Wipeout? The Gold Coast and Tweed surfboard manufacturing cluster and local economic development

Methods

The first step in this research involved establishing a comprehensive spatial database of Gold Coast surfing manufacturers. This was also used to recruit participants for a questionnaire and a follow-up semi-structured interview. The second step was to describe the spatial and temporal development and operations of the agglomeration, focusing on individual manufacturers’ production methods, labour inputs and formal and informal interactions with each other. In order to understand the agglomeration’s historical context, a number of meetings were held with prominent surfing industry representatives. Discussions were also held with local government planners, economic development officers and other key informants. Essentially, these individuals formed an expert panel for the research and provided advice, inter alia, on questionnaire development. All phases of the field research were approved by the University of New England’s Human Research Ethics Committee.

To address the third facet of the project, interviews were held with 19 active owner/manager participants in the Gold Coast/Tweed surfboard and ancillary manufacturing industries. This sample represents approximately 15% of the surfboard and ancillary manufacturers within the region. The respondents were purposively selected to ensure that all parts of the surfing commodity chain were covered, including shapers, contractors, retailers, materials suppliers and wetsuit manufacturers. All 19 had considerable industry experience, having spent an average 27 years in surfboard manufacturing. Each interview was recorded and transcribed, with responses tabulated in a Microsoft Excel spreadsheet.

Over the last decade, surfboard manufacturing has undergone radical change. New technology has been applied not only to board and componentry fabrication and production, with increased local outsourcing, but also large scale vertical integration in Asian countries such as Thailand, China and Indonesia. However, the material inputs have essentially remained the same since the early 1960s when polyurethane foam replaced wood. After foam blanks are manufactured in a specialised factory, they are delivered to a surfboard workshop. Shaped to precise specifications by manual planing (or a shaping machine) and sanding, each foam board is fitted with decals and laminated with a single layer of fibre glass cloth. The cloth is then saturated with resin (called the hot/fill coat) to ensure the foam is waterproof. For about 40% of custom-made boards, a second ‘gloss’ coat is added for additional strength and aesthetic appeal. After the resin has set, the board is given a final light sand and polish. Fins are fixed during the laminating/glassing stage or the plugs for interchangeable fins can be fitted after glassing. Boards may also be sprayed with vivid artwork (Jennar, 2007; Warshaw, 2004). Some material inputs have changed in recent years, such as the use of extruded polystyrene foam (XPS) and epoxy resin and since the mid-1990s interchangeable fins have developed into an increasingly diverse sub-industry (Figure 1). OPEN IN VIEWER

The Gold Coast/Tweed surfboard manufacturing industry agglomeration is contained within a narrow 20 km long corridor that runs along the NSW/Queensland coast from Mermaid Beach in the north to Tweed Heads South in the south (Figure 2). Research revealed 109 surfboard manufacturers (red dots), including several laminating factories, three fin manufacturers (green dots), three foam blanks suppliers (dark blue dots), three wetsuit manufacturers (yellow dots), two surfboard shaping machine manufacturers (light blue dots) and nine other firms (pink dots), including materials suppliers, makers of decals, surfboard storage racks and manufacturers of accessories such as wax, grip/traction systems and repair kits. Our measure of the region’s surfboard manufacturers excludes the large number of independent contractors working from factory to factory within the cluster. OPEN IN VIEWER

The first purpose-built Gold Coast surfboard factory opened in January 1962 when Joe Larkin moved from Sydney’s Northern Beaches to commence production in a rented garage in Miles Street, Kirra (Figure 3). Beforehand, Gold Coast surfers had to either make their own boards, often in backyard tool sheds, or purchase a ‘stock’ board from Mal Sutherland, the local distributor for Sydney-based manufacturer Dillon Surfboards (Figure 4). The market consisted chiefly of local and Brisbane-based surfers and interstate tourists, supplemented by referrals from surfboard-hiring licensees. Business promotion entailed simply surfing well, chatting with other surfers and subsequent word of mouth. At this early stage, ‘capital deepening’ in the sector was hampered by a lack of scale economies – itself reflective of the small local market and the concomitantly strong ‘D-I-Y’ board presence – and a dearth of suitable local production facilities. For many manufacturers, renting a private garage around Kirra was the only option. Over time, planning laws forced the relocation of these operators to the industrial areas (Bartholomew, 1992; Bartholomew and Baker, 1996; Doherty, 2004). OPEN IN VIEWER

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Figure 4.

Scott Dillon promoting his surfboards on the Gold Coast.

