We thought there would be an opening for a company that was a little more professional and low key.”

But the story doesn’t begin here. Like any good snowboard tale, it begins high up on Berthoud Pass in Colorado, back in the dark ages of snowboarding: 1983. Tracey and Tim, two rangy, friendly Colorado boys with callused handshakes-were about to discover snowboarding.

“A friend had a Burton Backhill, and my brother and I went up to Berthoud Pass,” says Tracey. “Well, once I tried it, I never went back to skiing. In fact, after the third day riding, we started making our own boards. We extended the tip up because we were riding much deeper powder than they have back East. Everything was also set back because the Pass is really steep and there are tight trees, so you need that control.”

The brothers named their snowboard company Swift, and between 1983 and 1986 they sold about 100 snowboards out of their Fort Collins garage. “We were the first snowboard company in Colorado,” says Tracey. “We sold them to our friends for 105 dollars. We obviously weren’t making any money, but it was fun. Everybody who tried snowboarding fell in love with it, but no one could look ahead and see that it was going to become this big.”

So, with Swift going nowhere and college calling, the Canadays packed up and headed to California. What they found was a booming-but-immature snowboard market and a concrete rat race. By 1990, they were both itching to get back to Colorado. By that time, they also had pretty specific ideas about getting back into the snowboard industry.

And so they went home. “We really wanted to do something different,” says Tracey about their nascent company. “We came up with the idea of using sintered P-tex for the sidewalls. It’s difficult to work with and it’s expensive, but it’s incredibly damage resistant and doesn’t crack when it gets cold. That was our niche.”

For the name of this new company they used a familiar inspiration. Highway 34, just east of the Canaday’s hometown of Fort Collins, becomes a sinuous highway of startling beauty as it enters the Rocky Mountains. Reaching 12,183 feet, it’s one of the highest paved roads in North America. And yet from its high point you can see, still impossibly high and far away, a greater-yet range of snow-clad mountains-the Never Summer Range.

“It wasn’t like we ever started with a lump-sum of cash and said 'This is how we’re going to make the company,'” recalls Tracey. “It was more of a garage operation. The first three years we built fewer than 400 boards.”

The Never Summer factory in 1994 was a cramped 1,200-square-foot space with one two-ton Olin ski press and 500-dollars worth of hand tools. “That was when we first got an order from Japan,” says Tracey. “It was for 550 boards and they wired us 65,000 dollars. It was amazing. We bought materials, we shipped on time, and they ordered another 300 boards that season. So that year we made 850 boards just for Japan and around 500 boards for the United States.”

The brothers expanded the factory a bit-as they would each year for the next three years-and reaped the benefits of a booming Japanese market.

The next year, the order was for 3,000 boards. “That made us number three in Stormy the major retailer in Japan at the time-right behind Sims and Burton-because of the close relationship our distributor had with the president of Stormy,” says Tracey. “Making that many boards was tough, but we didn’t waste the money and we shipped on schedule.”

By the time the Japanese market dried up, Tcey says Never Summer was hitting its stride in the United States-specifically the Rocky Mountain, Midwest, and Northeast regions. Success that Tracey says can be traced back to a simple concept: protect your distribution.

“I’m one of the few manufacturers who can go into a specialty shop and say: 'I know your numbers are down because the bigger companies can’t protect you anymore. They have to sell to everyone-including that chain store across town. But I only manufacture 7,000 snowboards worldwide, so I’m able to protect you. You tell me what territory you want and I’ll give you that territory,'” states Tracey.

For example, three years ago Tracey gave Daddy’s Board Shop an exclusive for all of Portland, Oregon with an order of eight snowboards. “That was a risk,” admits Tracey, “but the shop now sells 80 snowboards a year for me and their answering machine says 'Hello, you’ve reached Daddy’s Board Shop. We’re the largest Never Summer dealer in the Pacific Northwest.’ The owner is so excited about our brand because we chose to protect her. And we don’t oversupply, so she’s got something unique.”

This is happening not just in the Rocky Mountain region, says Tracey, but in the Midwest and the East: “I’m gaining market share within those specialty shops. The shop’s total sales may be down because of the pressure from chain stores, but now I’m number one or number two in those shops.

“If you limit your supply, you have more leverage,” continues Tracey. “Most of my accounts are C.O.D. That’s crucial, and it’s one of the reasons we wait as long as possible each summer to build snowboards. If I’m able to do 100 boards a day, I can turn that raw material into finished goods really quickly. When that happens, I don’t have to pay for the raw materials until I start getting paid from my customers.”

Because of this strategy, bad debt is low and the company is able to grow without outside investors or being controlled by a heavy-handed bank. “I’ve heard of companies that have had to write off 300,000 dollars in receivables this year,” says Tracey. “But because we’re asking for C.O.D., since 1991 I’ve had less than 10,000 dollars that I haven’t been able to collect on. It cracks me up to see these small companies willing to give 120-day terms. But I can stand tall and look my dealer in the eye and feel comfortable getting that C.O.D. I’m giving them a great product, they’re making a good margin because I don’t oversupply, and I’m protecting them.”

Production really doesn’t start until August. And while Tracey takes pride in shipping on time, he says things weren’t easy: “We have twenty snowboards in our line. In the past, we were only able to work on four models at a time. Back then, I had too many incomplete shipments. We would ship on time, but if retailers ordered twelve boards and there were twelve different models, they would get six boards one week and six boards the next-which isn’t very efficient.

“So, for us to start production late, we had to have a large enough facility to get more presses working,” he continues. “We needed to be able to work on twenty models at the same time.”

And so this year the company moved from its 8,000-foot, chunky industrial strip mall into a new 16,000-square-foot factory.

