Taylor Made Golf Co.

views updated

Taylor Made Golf Co.

2271 Cosmos Court
Carlsbad, California 92009
U.S.A.
(760) 931-1991
Fax: (760) 931-0950
Web site: http://www.taylormadegolf.com

Wholly Owned Subsidiary of Adidas-Salomon Group
Incorporated: 1979 as Taylor Made Golf Co.
Employees: 585
Sales: $550 million (1997 est.)
SICs: 3949 Sporting and Athletic Goods, Not Elsewhere Classified

The second largest manufacturer of golf clubs in the United States, Taylor Made Golf Co. designs and markets a complete line of clubs for men, women, and children, as well as golf accessories and golf bags. Taylor Made scored its initial success with its first product, metal drivers, which debuted in 1979 and subsequently dominated the golf market. With its focus on research and development and aggressive marketing, the company grew to be the second largest U.S. golf manufacturer by the mid-1990s, a ranking attained because of the popularity of its Burner Bubble drivers, introduced in 1995. In 1997 Adidas AG acquired Salomon, Taylor Made’s parent company, thereby creating Adidas-Salomon Group. Taylor Made was organized as a wholly owned subsidiary of Adidas-Salomon Group. Headquartered in Carlsbad, California, Taylor Made had operations in Japan, Great Britain, New Zealand, and Canada.

Origins of an Innovator

Taylor Made was founded by an entrepreneur named Gary Adams, who spent as much time as he could playing golf. His entrepreneurial creation was predicated on his greatest passion, a company with foundation that rested on a singular innovation that became a golf industry standard. That product, the Taylor Made Metalwood, changed the face of golfing across the globe. During the seven centuries of golf’s recorded history, the game that originated in the Scottish Highlands underwent comparatively few technological changes. The only equipment used to play the game—balls and clubs—remained technologically the same for generations, and sometimes for centuries, before a new type of ball or a new type of club gained widespread use. From the era of the Crusades to the dawn of industrialized society in the 19th century, the advancements in golf equipment were few and far between. In golfs modern era, when the number of golfers in the world rose exponentially and a new class of golfer—the professional—competed for multimillion-dollar purses, the speed at which technological change occurred became decidedly swifter. Golf had evolved into big business, with manufacturers vying for control of a market that was becoming increasingly lucrative. Although the financial incentive for developing a superior product was large, its size made it no easier to obtain. Golf was a difficult game to master and a difficult game for which to make technological improvements. Many innovations failed miserably after their market introduction, but for those few advancements that won over customers and met the approval of the professional ranks, the rewards were lasting and significant. Taylor Made was one of the handful of manufacturers able to carve a place for itself in the golf industry with an innovative product that earned the confidence of golfers worldwide. The credit for the innovation fell to the company’s creator, Gary Adams.

Roughly a decade before Adams began his fateful experimentation, a surlyn-covered, two-piece golf ball made its debut on the market. The two-piece golf balls traveled farther than any ball in the history of the sport, making it an instant necessity for any serious golfer. Two-piece golf balls quickly became the ball of choice for the golfing public and for professionals alike, offering the one advantage that translated into success in the golf equipment industry: distance. Increasing distance was the objective Adams was pursuing when he began tinkering in the late 1970s with different materials for making golf clubs. Using the superior two-piece golf balls, Adams discovered the balls traveled a greater distance when struck with a club made out of metal than with the traditional persimmon and laminated wood clubs used universally. The essence of his pioneering work completed, Adams designed the first Premium Metalwood driver and formed a company to manufacture and market his creation, the Taylor Made Golf Co., which started in McHenry, Illinois in 1979.

The patented, stainless steel Taylor Made Metalwood clubs were first presented to the public at the Professional Golf Association’s (PGA) Merchandise Show in 1979. Not surprisingly, buyers at the show examined the new clubs warily. Technological change in the golf industry occurred at a glacial speed and, consequently, skeptics were not hard to find. For those who tried the odd-looking clubs made by an unknown start-up company, the reaction was positive, but for Adams to make his fledgling company a success he knew he needed to convince a particular type of golfer that metal drivers were superior to conventional clubs. In the golfing world, professionals were the ruling class, the arbitrators of success or failure for all manufacturers. Less skilled golfers looked up to professionals, noted the equipment they used and, more often than not, based their purchasing decisions on the brands chosen by professional players. Tournament victories recorded by a particular player using a particular brand of equipment were the heart of marketing in the golf industry. Put a manufacturer’s product in the hands of a winner and that manufacturer gained a significant advantage over other competitors. Adams realized this fact and made it his primary objective from the start of Taylor Made’s existence.