The agglomeration’s subsequent evolution is related to three key factors. First and foremost is the cluster’s proximity to a close grouping of globally famous, high quality Gold Coast point breaks ¹ and Duranbah beach (blue text in Figure 5). Between 2002 and 2010, the board manufacturing cluster intensified in the region’s south. The concentration paralleled the evolution of a new high quality surf break known as ‘the Superbank’, produced ‘accidentally’ from sand pumping operations occurring at the nearby Tweed River bar. Surf journalist Nick Carroll explained the unexpected impact of the Superbank:

The Superbank … has attracted huge numbers of surf tourists to the Goldie; it's provided the key boardmakers with a near captive market. … It's also helped promote a focus on high performance equipment among the Goldie cluster which keeps it distinct from most other board building environments. (N Carroll, personal communication, 28 April 2011)

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Figure 5.

Network of functional linkages involving Gold Coast/Tweed surfboard manufacturing cluster. Source: Gold Coast/Tweed surf manufacturing survey, 2011.

Second, and consistent with conventional location theory, manufacturers have also been lured in by the growing consumer market (i.e. surfers) and key suppliers (see Figure 5). It was initially hypothesised that surfboard manufacturers had originally chosen to locate around the suppliers of foam blanks (Fitzgerald, 1992; J Larkin, personal communication, 23 March 2011; McTavish, 2009). Figure 5 seems to support this initial hypothesis, with a blanks supplier centrally located within the three main clusters of Burleigh Heads, Currumbin and Tweed Heads South. However, the reverse is true. The Gold Coast’s largest blank manufacturer, Burford, relocated from Adelaide during the mid-1960s to be closer to the rapidly emerging surf market. Burford did not provide the initial impetus for the cluster but subsequently became a key attractant for board manufacturers and other upstream and downstream businesses. Third, planning laws in combination with the availability of relatively cheap, appropriately zoned land have seen manufacturers locate predominantly around Tweed Heads, Coolangatta, Burleigh and Currumbin, though some have located along the Gold Coast Highway where dual retail and manufacturing businesses are permitted.

Non-local events have also influenced the cluster’s development. In December 2005, US surfboard blank fabricator, Clark Foam, suddenly ceased its operations at the height of global surfboard production; an event referred to in the surfboard industry as ‘Blank Monday’. ‘Blowing blanks’ is a dark art (Finnegan, 2006), with the most successful formulae and production methods kept as closely guarded secrets. Further adding to the mystery, foam blank producers are scarce, their number limited by the toxicity of the chemicals used in the manufacturing process, the concomitant difficulty in finding suitably located and zoned land and high establishment costs (see Warren and Gibson, 2014). Prior to ‘Blank Monday’, Clark Foam, owned by industry figure, Gordon ‘Grubby’ Clark, was the largest supplier of foam blanks in the world, accounting for 50% of global production (Finnegan, 2006).

Clark Foam supplied only a relatively small proportion of the Australian market (c. 20–25%). However, the abruptness of the closure created widespread panic and a substantial void in the efficient supply of quality blanks. This was a gap that Australian blank and surfboard manufacturers ably filled. Additionally, the closure of Clark Foam facilitated the development of more environmentally-sound materials (hemp cloth, for example) and production methods (Delson, 2006; Finnegan, 2006; Holmes, 2009; N Carroll, personal communication, 2 May 2011).

For the remainder of this paper, we explore the current state of the Gold Coast/Tweed surf manufacturing cluster in relation to four of the key elements of ‘new industrial districts’ as suggested by the relevant literature: producers’ focus on quality, artisanal-style production methods; the sector’s twin commitment to craft skills maintenance and innovation; the famed ‘industrial atmosphere’; and a preference for informal, non-hierarchical producer organization.

Production methods

Approximately 85% of respondents were located within the Gold Coast/Tweed surf manufacturing district (see Table 2). However, only 20% grew up locally, an unsurprisingly low figure given the region’s history of rapid population growth. Most located within the region for a combination of lifestyle, family and business reasons. Relocation within the Gold Coast/Tweed region was predominantly motivated by perceived superior business opportunities, including ready demand for their product, a desire to be within close proximity of high quality surf and an attractive lifestyle (see Figure 6).

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Table 2.

Career and business history.

Length of time respondent has worked…	Average (years)	Range (years)
In current business	14	2–31
In surf manufacturing industry	27	5–54
At current address	11	1–37
Within Gold Coast/ Tweed surfboard manufacturing cluster	24	5–42

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Figure 6.

Benefits of location in Gold Coast/Tweed surfboard manufacturing cluster.

