12140 Community Road
Aldila, the number one graphite shaft manufacturer among consumers and on professional tour worldwide, supplies leading manufacturers, distributors and custom clubmakers throughout the world with high quality graphite shafts for golfers of all abilities.
Aldila Inc. has been one of the world's leading producer of graphite composite golf club shafts since the early 1970s. It manufactures hundreds of different shaft models, many of them custom-designed for specific golf club manufacturers. Aldila's customers, which include industry leaders such as Callaway, Taylor Made, Ping, and Titleist. Since 1994, Aldila has itself produced much of the graphite prepreg used in the manufacture of its shafts. Since 1998, the company has operated a facility in Evanston, Wyoming, that produces carbon fiber, one of the raw materials the company utilizes in its shafts. Although much of the carbon fiber the firm makes is used in the manufacture of its own products, Aldila also sells some of it to third parties. Aldila participates in a joint venture with SGL Carbon Group to produce carbon fiber. Calloway Golf president Richard C. Helmstetter once described Aldila as one of the graphite shaft industry's "very first and true innovators."
Aldila was founded in 1972 by Jim Flood, a man who has been called the Thomas Edison of modern golf. In addition to the graphite golf shaft, Flood also invented the Basakwerd putter, the Power Pod, Slinger Irons, and an automatic head maker for woods. Flood was already working with golf equipment as an eighth grader working at the Cherry Hills Country Club near Denver, Colorado, where he performed minor repair work on clubs that members had damaged. By 1960, he had begun working as an investment broker, but his interest in golf remained unabated. Eventually he moved to San Diego, where a friend happened to describe graphite composite, a light, strong, flexible metal used to make the wings of the F-111 fighter plane. Flood's interest was piqued--his first thought was that the material would probably make excellent golf club shafts. It would produce a shaft that was much lighter than the steel ones that were used almost universally. He obtained some graphite samples and began tinkering with ideas for a new golf club, using fishing rods, glue, and his daughter's hair drier. Flood has no training in engineering, and when he formed his new company to introduce his first graphite shaft in April 1972, none of his employees did either. Products were designed relying on trial and error.
The new company, Aldila Inc., took its name from an Italian song of the 1960s that translated roughly as "far beyond." At first the firm was little more than a workshop, ringing up about $36,000 in sales during its first year of operations. The turning point came when Flood set up an Aldila booth at a golf trade show in Florida. Working his booth by himself, he there spoke with a Japanese man who said he wanted to buy gold club shafts. How many, Flood asked? Ten thousand, the Japanese man replied. The large order forced Aldila to grow quickly. Within a few weeks the number of employees grew from 15 to 150, while the company's production space had to be boosted from 1,500 square feet to 30,000, and not much later to 60,000. Its annual sales soon jumped to $12.5 million.
New Owners and Hard Times
Jim Flood was interested in creating innovative golf equipment, not in managing a multi-million dollar business, and in 1975 he sold Aldila to John Moler and John Hine, Sr. During the late 1970s and 1980s the company experienced difficulty making its product profitable. The new graphite shafts had a tendency to break when striking the ball, and their design thus had to be improved. There was resistance from professional players to graphite shafts for a number of years as well, which in turn slowed their acceptance among the mass-market for golf equipment. Another hindrance to widespread popularity of graphite clubs was their hefty price tag in the early years. In 1988, Aldila was sold again, this time to two Chicago investors, Gary Barbera and Vince Gorguze, a takeover specialist who had already acquired a number of small to mid-sized companies.
In the late 1980s, metal woods caught on among golfers, a trend that marked another turning point for the firm. Metal heads were heavier than traditional wood heads, which meant a lighter shaft was needed. Graphite shafts fit the bill. Manufactured using eight to sixteen sheets of a hybrid comprised of graphite polymers, plastics, epoxy, and rare elements like boron, the sheets wrapped around a metal core and were then oven-treated. The resulting shafts were much lighter than traditional steel-shafted clubs. As a result, golfers could swing the clubs faster, and the extra speed was transmitted to the ball, which consequently traveled a greater distance. By that time, graphite shaft technology had reached a stage of development where professional players were willing to use them. By the end of the 1980s, Aldila's credibility was further boosted by endorsements it received from golf pros Payne Stewart and Nancy Lopez. In the first six months of 1988, Aldila had sales of almost $4 million. So attractive were the properties of graphite that Aldila hoped to introduce other products that utilized it, such as baseball bats and bicycle frames. Another decade would pass before the first of those products would materialize.