In his company’s inaugural year, Adams convinced 47 professionals competing in the 1979 PGA Club Professional Championship to play with Taylor Made’s metal clubs. Skeptics who eyed the clubs distrustfully at the PGA’s trade show were quick to change their perspective, as the Taylor Made brand and its unique metal clubs achieved their first step toward legitimacy among golfing aficionados in the United States. By the end of 1980 the company’s sales were beginning their rise, fueled by the exposure Taylor Made Metalwoods were receiving on the national professional circuit. Three years later anxiety stemming from whether metal clubs would ever catch on as a widespread phenomenon within the golf industry was no longer a concern. By 1983 Taylor Made Metalwoods prevailed on the national tour, where an average of 60 Taylor Made clubs were in play each week and, consequently, were highly popular items in pro shops and retail outlets across the country. Metal, from this juncture forward, was the preferred material used in manufacturing golf clubs. Adams’s pioneering work had taken hold.

Mid-1980s: Legitimacy and New Owners

As would be expected, once the golfing public had shown their preference for metal clubs other manufacturers were quick to follow Taylor Made’s lead. Other manufacturers began marketing their own brands of metal clubs, as the new industry standard dictated the direction of the market. Concurrently, Taylor Made, the industry maverick and holder of a sizable lead in the new metal market, was a coveted company drawing the attention of would-be suitors interested in sharing in the company’s success. A corporate marriage, mutually beneficial to both parties, occurred shortly after Taylor Made made metal clubs the industry norm. In 1984 the French ski equipment manufacturer Salomon S.A. acquired Taylor Made, organizing the company as one of its numerous wholly owned subsidiaries.

For Salomon, the acquisition gave it a promising entry into the golf market, and for Taylor Made, the benefits resulting from its inclusion under Salomon’s formidable corporate umbrella were chiefly financial. A giant in the ski industry, Salomon had deep financial pockets, possessing far greater financial resources than Taylor Made could ever hope to draw from as an independent company operating in its fifth year of business. Further, Salomon had a legacy of innovation based on a commitment to research and development that Taylor Made would need as it attempted to build on its initial success with its patented metal clubs. For Taylor Made, its union with Salomon was more than a marriage of convenience; it bordered on a marriage of necessity. Other, more experienced, and more financially well-equipped golf manufacturers had sniffed the prevailing winds of consumer demand. Taylor Made would need the support of a much larger ally to maintain its lead in the metal club market and develop additional innovations to drive its progress in later years.

Although Taylor Made’s metal clubs looked to be the market winner at the time of the Salomon acquisition, the company still had several important hurdles to clear before it could rightly claim to be one of the elite golf club manufacturers in the country. Those obstacles were surmounted during the mid-1980s when the company’s signature metal clubs were used to record important victories on the professional tour. In 1984 a Taylor Made Metalwood driver was used to win one of golfs major tournaments, the 1984 PGA Championship. The following year the company’s market position was bolstered considerably by a string of victories registered by players using Taylor Made clubs, including the Canadian Open, the Honda Classic, and the Panasonic Las Vegas Invitational.

As these important victories were being tallied on the links, Taylor Made prepared for the years ahead by introducing a new line of products and consolidating its manufacturing operations. The company’s new Burner and Burner Plus drivers ranked as the most popular clubs used on the PGA circuit by the mid-1980s and a new line of putters constructed with heel-and-toe weighting debuted in 1985, the same year the company migrated west. Headquartered in Illinois, where Adams had founded the company, Taylor Made also operated a manufacturing facility in Carlsbad, California, the epicenter of golf club production in the United States. In 1985 the company closed its Illinois offices and consolidated them with the production plant in Carlsbad, where the largest producers of golf clubs in the United States were located. Two years after the move, construction of a new 90,000-square-foot production plant in Carlsbad was completed, giving the company the manufacturing capacity to meet the steady demand for its golf clubs.

Company Perspectives:

We love to make golf clubs. This is a Taylor Made belief shared by all our employees. The reason we love to make golf clubs is that our values revolve around innovation, caring and being balanced. We love product innovation and the search for building better drivers, fairway woods, irons and putters. Innovation is respected and valued by not only R&D and marketing, but by all our employees. Golf is a continual quest for improvement, for that one perfect round. At Taylor Made we have that same quest for improvement and perfection in all our clubs.