All respondents were experienced and passionate surfers, and all noted that their involvement in the industry afforded the opportunity to continue that lifestyle while making an income. A background in trades, particularly carpentry, was common. Most respondents advised that the desire to pursue a more creative, challenging and rewarding pursuit than their trade had formerly allowed led them into surfboard manufacturing. The Gold Coast/Tweed district was seen as home to similarly innovative and creative colleagues and a flexible work schedule that revolved around surfing when conditions were good and working at any time of the day or night in order to catch up. Such is the ‘pro-am’ nature of the local sector: what had begun as a passionate hobby has for some been converted into a profession based around the creation of quality surfboards and componentry.

Befitting the artisanal nature of much of the sector, most careers began in surfboard repairs and/or shaping for themselves and friends at home, progressing in skill until they were employed by others or opened their own business. Others started doing basic work in surfboard factories, working their way up through various stages of production mostly with the goal of shaping and designing surfboards. Industry training is ad-hoc with no formal skills recognition or classification, accredited formal training systems or apprenticeship scheme.

Production statistics for the local cluster are shrouded in secrecy and uncertainty. According to respondents, global surfboard production was estimated at 740,000 (the mean of all estimates). This figure compares with blanks manufacturer Burford’s estimate of 600,000 and surf writer Matt Warshaw’s estimate in 2009 of ‘roughly 400,000’ (Warshaw, 2010). In 2008, it was reported that the Cobra factory in Thailand (the largest in the world) was producing 200,000 epoxy-moulded surfboards and 70,000 polyurethane surfboards per year (Curtain, 2008). Respondents generally agreed that the Gold Coast/Tweed surfboard manufacturing district produced at least 50% of all surfboards in Australia, underscoring the regional cluster’s importance to the Australian surf scene.

Craft skills maintenance and innovation

Larger manufacturers tend to employ staff on a permanent but piece-rate basis. By comparison smaller manufacturers rely upon contractors and casual staff. Piece-rate employment conditions are popular, and reflect the industry’s high level of workday flexibility and, partly, its inherent volatility. Demand for boards and, hence, labour fluctuates wildly due to seasonality. Domestic surfing participation naturally peaks in summer and, thus, winter is a slow season according to most respondents.

As might be expected in such a small-scale, ‘flexible’ industry, staff turnover is high. According to respondents, most workers remained with a single employer for fewer than 5 years. For many contractors, piece rates have remained unchanged since 1990. Consequently, many ‘job-hop’ between workshops in order to make a reasonable income, or have left the sector for more reliable employment elsewhere, including the construction and mining industries (see Warren, 2014). Several respondents noted that this tendency is more prevalent in Western Australia where mining employment is more readily accessible.

As a consequence of the declining regional economy and industry conditions, over half of all respondents reported that their staff levels had decreased over the previous three years. Nevertheless, one-third reported that their employee numbers had remained stable. The average age of employees has increased with few young staff entering the industry, particularly in the small- to medium-sized factories. There is an increasing trend to use foreign labour, particularly from Japan and Brazil. Some respondents reported that foreign workers displayed a better work ethic and appeared more enthusiastic to work in the industry. It was common for those workers, upon gaining sufficient skills and knowledge from the Gold Coast/Tweed surf manufacturing cluster, to return to their country of origin and experience considerable career success. However, the process involved in hiring skilled foreign labour has proven prohibitively expensive, confusing and time consuming for many of the smaller local manufacturers.

Automation and precision technology are also increasingly making their mark on the sector. The emergence of computer numerical control (CNC) shaping machines in recent years has reduced the workload, time and inaccuracies of full hand shaping (see also Warren and Gibson, 2014). The introduction of such machines is a contentious issue within the industry. Machine shaping is often cited as being a soulless intrusion into a strongly artisanal craft production sector; one which removes the uniqueness of each board and sterilises the process, thus removing the errors or ‘accidents of history’ which foster design innovation. Conversely, it has also been argued that less time ‘mowing foam’ in the shaping bay leaves more time for creative design and knowledge-based innovation. Moreover, reduced manual work and chemical exposure reduces the physical and health toll on workers. Regardless, shaping machines are now widely used in the cluster, 75% of respondents in this study reported using CNC shaping machines in their own plants or using others’ machines for a fee, then fine tuning the shape to exact specifications by hand.

Further, respondents believed that outsourcing of production was increasing. Almost half reported some degree of outsourcing, mostly via the use of shaping machines. Almost 40% reported some degree of international outsourcing with five manufacturers producing boards in foreign countries for Australian and international markets. This is a recent and emerging strategy undertaken to manage the impact of the high Australian dollar, high local production costs and to exploit more efficient and extensive shipping routes, particularly from Asia. Furthermore, there is an increase in international production of local brands under licence in foreign countries. Some are shipped back for sale in Australia while others are distributed globally.

