K2 marketing manager says sagging sales haven't sunk company's commitment to skates
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We reached Mike Powell at his office at K2 headquarters on Vashon Island, near Seattle. Vashon Island is hallowed ground for K2. It is where Bill and Don Kirschner (the two Ks of K2) were building fiberglass dog cages when Bill decided (in 1961) to make skis out of fiberglass. The skis were an international sensation and catapulted K2 to the top ranks of the world's ski makers.
The company didn't stop there. It grew and bought up other sporting goods companies. In 1988, it started making snowboards; in 1993, inline skates. The skates featured something new: a soft boot, which became the industry standard, replacing the plastic hard boot of the original Rollerblades.
Today, K2 is one of the largest sporting goods companies in the world with sales of over $1 billion a year.
Robert: So how did you get your start with K2?
Mike: I started driving a K2 van. I was called an "ambassador." I drove the van up and down the East Coast and would hit all the events, like the Philly Freedom Skate and the A2A ultra marathon. And at the events, I would give away free stuff, talk to people and skate and have about 150 demo skates for people to try.
Robert: What kind of a skater are you?
Mike: I skate aggressive style more than anything else.
Robert: What did you do after your stint as an ambassador?
Mike: I did team management, working with the X Games and Gravity Games guys. And for the past two and a half years, I've been running all the marketing for skates and managing the race and aggressive teams.
Robert: How does K2's skate division fit into the big corporate structure?
Mike: We are run by K2 Inc., which is based in Carlsbad, California. Under the K2 Inc. family of brands, there is K2 Corp., which includes K2 Skis, K2 Skates, K2 Snowboards and K2 Bike. And then there are the other companies we own, like Browning, Brass Eagle, Stern, Shakespeare fishing equipment.
Robert: What's it like working at the K2 offices on Vashon Island?
Mike: It's just a fun place to work. There aren't many cars on the island, so there's no traffic. And there are trails all over the woods. So there's lots of terrain to test the gear.
Robert: Does K2 still do its research and development on Vashon Island?
Mike: Yes. All of our engineers, except for John Svensson, who is based in Korea, are here. John is a champion inline skater and is also the Korean MVP in their inline race series. So we have an elite racer actually designing our products, which is something nobody else has. He runs research and development for the race program and for the training line [the Radicals and VOs skates].
Robert: Why is John based in Korea?
Mike: He likes to be at the factory so he can make the latest and greatest skates. ... Which is what he does. Whatever everybody thinks is hot this year, he was skating on last year.
Robert: What is his latest and greatest?
Mike: The K2 Longmount [a racing skate with four 100 mm wheels]. It has the 195 mm spacing to keep it as low to the ground as possible. It's fully heat-moldable. But people have been racing them right out of the box and calling me up and saying, "I don't even need to heat-mold them. This is the most comfortable boot I've ever put on my foot."
Robert: You mentioned that your skate factory is in Korea. Is that the only one?
Mike: We have one in China, one in Korea.
Robert: K2 used to do all its manufacturing on Vashon Island. What happened with that?
Mike: We got to the point where we found we couldn't compete if we continued to make skates at Vashon Island.
Robert: Why not?
Mike: Because of the price. ... We were the last brand to make stuff in this country. And we took great pride in that. But it got to the point where our prices were nearly twice as high as the competition. So to be competitive we had to move production overseas.
Robert: What is the benefit of that? ... Lower labor and production costs?
Robert: With the inline skating industry in a slump, what's it like at K2?
Mike: It's a scary time here for sure. We've seen sales drop for the last five years by about 15, 20 percent.
But we are doing what we can. We are still putting out quality products and still putting the same amount of money into research and development.
But it's hard to do everything we want to do. This year we weren't able to sponsor the Long Beach Inline Marathon; we weren't able to head out to the Athens and Atlanta. We can't go to as many events as we would like because of budget issues.
Robert: Have sagging sales affected K2's commitment to inline skates?
Mike: No, we haven't seen that at all. I've been worried a little bit, but management hasn't wavered in its support.
Robert: How can you tell?
Mike: They haven't cut budgets for the '06 skates [which are already in development].
Robert: What's happening with your skate sales outside of the United States?
Mike: Well, last year for Europe was comparable to 1998 in the U.S. when the bottom fell out of the market. They sold 30 or 40 percent less than their forecast.
Robert: And elsewhere?
Mike: Korea was booming at the beginning of the 2004, but sales fell off about half way through the year. That market got flooded with product, too.
Robert: What about South America?
Mike: I think we are just starting our distribution there. ... It is something that needs to be worked on.
Robert: How does K2 see the future of inline skating?
Mike: Very cautiously. Everyone in the skate department is a skater --- and very passionate about it. And we want to innovate and get new stuff on the market. But in reality the market is going to dictate what we can do, because the future is based on how much we are selling now.
There are a ton of prototypes here that no one will ever see until we have the budget to make them.
What we need is to get people out of their old hard boots with neon laces and into modern skates. ... It would make them better skaters, and it would definitely be more healthy for the industry.
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