It’s a long, brick building in the industrial lowlands of Denver. You can constantly hear the hum of passing trains and the grinding gears of semi trucks. In summer, it’s sweltering. But the brothers couldn’t be happier-they finally have room to breath.

During production, which ramps up in mid July and ends in late October, Never Summer hires twenty additional workers to its full-time staff of six. The factory layout is a “U” shape with raw materials, which are stored near the office at the top of the building, being funneled down to assembly next to the five double presses along the wall. Boards are rough cut and fine-finished at the bottom of the U, before being shrink wrapped and packed for delivery back up by the raw materials.

The pre-cure fiberglass used in every Never Summer board keeps the factory much cleaner than those using wet lay-up. It’s also the prime reason why the boards are loved by so many snowboarders, says Tim, who oversees production.

“We only use layered, pre-tensioned fiberglass,” he says. “With pre-tensioned fiberglass, the glass supplier pulls all the glass fibers tight and lets it cure under tension. That gives you a lot of the spring and strength because everything is very tight and very straight lined.”

Since the fiberglass is smooth and layered-instead of woven-Never Summer can forego a topsheet altogether. The graphics are sublimated directly into the top layer of fiberglass.

“My material costs are twice as much as most of my competition,” says Tim. “I spend about 80 dollars in materials per board. But I’m willing to pay the premium price for this stuff, because my boards look different than anybody else’s and the retailers have a story to tell about them. Plus, they’re strong and they ride incredibly well.”

Not surprisingly, Tracey has specific goals for the future. He’d like to see Never Summer grow ten percent a year and eventually level off at between 15,000 and 20,000 boards-while protecting his distribution network: “I’m a firm believer in specialty shops, but they need more companies like us to protect them and to give them a good-quality product on time,” Tracey adds.

Never Summer has never built demand with high-profile team riders. “The more money I spend on a team, the less I’m going to be able to spend on a good quality work force and the materials that go into the board,” says Tracey. “I spend about 100,000 dollars a year in advertising. A lot of small companies with my volume wouldn’t be able to do that because they spend a lot on the team and other promotions. Of course, you can do certain things with team riders to get hype and momentum generated, but it’s tough for a compmay with our volume to compete with the large salaries paid in recent years.

“By no means am I getting rich,” he continues, “but I’m making enough money to buy a house, to have my truck, and to live a comfortable life. We’ve seen too many kids in their twenties running these companies who think this industry isn’t like any other industry-which is a joke. This is like any other industry where you have fast growth, a lot of money wasted, and then a shakeout.

“My brother and I are very realistic, and we have a crew right now that’s very realistic and patient. They understand that if we grow smart and we grow slow, then they’ll be able to buy homes in the future and live a comfortable life.”

With low debt and tight distribution, the brothers say they will emerge from the consolidation in good shape. “We set up the company to make money at around 6,000 boards. Once things shake out, there’s going to be fewer players going after bigger pieces of the pie, and we’re going to be one of them.”

Since day one, Never Summer has had the same ownership, same management structure, same vision. There’s never been a shake-up and the owners are out on the factory floor every day during production.

“Is there another snowboard company that can say that?” asks Tracey.packed for delivery back up by the raw materials.

The pre-cure fiberglass used in every Never Summer board keeps the factory much cleaner than those using wet lay-up. It’s also the prime reason why the boards are loved by so many snowboarders, says Tim, who oversees production.

“We only use layered, pre-tensioned fiberglass,” he says. “With pre-tensioned fiberglass, the glass supplier pulls all the glass fibers tight and lets it cure under tension. That gives you a lot of the spring and strength because everything is very tight and very straight lined.”

Since the fiberglass is smooth and layered-instead of woven-Never Summer can forego a topsheet altogether. The graphics are sublimated directly into the top layer of fiberglass.

“My material costs are twice as much as most of my competition,” says Tim. “I spend about 80 dollars in materials per board. But I’m willing to pay the premium price for this stuff, because my boards look different than anybody else’s and the retailers have a story to tell about them. Plus, they’re strong and they ride incredibly well.”

Not surprisingly, Tracey has specific goals for the future. He’d like to see Never Summer grow ten percent a year and eventually level off at between 15,000 and 20,000 boards-while protecting his distribution network: “I’m a firm believer in specialty shops, but they need more companies like us to protect them and to give them a good-quality product on time,” Tracey adds.

Never Summer has never built demand with high-profile team riders. “The more money I spend on a team, the less I’m going to be able to spend on a good quality work force and the materials that go into the board,” says Tracey. “I spend about 100,000 dollars a year in advertising. A lot of small companies with my volume wouldn’t be able to do that because they spend a lot on the team and other promotions. Of course, you can do certain things with team riders to get hype and momentum generated, but it’s tough for a compmay with our volume to compete with the large salaries paid in recent years.

“By no means am I getting rich,” he continues, “but I’m making enough money to buy a house, to have my truck, and to live a comfortable life. We’ve seen too many kids in their twenties running these companies who think this industry isn’t like any other industry-which is a joke. This is like any other industry where you have fast growth, a lot of money wasted, and then a shakeout.

“My brother and I are very realistic, and we have a crew right now that’s very realistic and patient. They understand that if we grow smart and we grow slow, then they’ll be able to buy homes in the future and live a comfortable life.”

With low debt and tight distribution, the brothers say they will emerge from the consolidation in good shape. “We set up the company to make money at around 6,000 boards. Once things shake out, there’s going to be fewer players going after bigger pieces of the pie, and we’re going to be one of them.”

Since day one, Never Summer has had the same ownership, same management structure, same vision. There’s never been a shake-up and the owners are out on the factory floor every day during production.

“Is there another snowboard company that can say that?” asks Tracey.