A Look Under SIMA’s Hood

Part Two: Reengineered for better perfomance, can SIMA entice the surf industry to hitch a ride?

click here for part one.

Something is happening at the Surf Industry Manufacturers Association. In the last eighteen months, it seems more dynamic activity has occurred than in the previous decade. After ten years on cruise control, SIMA seems on the verge of transforming itself from a sedate, clubby, underpowered utility vehicle to a sleek, powerful touring bus with room for everyone.

During the last year and a half, SIMA restructured its organization, hired a professional staff and an experienced executive director, hosted a record-earning Waterman’s Ball and attendance-breaking Surf Summit, and launched a new surfboard-makers association. After they were hired, Executive Director Terry McCann and Marketing Manager Sean Smith moved swiftly to enhance communications and to produce an array of member benefits intended to put the organization into high gear.

There are certainly plenty of reasons why SIMA should have its foot on the accelerator. “The biggest challenges facing the surf world today aren’t going to come from inside the industry,” says SIMA’s Vice President Paul Naude, who’s also president of Billabong USA. “They’re going to come from outside forces, who will attempt to exploit our lifestyle, threaten our markets, and degrade our environment.” That statement, coming from one of the surf community’s most respected members, sums up SIMA’s recent impetus to hit the gas pedal.

But despite its overhauled engine, it’s unclear if the surf industry is ready to take a ride en masse with SIMA. And if the road to perdition is paved with good intentions, then the route to success must surely not be paved at all. After a two-year spurt of acceleration, the organization has arrived at the bumpy boulevard of implementation. And that’s where (to extend the analogy) the rubber meets the road.

Simply put, SIMA faces immediate and formidable challenges, ones that can’t be won in the slow lane. First, it must build a dues-paying membership from a group of brands that have been uninterested or downright skeptical of SIMA in the past. To develop real legitimacy, SIMA must convince the top 100 brands that it can provide enough services and value to warrant paying some relatively hefty dues.

Jeff Booth, a new SIMA board member representing Quiksilver, sees increasing membership as an essential goal SIMA must secure. “We have to get the industry — the whole industry — on board,” he says. “That’s why I want to help. People have to know about what’s going on and why.”

Getting membership has always been a struggle for SIMA, but then it historically offered little incentive to those who did not see the altruistic value of contributing to the community. “Now,” as McCann likes to point out, “SIMA has structure, purpose, and benefits.”

SIMA must also form a nonpartisan alliance with two newly formed groups — a retail association and a wild-card skate tribunal — that maximizes their common affiliations. Surfing America needs a renewed kick in the pants, and SIMA’s current rocky relationship with Surf Expo must be smoothed over.

As importantly, as Naude points out, SIMA must help the industry mitigate the commercial forces of mainstream corporate America trying to grab a massive piece of the fast-growing action-sports market.

But that’s not all. It needs to do all of this without upsetting the delicate balance between corporately owned trade shows, doubtful industry heads, cautious surfboard makers, independent-minded retailers, and some monster-size industry egos. It ain’t exactly gonna be a cruise on the scenic route.

Can SIMA achieve these lofty aspirations? Will the various factions be willing to work together? Will SIMA’s benefit package entice a new wave of membership? Certainly the task is daunting. But recent developments show that they’re not insurmountable.

The View In The Rearview Mirror
SIMA began tinkering under the hood two years ago, after Ocean Pacific’s Dick Baker was named president of SIMA. A veteran of the New York garment industry, with stints at Esprit and Tommy Hilfiger, Baker came to the SIMA table without baggage, providing expertise and leadership without threatening the tight band of industry insiders.

“He had made his mark on the Big Apple, but in his heart he had always remained a California boy,” says John Bernards, former president of MAGIC, an apparel-trade organization. An experienced strategist, Baker could see a better future for SIMA. He was also a people person who had a passion for the lifestyle and knew how to surround himself with a talented team.

The first thing Baker could see is that without enthusiasm from the top players in the industry, the club would remain small and slowly fade. He went out to rally the troops, and the first person he drafted was Naude, who had previously been a skeptic of SIMA. With Baker’s persuasion, Naude agreed to become involved, but with one important condition: SIMA would have to hire an experienced trade-association executive director — someone who could get a bunch of industry mavericks moving in the same direction.

Baker agreed, and the members of SIMA started an executive search to locate the rare person with such specific experience. Luckily, they found one of the most qualified people in the business. Even more fortuitous, he happened to be a dedicated surfer.

Terry McCann, the man SIMA chose for the job, has spent his entire career in the trade-association business. He started with the Supermarket Institute, which in the 1960s was the third-largest trade association in the nation. He was chief financial officer of the Lions Clubs before being named executive director of Toastmasters International, where he served for 27 years.

By the mid 70s he had become addicted to surfing and moved the Toastmasters offices nearer the beach to be able to surf every morning. He had also been elected president of the Surfrider Foundation, and served on the Olympic Committee Board Of Directors. So by the time he came to SIMA, McCann had surf roots, sports experience, and a 40-year history of trade-organization leadership.