By 1991, Aldila's annual sales had climbed to more than $40 million. Although sales of golf equipment were beginning to slump nationwide, Aldila's workforce of 500, up from 200 in 1988, was producing at full capacity. The firm had over 2,400 customers, which included many of the most famous golf club manufacturers, including Taylor Made, Karsten, Wilson, Spalding, and Callaway Golf, the maker of the Big Bertha driver. As the 1990s began, the company had claimed over 50 percent of the graphite shaft market in the United States.
Public Offering and Expanded Operations
Aldila was sold for a third time in January 1992 to DJ-Forstmann Little & Co., the nation's second largest leveraged buyout firm. Based in New York City, Forstmann, which owned a portfolio of companies such as sports card maker Topps, General Instrument (a manufacturer of high tech equipment), and Gulfstream Aerospace, paid $83.1 million for the company and left the old management team in place. In April 1993, Forstmann announced that Aldila would make an initial public offering of 2.3 million shares. Forstmann would continue to hold about 59.1 percent of Aldila's outstanding shares and the management team approximately 11.5 percent. The proceeds from the offering were to be used to pay off much of the $31 million bank debt Forstmann incurred when it bought Aldila. Analysts at the time saw Aldila as a standout offering at a time when many less than desirable companies were going public. The only question mark was Aldila's large accounts receivable, which had grown from $171,000 in 1992 to $3.27 million in 1993.
The stock was first offered on the NASDAQ in June 1993 with an opening price of $14 a share. Within the first two days of trading, the company's share price rose 52 percent to $21.25, and by mid-September it reached $31.50. So bullish was Aldila's stock that, in January 1993, the company's board of directors approved a two-for-one stock split. Aldila's sales rose in 1993 as well, reaching $62.6 million, an increase of 31 percent from the previous year. As the 1994 fiscal year got under way, Aldila was predicting a year of 20 percent growth. In 1994, Aldila started manufacturing the sheets of graphite for its shaft production rather than purchasing them from on outside vendor. The firm, which by then was using nearly four percent of the world's carbon fiber, also hoped to be able to create other products that used this material. As part of the plan, the company began shopping around in Utah and Wyoming for a site to build a facility to produce the carbon fiber it needed for its shaft production.
Golf Industry Slump of the Mid-1990s
The company's fortunes took a downturn in July 1994. The price of Aldila stock began to drop when rumors began making the rounds that Callaway Golf Co., the maker of the popular Big Bertha driver and a company that purchased nearly all of its graphite shafts from Aldila, was going to start buying a significant number of its shafts from other manufacturers. Callaway denied the rumors, saying it expected Aldila to remain its biggest supplier of shafts. However, six months later, in January 1995, Callaway formally announced it was sharply cutting its orders from Aldila, a move that sent Aldila's stock into a plunge that saw its value cut in half, from $10 to $5 in a single day. In July the firm made up some of its lost ground when it signed a three-year contract to produce 80,000 shafts a month for Taylor Made Golf's Burner Bubble metalwoods. Aldila's sales suffered nonetheless in 1995, dropping to $56.5 million from $79.8 million in 1994. Sales recovered slightly in 1996, rising to $58.4 million.
In May 1996, Aldila finalized a deal to purchase G. Loomis Products, a Woodland, Washington-based company, for an undisclosed amount. Loomis, the top maker of graphite shafts for irons used by players on the Professional Golf Association tour (Aldila was the number one maker of graphite shafts for woods on the tour), also made fishing rods, fishing rod blanks, and other tubular structures. The acquisition came because Aldila was looking to expand its technology base. Purchasing Loomis presented an opportunity to do that without the time and cost of developing it in-house. In May 1997, Aldila announced that Evanston, Wyoming, would be the site of its new 50,000-square-foot manufacturing plant, which would employ about forty workers. Production of carbon fiber began in early 1998.
Aldila sales dropped again in 1997 to $55.7 million. In response to the decline, the Aldila board of Directors passed a plan in November 1997 to close the company's operations and
By 1999 the golf industry was beginning to pull out of a slump that had plagued it since the mid-1990s. Aldila's sales, however, continued to decline in 1999, dropping by over 25 percent, from $62.5 million in 1998 to $45.1 million. In 2000, however, the firm was buoyed, posting $55.9 in sales. That same year, the company had a record 46 percent increase in golf club shaft shipments, and in the first quarter of 2001 it managed to nearly double its earnings from the same quarter of the previous year. Moreover, Aldila finally began to diversify its product line, producing hockey sticks in 2000. Still, challenges ensued in 2001, with sales again falling, to $39.6 million. Despite a less than attractive financial showing, the company, now debt free, remained optimistic and proud in particular of its product line, including the new Aldila ONE shaft.
Principal Subsidiaries: Carbon Fiber Technology LLC.
Principal Competitors: Royal Precision Inc.; True Temper Sports; Toray Industries, Inc.