Explosive 1990s Growth

The early and mid-1980s brought Taylor Made to the fore in the golf industry, with its innovative and highly popular clubs driving the company’s transformation from small upstart into a formidable competitor underpinned by strong brand recognition. The bustle of activity that described the company’s progress during the first half of 1980 tapered off somewhat during the latter half of the decade. Taylor Made fed off the momentum built up from its pioneering introduction of metal golf clubs, yet lacked the energetic surge in business that would have been sparked by the development of a new, eye-catching line of clubs. It was not until the mid-1990s that Taylor Made executives could point to a new line of clubs capable of generating the same amount of enthusiasm as its Premium Metal wood and Burner brands. When the company introduced its new Burner Bubble driver in the mid-1990s, with its innovative shaft that enabled golfers to swing faster without extra effort, industry pundits projected a boost to Taylor Made’s business, particularly after a Burner Bubble prototype became the first Metalwood to win at the Masters Tournament in Augusta, Georgia.

As the company geared itself for the debut of the new Burner Bubble clubs to the public in 1995, expectations were high that the new line would inject new life into the company. The company’s vice-president of marketing and its future leader, George Montgomery, conceded that Taylor Made “has been stagnant for about three years” and was intent on creating as big a marketing stir as he could with Burner Bubble drivers. Montgomery, who prior to joining Taylor Made in the early 1990s had helped Seattle’s K2 Corp. become the leading ski brand in the United States, made plans for what the company described as the largest budget “ever allocated for golf club launch.” An unprecedented $18 million was set aside for advertising and marketing support, 50 percent more than the company’s total marketing budget in 1994 and twice the amount it spent in 1993. When the Burner Bubble clubs were introduced amid a dense flurry of print and television advertising, the results were encouraging, with 500,000 clubs sold during the first eight months of availability and the company’s pre-launch goals having been exceeded. For the year, domestic sales soared 90 percent, while international sales surged 50 percent, giving the company an estimated $220 million in total sales for 1995. Montgomery was pleased. “I’m recommending a $30 million budget,” he declared in response to Taylor Made’s marketing plans for 1996.

By 1996 Montgomery found himself in a position that added considerably more influence to his recommendations. In May, Charles Yash, Taylor Made’s chief executive officer and president, left the company unexpectedly to help form Callaway Golf Ball Co. Yash’s defection into a major competitor’s ranks (Callaway Golf Company ranked as the largest U.S. golf manufacturer) cleared the way for Montgomery’s ascension to Taylor Made’s top two executive posts. Montgomery inherited a company that he had helped transform into an industry leader. When he joined the company, it ranked as the sixth largest U.S. golf manufacturer. By the time he stood atop Taylor Made’s worldwide operations, the company ranked as the second largest U.S. golf manufacturer, larger than Cobra Golf Inc. and trailing only Callaway Golf.

In early 1997 Taylor Made announced plans to consolidate its operations in Carlsbad and to expand production capacity significantly, as it moved to narrow the gap separating it from Callaway and distance itself from encroachment by Cobra. Included in the expansion project were a 206,000-square-foot main building, a 4,250-square-foot test engineering laboratory, and a six-acre club-testing range that would enable the company to produce more than four million golf clubs a year, nearly twice the capacity of its three existing plants in Carlsbad. Slated to be concluded at the start of 1998, construction began in March 1997. Midway through the expansion, Taylor Made received news of a deal that augured well for its future plans. In September, Salomon agreed to sell controlling interest in Taylor Made and its other sports equipment companies to global giant Adidas AG, a move that both those within and outside Taylor Made viewed as a positive development for the Carlsbad golf manufacturer. Again, Montgomery was pleased by what he saw. “This is a tremendous move for Taylor Made,” he told reporters, “giving us access to the resources of the number two company in the world in sports clothing and shoes. Joining the Adidas family undoubtedly will help Taylor Made as we continue our aggressive growth plans.”

Once the $ 1.53 billion deal was concluded, Taylor Made had a new parent company, a worldwide sports conglomerate that called itself Adidas-Solomon Group. To this new parent, Taylor Made had impressive results to report at the end of 1997. The company’s retail market share in metalwoods in the United States was up 25 percent, its irons market share was up nearly 30 percent, putter sales had more than tripled, and Taylor Made’s golf bag sales had doubled. In nearly every facet of the company’s business, growth was rampant, instilling Taylor Made executives with confidence that the future held considerable promise. As the company moved into its new facilities early in 1998, it announced plans to introduce the golf industry’s first line of golf clubs designed expressly for children. With the doors open to this potentially lucrative market niche, Taylor Made braced itself for the beginning of the 21st century and the continuation of its steady rise within the U.S. golf industry.