‘Industrial atmosphere’

A key ingredient to the success of the Gold Coast/Tweed surfboard manufacturing district is its ‘industrial atmosphere’. Surfing and surf culture have come to thoroughly permeate the region and are part of its raison d’être. However, aspects of this local ‘industrial atmosphere’ have begun to change. Surfboard manufacturing is no longer perceived as favourably by younger surfers as it once was when shaper-idolising ‘grommets’ would hang around factories after school and on weekends. Whereas surfboard making was once perceived as an attractive lifestyle, defined by its creativity, flexibility, relaxed environment, ample surfing and cultural iconic status, it is increasingly viewed by younger people as financially insecure, precarious, physically demanding and dirty work. The lack of a formal apprenticeship, accreditation scheme or government skills recognition further overshadows this career path, particularly when contrasted with established and recognized trades and careers.

All respondents stated that there was little to no formal collaboration or sharing of ideas between firms. However, as in Motorsport Valley, informal knowledge transfer within the cluster was rife but subject to inter-regional ‘spillover’ (cf. Henry and Pinch, 2000). Production knowledge was primarily transferred by the sharing of workers – understandable given the high rate of contract employment and staff turnover – and various suppliers. Other methods of ‘intelligence gathering’ included gossip in the surf, beach car park, pubs and parties, innuendo and the ‘rumour mill’. From a manufacturer’s perspective the high level of staff movement is a double-edged sword: it not only ensures the rapid transmission of knowledge from firm to firm, facilitating the spread of innovation to willing adopters, but also produces ongoing expenses for staff re-training and loss of intellectual property. From a worker/contractor’s perspective, their embodied craft knowledge and skills, accumulated from working a number of boardmakers, are highly desired and portable attributes that provide these ‘flexible’ workers with a modicum of protection in a sector characterized by insecure employment and relatively low pay.

For over a third of respondents, the Gold Coast/Tweed surfing industrial district is conducive to high quality design and manufacturing, using leading edge techniques, due largely to the sheer spatial proximity of competitors and input suppliers (see Figure 6). Ready access to Burford Reinforced Plastics (at Currumbin), a firm which many respondents regarded as producing the best foam blanks in the world, was given as a key advantage. This close proximity, together with the high standard of surfing and the large numbers of professional surfers in the region, produces a harmonious, virtuous set of conditions for economic development (Myrdal, 1957). Moreover, the agreeable climate, warm water, good quality surf and well-developed surfing culture strongly contribute to brand recognition and reputation for quality surfboard design and production. Some manufacturers sponsored local and international pro-surfers as a key part of their global marketing strategy. There was also an acknowledgment of the ready supply of customers and low cost of living relative to Sydney. Gold Coast-based international apparel and componentry company, Billabong, must also be credited with stimulating the region’s surfing culture and economic development via surfing event and pro-surfer sponsorship, as has Rip Curl in Victoria’s Surf Coast region.

While a number of respondents claimed there were few if any negative aspects (see Figure 7), it is ironic that the cluster’s main positive feature (the highly competitive environment), was also perceived as its main drawback. Participants cited ‘excessive competition’ as the main negative aspect of firm location. This issue was closely followed by ‘unsustainable/low margins’ – of which a considerable cause is intense competition. It was posited that this low margin climate created conservatism in design; undermining the ‘industrial atmosphere’ by stifling innovation and creativity due to risk aversion which materialised in the production of surfboards that sold quickly without discounting. Consequently, the Gold Coast/Tweed surf industrial district was seen to be at risk of retreating from a centre of innovation to a centre of refinement, dedicated to the larger scale production of outside innovations. OPEN IN VIEWER

The underlying competition provided by ‘backyard manufacturers’ was identified by respondents as another ongoing problem. An unknown number of these operators exist because they rarely advertise, work out of unregistered business premises and trade on cash-only terms. Predominantly found in residential or basic factory premises, they allegedly flout environmental, OH&S and local authority compliance laws, thus enabling production at lower prices (often 20–30% less than the legitimate market). Respondents lamented that material suppliers charge the same price to backyarders as they do to manufacturers who could order hundreds or thousands of products per year, entrenching the low barriers of entry to the industry. However, the presence of these ‘backyarders’ was thought to have decreased in recent years due to an increase in the availability, diversity and demand for established brands and designs (N Carroll 2011, personal communication, 3 May), and an inability to compete with cheap imported surfboards, the retail price of which is typically less than the cost of production in Australia (Holmes, 2009; McAloon, 2008). Ironically, many respondents acknowledged starting their own careers as backyarders.