The Mechanics Of The Trade
One of the problems SIMA faces is that few people really understand what a trade organization is supposed to do. “A trade organization like SIMA provides a number of basic services to an industry: education, training, market research, promotion, public relations, and political representation,” explains McCann. “For the most part, we don’t have to worry about lobbying or governmental politics. Larger apparel-trade organizations pretty much take care of those areas.”

So who are the other trade organizations covering the action-sports and apparel worlds, and what services do they provide to their members? The two most similar to SIMA are SIA (SnowSports Industries America) and MAGIC (Men’s Apparel Guild In California). SIA represents ski, snowboard, and mountain-sports companies. MAGIC represents the West Coast apparel industry, where the action-sports market is the fastest growing and most dynamic sector. Both provide members with a set of benefits, including significant shipping discounts, group-insurance savings, and trade-out opportunities with other associations. What benefits SIMA has not already put into place are being hotly pursued for the future. In this regard SIMA is becoming more similar to other established trade organizations.

There are some notable differences, though. Both SIA and MAGIC have been operating for more than 30 years. They have hundreds of dues-paying members. They have large staffs that handle myriad programs. But the truly significant difference is in how they’re primarily financed. Both SIA and MAGIC run their
own trade shows.

“For most trade organizations, the major source of operational income is the administration of a trade show,” says Bernards. “I can’t really think of a trade organization that doesn’t run its own show. It’s just how they do it.”

The significance of SIMA not owning its own trade show is a handicap that can’t be discounted. The control, income, and vitality that come with operating a show is immense, and it appears that for the foreseeable future, SIMA has foregone that option. But that doesn’t mean the organization is crippled.

“Look, you have to compare where we were to where we are now,” Naude contends. “We are far more in control of our destiny and far more capable of helping the entire industry today than ever before. Once the membership is pumped up and alliances are made, true progress can begin to occur.”

Dave Gilovich, the marketing VP at Surfline and a longtime SIMA board member, agrees: “We’re in the best shape the organization has ever been.”

Progress aside, getting new members with SIMA’s current resources may be a larger task than anticipated. SIA, for instance, has several-dozen staff members with locally based representatives stretching into every region of the country. “We try to really get to know the members and help them with their business,” says David Ingemie, president of SIA. “That’s how we keep growing our membership.”

Not everyone in the surf industry is a joiner, though. Take Bob Hurley, the independent-minded surf manufacturer who built the Billabong USA name and then launched his own company, Hurley International. He believes that as individuals we’re stronger than as a group. “I know that’s the opposite of how many people think,” he says. Hurley sees his autonomy as a badge of freedom: “I don’t like people speaking for me, even though 90 percent of the time we’re in agreement with the industry and support SIMA’s initiatives.”

As a nonmember, what kind of initiatives would Hurley support? “I look around at the shapers and board makers,” observes Hurley, “and they’re struggling. It seems like the guys who contribute the most to our lifestyle enjoyment have the least benefits. It would be nice if SIMA could figure out a way to get the little guys some insurance.”

Now that the deal with ASR is signed, sealed, and delivered, will SIMA use some of its increased income to reach out to industry critics and comrades alike and entice new membership? McCann bristles at the topic of income and its use: “We don’t want to get into the subject of money.”

Money, nevertheless, is a subject that can’t be ignored. In a capitalist society where everything from social status to quality of wine is based on finances, a lack of money will stifle progress and complicate consensus.

Making Room For Everybody
One of the difficulties with finding a common direction for SIMA has been the interwoven connection with other sectors like skateboarding and shoes — especially as it pertains to the trade shows.

Just take a look at SIA. A decade ago, the sedate side of the ski industry was having a hard time melding with the radical upstarts in the snowboarding aisles. Economically, snowboarding was to skiing what skateboarding is to surfing — a younger brother who suddenly seemed to have more momentum and energy than the older one.

SIA stood for “Ski Industries America,” yet the organization knew it had to solve the conflict between ski and snowboard companies and unify the two groups for the good of everyone. That required both sides to put their stereotypes aside. It meant looking for common ground without losing uniqueness. In this case, it even meant changing the trade association’s name. The SnowSports Industries America did just that.

“We had to find a way to bring the snowboard industry into our fold and make them feel represented,” says Ingemie. “We didn’t mind changing our name to do it.”

SIMA has a similar dilemma, but devised different solutions. In the action-sports world, skateboarding and the specialty-retail sector have different needs from surfing companies. McCann could see that skate-brand owners didn’t want to join an organization like SIMA that was founded and permeated by surfers. Retailers, who were also clamoring for representation, also didn’t want to be in the same camp as their surf-manufacturer trading partners. They wanted the expertise found at SIMA. They just didn’t want to be part of it.

To solve this predicament, McCann conferred with the SIMA board and then launched an independent trade-association consulting firm called Board Sports Management, which will assist with the formation and operation of several organizations without intruding on their sovereignty.

