The difficult winter sports business has recorded a major casualty. Pale, the big Austrian contract manufacturer for alpine skis and snowboards, will halt its business soon. The first of around 100 employees at its Austrian production facility in St. Stefan near the Slovenian border are to leave in September, and the factory is going to be shut down in December after production for the Winter 2008-09 season has finished.
Until then, the company will continue to make skis and snowboards to clean up its stock of raw materials. It will thus be in a position to respond to any new demand if the snow conditions end up being favorable this time.
It is likely that the company’s 45-year-old managing director, Gerhard Leopold, is shutting down the operation to avoid a possible bankruptcy, although he is now considering doing something else afterward that is not so dependent on weather conditions. The reason for his decision is that Pale has been getting big cutbacks in its orders from its numerous OEM clients in Europe and the rest of the world in the past couple of years because of the poor snow conditions. The latter have seen big drops in pre-orders from their own retail customers.
Pale’s ski factory was set up by Gerhard Leopold’s father, Paul Leopold (“Pa-Le”), in 1955. It still has a largely unutilized annual production capacity of up to 600,000 pairs of skis or a similar number of snowboards. While it has been particularly strong in the area of junior skis and snowboards, which were neglected by some major brands because of relatively low margins, Pale has the capability to make all kinds of laminated and polyurethane-injected skis and snowboards at many price levels.
No official figures are available on the company’s recent sales in terms of turnover and volume. At the peak of its fortune in the mid- and late 1990s, Pale was estimated to manufacture up to 400,000 snowboards and 300,000 pairs of skis a year. Some observers think that Pale’s business decreased since then down to a level under the critical point of profitability, estimated at some total 300,000 units, but that it is still working at a annual level of more than 200,000 units – half skis and half snowboards.
Like the recently closed or scaled-down facilities of other ski manufacturers, including majors such as Rossignol and Salomon, Pale has been a victim of the shrinking ski market rather than the competition from cheaper sources of production in the Ukraine, Bulgaria or China. While the entire business has been going down, especially in the last two years, many brands have preferred to keep their own production facilities running, instead of purchasing additional capacities from OEM manufacturers such as Pale.
Pale’s list of customers could be read like a “who’s who” of the snow sports industry. Although no names could be officially confirmed, it is probable that basically most of the well-known ski brands have had their skis produced in St. Stefan, either on a regular basis or from time to time, including brands such as Nordica, Nidecker, Fanatic, Scott, Blizzard and Kästle as well as the two big international buying groups, Intersport and Sport 2000. Only about 10 percent of sales came from Pale-branded winter hardgoods lately.