LECTURE LINKS
LECTURE LINK 12-3
When the Supply Chain Breaks
As manufacturers try to balance inventory costs with production speed, one vendor’s demise can
completely wreck the company’s production process.
The unexpected closure of Clark Foam clearly illustrates this. Clark, a Laguna Niguel, California,
company, mass-produced foam blocks used to create customized surfboards. Gordon Clark pioneered the
technology in 1961. The foam blanks, which cost between $50 and $90, are first smoothed and shaved
with sandpaper and shavers. Painters then add color and design before the board is covered in fiberglass.
Clark enjoyed a virtual monopoly on the blocks (called “blanks”). It supplied unshaped blanks for
about 90% of all custom-made boards purchased worldwide. Before the Clark closure, custom-made
boards sold for between $300 and $800. Suddenly manufacturers were scrambling to purchase the last
supplies of the polyurethane blanks. The price for a classic longboard rose from $100 to $1,000 shortly
after Clark closed.
Clark Foam had closed because California’s Orange County Fire Authority had repeatedly reported Clark Foam to other government agencies, including the EPA, which cited the company for its continued use of the toxic chemical toluene diisocyanate, which can cause severe and chronic lung problems.
Clark finally shut down the facility of his own volition, rather than face the legal fallout, according to a memo circulated by Clark at the time he closed. The media attention on Clark’s closure focused
light on this and other environmental problems associated with the production of surfboards, such as the
use of polyester-based resins, which are harmful to the worker and emit noxious fumes. Most of the industry, long silent on the fact that manufacturing a surfboard is a dirty process, was poised for change.
A handful of small U.S. companies also produced foam, but not in great enough quantities to fill
the gap. Australian manufacturers of foam blanks turned out just enough to meet Australian demand and
had little to sell overseas.
In the weeks following Clark’s closure, board builders scrambled to find the remaining Clark
blanks. They were even available on eBay. Bidding for blanks went as high as $50,000. Scraps of Clark
Foam were even being sold as pieces of history, starting at $1.
Before the closure, Clark had churned out about 1,000 blanks a day. Gradually smaller producers
like JustFoam in San Clemente began to ramp up production. JustFoam was able to increase daily production from 24 to 350.
A handful of small companies had already been working, some for up to twenty years, on cleaner
surfboard-making technologies that would cost the same as the dirtier ones. But they couldn’t find a hole
in Clark’s monopoly to successfully introduce a product. Among the contenders was Homeblown U.S., an
independently-owned six-employee foam producer that had developed a foam production system that was
similar to Clark’s but was safer to workers because it didn’t emit volatile fumes.
Homeblown had started in Britain in the late 1980s and held a 50% share of the market for blanks
there. But Clark had such a dominant position in the market that it wasn’t practical for Homeblown to
open in the U.S. until the Clark factory closed.
Today, Homeblown has gained a toehold in the U.S. market, though it still produces only 75 to
100 foam blanks a day, compared to Clark’s 1,000 a day production. It is ramping up its efforts to bring
more sustainable surfboards into the market. The end of Clark’s monopoly in surfboard blanks has paved
the way for cleaner ways of making surfboards, with independent businesses taking the lead.i
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Sources: The Associated Press, The Clarion-Ledger, December 10, 2005; Robert Whitfield, “Clark Foam Surfboard Blanks on eBay,” The Orange County Register, December 15, 2005; Nancy Luna, “Former Clark Foam Employees Say They’ve Formed a New Foam-Making Factory,” The Orange County Register, March 4, 2005; and
Nancy Luna, “Buyers Flood Clark Foam Auction,” The Orange County Register, March 9, 2006.
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MANAGEMENT: A REAL WORLD APPROACH: Instructor’s Resource Manual