McCann has already put together a presentation to the Board Retailers Association and the still nascent skate-industry association.

“By forming an umbrella management operation, McCann is using the efficiencies of a small staff and combining this with his trade-association management expertise — which is a great way to solve many needs,” says Bob Mignogna, a Primedia VP and a founding advisor to the SIMA board. “This concept takes advantage of existing talent and structure, while giving skate {companies} and retailers their own voice and independence.”

The issue of independence is an important one. “Retailers, at least at this point in time, need to have autonomy,” says Surf City Surf Shop Owner Roy Turner, who’s the driving force behind the Board Retailers Association. “We’re very friendly with SIMA. We just have to get our own act together first and foremost.”

And not every SIMA member is completely comfortable with the launch of these associations, either. “I welcome the idea of a retailer association, but not everyone does,” says Naude. “Some feel a united retail association could pose a threat to the manufacturers. I disagree. Our relationship with shops is too symbiotic. The reality is it will give the key people in the lifestyle distribution channel more ability to compete with the chain stores.”

Potholes On The Road To Success
So what’s the strategy for SIMA? Which priority will it focus on first? While the plans and dreams are warm and fuzzy, the actual next steps have a definite edge to them.

If increasing its dues-paying membership is on top SIMA’s to-do list, then just below it is smoothing over the rift between SIMA and Surf Expo, where a series of recent misunderstandings and miscommunications nearly derailed one of SIMA’s most important strategic relationships.

After SIMA and Surf Expo were unable to reach consensus last summer about renegotiating their long-term partnership, it appears both parties are back at the table.

“We’re very interested in renegotiating our deal with SIMA so there’s more of a partnership moving forward,” says dmg World Media VP Lori Kisner. “Just like any true partnership, we’re looking for deal that’s mutually beneficial to both partners. Right now, our {current} agreement really doesn’t ask SIMA to do anything other than put its name with our show and have a hospitality suite. We’re really excited about having an agreement that will make it more of an active partner that will help us build and grow our show.”

Kisner says her primary concern is making sure any agreement won’t increase booth pricing and other exhibitor costs. When asked about the causes of any SIMA/Surf Expo rift, Kisner replies, “It’s always been my working motto to look forward and not back. I’ve always believed that a strong trade organization that can provide member benefits is absolutely critical to the health of an industry.”

Baker also seems ready to move on: “We’re totally committed to executing a new long-term arrangement with Surf Expo to take advantage of the opportuntiesto not only promote the trade show, but the industry. SIMA has worked very hard to make the two key trade s
hows our partners.”

But not everyone is particularly impressed with the deal SIMA put together with ASR. “When I read the press release, I kept searching for something definitive,” says Quiksilver Senior VP Randy Hild. “I kept asking myself, ?Where’s the teeth?'”

Once the renegotiating process with SIMA’s two trade-show partners is finally complete, kickstarting Surfing America with the proper funds and focus will be another long-term project for SIMA. Tackling the unification of amateur and professional surfing in the U.S.A. will be a titanic project on its own.

SIMA will also have to define its market research and education goals — areas that previously garnered little enthusiasm from most companies. Market research has been available from at least one long-standing industry source for a number of years, and it has met with less than overwhelming purchase activity. “We don’t know how much this type of market research will cost,” admits McCann. “We haven’t got a handle on that yet.”

Another issue that seems foremost on some board members’ minds is the threat from outside the industry. Abercombie & Fitch is opening several-hundred of its surf-styled Hollister Co. stores in the next year, directly competing with the current action-sports distribution channel of surf shops, specialty stores, Pacific Sunwear, and Zumiez-type chains.

Quiksilver CEO Bob McKnight’s keynote speech at the 2001 Surf Summit 4, since christened the “Cabo Manifesto,” identified the threat of non-authentic brands moving into the market. Since then, one of the key concerns among industry insiders is how to handle a vertical retail chain that promises to build product from similar sources and sell it well below the current prices that surf shops require to stay healthy. Many in the industry see authenticity already being stripped, damage already being done.

“The problem is, these people have never had saltwater up their nose. They don’t know the smell of wax,” says Naude. “These people have already done a hundred-million dollars’ worth of business selling action-sports lifestyle products. They have already taken market share.

“We have created a lifestyle industry that now has thousands upon thousands of people who are employed by it,” Naude continues. “The opportunity definitely exists to use our collective strength to improve the conditions for all members of the community, but to do so, everyone must check their egos at the door.”

What kinds of things can the industry do? “I don’t want to say too much at this stage,” says Naude, “because this is the meat of my keynote speech at Surf Summit 6 in Cabo.”

At the very least, it seems a strong, unified, and purposeful trade organization is far more vital to the issues at hand than it was just three years ago.

Organizations are organic and evolving by nature. But one thing seems clear: governing bodies are only as good as the people who run them. Fortunately for the surf industry, guys like Naude and the other SIMA board members just don’t have saltwater in their noses, they’ve got it in their hearts.