Tragedy Strikes The Golf Ball Industry
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Today At A Glance:
Launch Technology produces 20% of the global golf ball supply. They experienced a tragic fire at their facility two weeks ago. Today’s newsletter details the events and the impact on the golf ball industry.
Read Time: 4 minutes.
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Hey Golfers —
A fire and subsequent explosions broke out in a Taiwain factory a couple of weeks ago, resulting in nine people losing their lives. The fire happened at Launch Technology Co Ltd — a golf ball manufacturer.
Launch Technology was founded in 2006 — and is a public company listed on the Taipei Stock Exchange under code 8420. The company is a major player in the golf industry — with over 600 employees and $100 million in revenue.
The events at Launch Technology are tragic — I do not want to minimize them. Human lives are more important than golf balls.
Launch Technology manufactured 260 million golf balls last year — 20% of the global supply. Sales have skyrocketed for the company since 2018 — more than doubling in size.
2018 — $46,700,595
2019 — $56,352,051
2020 — $49,502,630
2021 — $81,259,035
2022 — $112,081,428
Launch Technology is trading at a market cap of over $100 million — reaching as high as $175 million earlier this year.
According to the Associated Press — Launch Technology manufactured golf balls for several companies.
Callaway
Mizuno
Bridgestone
TaylorMade
The AP pulled the list from the 2021 annual report from Launch Technology. As of a month ago — the customer list may have looked different. We know that Callaway worked with Launch Technology — they released a statement after the fire.
And MyGolfSpy reported that Launch Technology made the ERC Soft, SuperSoft, and Topgolf balls for Callaway. MyGolfSpy also reported that Launch Technology manufactured golf balls for direct-to-consumer golf brands.
Seed
Odin
OnCore
Penfold
Around 80% of Launch Technology's products were sold to companies in the United States.
The Golf Ball market is enormous — over 1 billion golf balls are sold yearly. Titleist had golf ball sales of $675 million in 2022. While Callaway had golf ball sales of $235 million in 2021. The two companies alone make up nearly $1 billion in revenue.
Callaway has spent tens of millions on manufacturing facilities for its golf balls. And has invested over $50 million in its Chicopee, Massachusetts location. Because of the investment — Callaway has become the second-largest golf ball provider in the world. Callaway’s market share has tripled since 2013.
Callaway spends over $50 million annually on research and development. They also state their golf ball manufacturing is flexible to provide better supply.
Smaller companies like Seed don’t have that same luxury. Seed CEO was quoted in a Golf Digest piece saying, “The only supply we have is in current inventory and what is on the water being shipped.”
The fire will undoubtedly have an impact on the golf ball supply chain. It appears that Launch Technology only has one manufacturing location — reports expect that it will take up to a year to rebuild the facility.
And for golf companies that don’t have a flexible supply chain — it isn’t as easy as making a phone call to another golf ball manufacturer. Seed CEO stated it would take six months to re-establish a supply chain elsewhere. It is a time-intensive process involving tooling and dimple patterns.
Callaway’s stock price has struggled this year — down 31%. And since the fire at Launch Technology — it is down 5%.
Callaway will make it through the supply chain disruption. However, the smaller, direct-to-consumer companies that rely heavily on Launch Technology will be significantly impacted. Not to mention — Launch Technology employs over 600 people, and now they aren’t working.
The fire is under investigation. Taiwan officials have fined Launch Technology $75,000 for storing 3,000 tons of organic peroxides on site — only 100 tons are permitted by law. Organic peroxides are supposed to be stored in a separate warehouse, and Launch Technology was storing them on the first floor of its facility.
Have yourself a great Monday. Talk to you next week!
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