****PLEASE NOTE THAT THIS ANALYSIS IS FROM MIKE EID, PRESIDENT OF CLASSIC PRODUCTS. MIKE AND CLASSIC, AS STATED BELOW HAVE VERY CLOSE RELATIONSHIPS WITH THE MANUFACTURES AND OTHERS TO HELP US HAVE A BETTER IDEA OF WHAT TO EXPECT AS THIS UNRAVELS. THANKS TO MIKE AND CLASSIC FOR THE INSIGHTS****
Hello, we at Classic continue to closely monitor the consequences of the Brunswick/Ebonite deal. From our position between you and the manufacturers we have made some observations that we feel you may find informative. The following is our attempt to share what we know. There is a lot of uncertainty in our industry. There is concern regarding what the near future holds for those of us who are invested in the manufacturing, distributing, selling, buying, and using of bowling balls.
We at Classic are not necessarily concerned but we are uncertain and curious. We do have access to some insights that might be of value to you as you work your way through this transition period. We don’t hold any position of significance in the process, but we do know what is going on in our own company and we do have close contacts with those who are actively managing this new era. So I would like to share with you the facts I know and a few humble projections – all in the interest of giving you as much information as I can that might help you through this period.
Make no mistake, this hit almost every Brunswick employee as a complete shock. I mean morning of the announcement shock. Since then the management team at Brunswick has been scrambling to define the mission of managing the transition (people, brands, models, production equipment, patents, licenses, contracts, secret formulas and processes, new supplier relationships, and so much more). But here is the thing – they are on it.
They are working long hours, with sleepless nights, on a project they had no idea on November 14 they were going to be a part of. They have already interviewed, negotiated with, and hired several key people (very good people), with more to come. Their staff is working with ex-EBI people (that is still hard to put into words) to understand what made the popular EBI products unique and special.
B. Ebonite Bowling International Brands
Here is what know:
In announcing the acquisition Corey Dykstra, Brunswick’s CEO, said that Brunswick would keep all four EBI brands active. He said bowlers who have purchased EBI brand balls in the past can expect to still be able to do so, in the price ranges they are accustomed to. I am positive this will happen.
How long will they keep the seven brands as we know them today? Not sure, but I am sure they intend to make a run at fully supporting all seven.
C. Production/Availability of Product
This is troubling. The good news is sales have been fantastic since November 15 as shops have rushed to grab Purple Hammers, V2’s, Black Widow Pinks and Black/Golds, and Phaze III’s.
But now what? On November 15 EBI had roughly 80,000 balls in their warehouse. Since then they have been selling these off. Pretty much all of the distributors have bought what they could, but because of the unusual situation (the warehouse is only going to be open through December 20, at which point all but a couple of EBI staff will be left – and their job will be to sell equipment, the building, and the property). Because of this and other stipulations of the closing of EBI all balls ordered by distributors had to be paid for in advance.
Ordinarily we all manage our cash flow through this time cleanly but suddenly having to come up with the cash to buy a share of the last 80,000 EBI brand balls that will ever be produced in Kentucky presented a challenge. It would appear everyone managed to find some cash in the corners of their emergency mattresses because as of today these balls are all sold.
The concern is many of the balls purchased out of that 80,000 ball inventory are already in shops, or drilled and on the lanes. And there will be no more for a while.
The estimates that sound the most reasonable are:
Brunswick intends to start shipping balls for all four brands late in February or early March. The plan is for there to be high performance balls in these offerings; however, they will not be of the typical EBI technology. They will have all new cores and cover stock that Brunswick leaders feel will represent the EBI brands well.
The uniquely EBI technology that Brunswick purchased (dual cores, special cover stocks, multi-density, special finishes, etc.) will only be released once the Brunswick technicians (including the ex-EBI people they will be working with) feel they have perfected the processes. This will be later in 2020, maybe not until after Bowl Expo, or possibly the fall.
Brunswick management very well understands that all eyes will be on the quality of those first balls shipped – their focus on quality will be intense.
Meanwhile Storm scheduled a year end shutdown for preventive maintenance on their equipment as well as an expansion of their production facility. The shutdown will occur December 20 and not return to production until January 6. They have worked diligently to schedule production of the hottest moving balls in the Storm and Roto Grip product lines prior to this shutdown. They may have a few sku’s that are low in inventory, but they are adding a second shift in January to accommodate the anticipated demand of their products.