In spite of these concerns about low cost market entry and price under-cutting, retailing difficulties were mentioned by only 7% of respondents. Problems included the lack of appropriately zoned small retail sites along prominently exposed routes such as the Gold Coast Highway. Some suggested that retailing would be a preferable land use along this route, offering better planning outcomes than residential land uses.

A preference for informal organisation

The predominant ‘cottage industry’ character of the Australian surfboard manufacturing sector can be attributed to a number of factors. To begin with, low profit margins have hampered any collective investment in research, development and training. In addition, many manufacturers’ own rejection of mainstream cultural values has engendered an essentially individualistic entrepreneurialism and an inward-looking approach to business improvement. The lack of a coordinated, well-funded and active peak industry organisation is both an outcome of the previous two factors and a further potential weakness. In such an artisanal setting, it is perhaps not surprising that a high proportion of respondents felt that the industry needed to take greater responsibility for itself, principally via manufacturers’ active participation in the Australian Surf Craft Industry Association (ASCIA). The ASCIA was formed in late 2010 in response to the recommendations of the AEC Group research report for the Gold Coast City Council but disbanded in 2013 due to a lack of support from manufacturers and general disagreement over what role the Association should play in advancing the industry.

Respondents felt that more government input was needed, particularly in relation to the need for a formal skills classification system, incorporating awards and training. At a local level, there was a call for planning and development input into such areas as workplace regulation, particularly backyard manufacturing operations. At the same time, many manufacturers eschewed Council intrusion into established premises since they feared a growing regulatory burden would increase costs and diminish already thin margins. Furthermore, the previous two years had seen a rise in itinerant vendors selling large volumes of cheap imported surfboards on roadsides, in public parks and council halls in contravention of local planning laws (see Figure 8). One respondent was advised by an itinerant vendor that he had 1500 surfboards in a container in Brisbane which he was gradually selling in this manner. Some retailers were now stocking imported Asian manufactured surfboards, reporting better margins even at cheaper prices. OPEN IN VIEWER

The future

Looking to the future, most respondents believed that the cluster would shrink as participants relocated to more profitable, lifestyle-oriented locations. Some indicated that Bali (Indonesia) was the likely site of the next surfboard manufacturing cluster due to: its high quality surf; lower overheads; existing and rapidly developing (Australian) surf industry, including manufacturers, retailers, pro surfers and media; large customer base from travelling international surfers; limited development compliance; ready supply of cheaper and increasingly skilled labour; and access to more efficient global distribution routes. The Gold Coast/Tweed surf industrial district, on the other hand, was thought likely to be negatively affected by increased outsourcing, encroaching residential development and likely skills shortages as the domestic workforce ages or relocates without being fed at the entry level by young workers.

Clearly, the high Australian dollar, mounting local production costs and difficulties and Australia’s remoteness are having a deleterious effect upon this industry, as they are on the broader Australian manufacturing industry (Warren and Gibson, 2014). Respondents with trade-exposed businesses have reported production losses of 25–33% since the $AUD exceeded $US 0.80 from June 2009. Retailers reported lower spending by international tourists due to the higher exchange rate but an increase in sales of second hand boards, which have also become cheaper. The high Australian dollar also made imported Asian-produced surfboards even cheaper and hence retailers were more likely to stock imports than locally made products due to the resultant higher margins. Local manufacturers with international factories increased profits by using $US and those that imported raw materials also benefited for the same reason. Conversely, one respondent who only serviced the local market reported that the high $AUD had boosted turnover this year due to the spike in surfers travelling overseas and ordering new locally-made boards to take with them.

Overall, the most significant issue affecting respondents’ businesses was poor business turnover and narrow margins. These factors were produced by a combination of intense competition, cheap imports, declining exports and the ongoing depressed domestic economic conditions (Bita, 2011) triggered by the Global Financial Crisis and felt strongly in the Gold Coast/Tweed region due to its narrow economic base. Furthermore, the 2010/2011 summer, dominated by a La Niña weather pattern, caused a decrease in tourism and surfing participation, resulting in lower sales. This setback was exacerbated by out-migration from the region for superior job opportunities elsewhere. Most respondents agreed that current global production had led to an oversupply, with cheap, mostly inferior, quality surfboards flooding the novice to intermediate surfer market. Many had been dumped on local markets at or below cost and were being sold by itinerant vendors (Figure 8).