So here is what this all means – at a point when the demand for bowling balls is at its peak, inventories in general will have been driven down by the holiday crush and the unnatural demand created by the closing of the EBI Kentucky facility. And inventories of almost all the most popular balls will have been depleted by the end of 2019, some already – with no production scheduled before mid-January (Storm) and late February/early March (EBI).
Brunswick has taken steps to address this beyond their push to get their newly acquired Ebonite/Columbia/ Hammer/Track production up and running. Thursday, December 12 they announced a change in their new product release schedules – instead of splitting the releases across January and February they moved DV8 releases into January along with their Brunswick and Radical releases so they will be releasing all balls in January – 7 different balls in total.
Motiv and Global are also obviously doing all they can to ramp up production to meet the increase in demand they are expecting – but there is only so much they can do given their production was already heavy and they were as surprised by this development as the rest of us.
Working through this is going to take a lot of planning by all of us. There are a lot of balls in the system that may not have been so popular a month ago but now, well, it may be time to take a closer look at what is available and consider carefully how you make these very well designed and manufactured balls work for your bowlers.
D. What is going to happen to the EBI brands?
Everyone is wondering this. Many are speculating. Some seem sure. This is my thought – don’t bet against Brunswick or this team. And whatever you do don’t encourage negative expectations. I tell our people all the time we need to understand our role in the industry. As a distributor we must understand we are essentially an extension of each manufacturer’s marketing, advertising, selling, warehousing, and distribution operations. Our job is to take these well designed and made products and warehouse them is such a way that the shops have what they want, when they want it.
Obviously without a strong, successful customer base Classic is nothing. But also, without the manufacturer’s designers, physicists, chemists, engineers, production, and quality control people we would have nothing to sell. We need our manufacturers/partners to be successful. And so do you. And this is a critical time for all of us. Storm is fantastic. Motiv does great things in their niche. Global has shown significant progress as they grow their market share. But they are not enough – here is what I know for fact – since November 15 EBI and Brunswick have combined to make up the following market share at Classic:
1. High End Balls = 41%
2. Upper Mid-Range = 53%
3. Mid-Range = 38%
4. Lower Mid-Range = 45%
5. Polyesters = 91%
That is a lot of what we sell to you that you sell to bowlers. This acquisition and the eventual success or failure of their mission isn’t about just Brunswick, it is about Brunswick, its distributors, and pro shops. And I think it is important that we think of it that way. We need to do all we can to support their mission. It is our mission too, and we should support them and encourage their success just as we would a major project going on in our own businesses.
I am comfortable calling for this for a few very good reasons:
1. I think a lot of the Brunswick staff. They have experience and intelligence that will serve them well.
2. I really like the people they have recruited from EBI, and I know there will be more to come.
3. The group that owns Brunswick clearly has the resources to pursue such a venture and, of equal importance, the confidence in the Brunswick management team to take this step. Investment groups like this don’t throw good money after bad, and I believe they wouldn’t have made this acquisition if they didn’t have a very deep commitment to providing that team the resources they need to make this a success, which will benefit all of us who depend on the Brunswick and EBI brands to fuel our businesses.
E. Other odds and ends:
1. Warranties: All EBI brand warranties will be honored by Brunswick.
2. Reward Programs: All EBI brand reward programs will be reimbursed by Brunswick through the end of the year transactions. They are busy reviewing each and working on programs for 2020.
3. Why isn’t Brunswick saying more?
They will, but they are swamped. Their focus is on identifying all the issues that they need to address – remember, they found out only a few hours before you did that their entire lives had been made tremendously more complicated. They have every intention of communicating in depth regarding their plans for the project – but they want to be sure to have solid information to share. They are making great progress but committing to plans and dates would be premature just yet.
Well, there it is. A view from 5,000 feet that I hope offers information and thoughts ( I acknowledge, unsolicited) that you will find of some benefit. At Classic we will do everything we can to help navigate through this period of change and uncertainty. I am confident all of this can be for the betterment of all of us – I hope you agree.
Classic Products Corp.