Last year the world-renowned ski manufacturer Elan generated more than one quarter of its ski sales in the North American market. This might not seem much considering all of the skis produced by Elan, but the fact that a factory in tiny Slovenia last year generated its biggest growth in the North American markets of the US and Canada, and while also acknowledging that the US is Elan’s biggest ski market, puts this information in a different perspective.
Elan also produces sailboats, provides equipment for sports halls and manufactures high-quality and complex composites for the offshore wind power industry. We discussed the vigorousness of Elan and their plans with the company’s CEO, the American Jeffrey Tirman. Elan has its headquarters in Begunje, a town close to the Slovenian and Austrian border, and has since 2015 been owned by the financial funds VR Capital and Bank of America Merrill Lynch (BAMLI).
Elan does business with snow, sun, water and wind. How has each of these, let’s call them natural elements, promoted Elan’s business last year, generating approximately €85 million of revenue.
Based on revenue, our biggest division is the winter-sports division. Namely our ski production, which makes up almost 50 percent of sales. The 2017/2018 season was very good, as our ski sales achieved growth of almost 20 percent, or €40 million of revenue. According to the pre-season results, things also look promising for the 2018/2019 business year, when we estimate we’ll reach €45 million of revenue from ski sales. Our second most important division is the production of high-quality and complex composites for the offshore wind power industry. We produce external casings for very large wind turbines, internal structural supports for wind blades and tools for the production of blades. With composites, we are also entering the aviation and transport industries but right now I am unable to provide more details. Production of advanced composite components for offshore wind power is growing and last year generated just over €20 million of revenue and we expect roughly the same results this year, excluding potential new business that we are pursuing. We also produce sailing yachts, which should this year generate approximately €12.5 million of revenue. Our fourth division, Elan Inventa, offers technical seating solutions and equipment for sports halls, such as contractible seating systems for large, multi-purpose halls and arenas. We have supplied these seating systems for the fairgrounds in Düsseldorf and Köln, along with many other large venues. At the moment, most of Elan Inventa’s business takes place in the Scandinavian countries and in Germany, Switzerland and Austria. We have also made a few business deals in the Gulf states, and in Kazakhstan and nearby countries, to name a few. Our annual business growth is around ten percent, but it is of course hard to estimate growth with this kind of project oriented business.
How have you managed to increase the sales of skis by as much as a fifth?
Under the leadership of the ski division director, Leon Korošec, several key factors contributed to this growth, but most of all the innovation which is extremely important in the ski industry and is an area that gets a lot of attention here in Begunje. This tiny corner of Slovenia is the birthplace of many of the biggest ski innovations in the world. For example, Elan was the first company to produce carving skis and the first to make skis with an integrated binding system. Last year we managed to launch another breakthrough innovation on the market - the first ever truly functional folding touring skis, something others have unsuccessfully attempted to do for decades. It is crazy if you think about it as we cut the ski in half, then add hinges, rotating panels and so on, and out comes a ski with the same rigidity profile as a normal ski, and one which skis as well, if not better, than an uncut ski. Our folding ski has been precisely and meticulously tested with the help of several army mountain warfare and rescue units from various countries, including Italy, Austria, France, the US and Canada, and it passed every single test. I have skied using the folding skis myself and they are truly excellent.
When buying skis from Elan, you can rely on the product as we have been making skis for 75 years at the same location, the same factory here in Begunje, in the vicinity of the Slovenian and Austrian border. And that’s not all, Elan is also the last company to fully produce 100 percent of its skis in the Alps, hence remaining true to its roots. All other ski companies manufacture their skis in Romania, China, Ukraine, etc. For Elan, Begunje is the home of tradition, quality and Slovenian heritage.
Last year, we dedicated a lot time and energy towards repositioning of the Elan brand, not just with dealers but also with consumers. To put things in perspective, up until now, the ads for skis always involved a skier storming down a very steep hill, or perhaps an individual slalom skier, whereas we have put family and friends at the center of it all. Our message for the consumer - we want you to have fun when skiing on Elan skis and socializing. We want you to have a great day out on the slopes, and to be happy with your friends and family.
So, how did the last ski manufacturing company in the Alps last year manage to achieve the biggest growth in the US and Canada - across the ocean and not on its home soil - in Europe?
Although the Elan brand has been strongly established in Canada and the East Coast of the US since long ago, a significant leap was made in the spring of 2016, when we hired Jeff Mechura, who is very well respected in the American ski industry and to whom we have entrusted the development of our ski brand. Mechura opened doors for us to reach key ski dealers and buyers in the US. This all coincided with the introduction of our “Ripstick” ski, which was very well received on the West Coast of the US, where ski conditions are very different compared to those on the East Coast. In the east, there is a lot of heavy snow and ice, whereas in the West there’s more powder. And once things came together, we found the American market was quite enthusiastic about Elan.
Where can American consumers buy Elan skis?
In most mountain resorts with ski shops. However, you won’t find them just anywhere, as we do not intend to undersell our skis by any means. I will tell US consumers to be on the lookout for a new Elan ski in the upcoming season, as Elan will launch a new model in the US, the Elan “Element”. It is a ski intended for newer skiers as it is super easy to turn while providing good stability at the same time. This was achieved by a series of innovations within the body of the ski, which has several flex points for a more uniform flex when turning.
Recently, Elan has taken over the distribution company
Alpina Sport USA, a distribution company of the Slovenian manufacturer of top-class sports footwear Alpina in the North-American market.
The story is very simple. Some time ago, Elan had its own distribution company for selling skis in the US, which the previous owners shut down. Over the last several years, we have sold products intended for the American market through the company Alpina Sport USA, while our company, Elan Canada, sold Alpina products in Canada. For Elan, the acquisition of Alpina Sport USA was a logical step, since almost 70% of Alpina Sport USA revenue comes from the sale of Elan skis. The US is our biggest market for skis and we now fully control the distribution network in the US and Canadian markets.
Would Elan be interested in the acquisition of Alpina?
No. This won’t be the case as long as I am CEO at Elan. We do not manufacture cross-country ski boots, ski helmets, shoes, hiking boots, etc. We do, however, know how to make skis and we will stick with what we know and do well. We believe that we make skis better than anyone else in the world and that is what we will continue to do.
Two years ago, you were asked about the significance of the Olympic games in China in 2022 and back then you stated that by then Elan would be present in China. How many Chinese will be skiing on Elan skis in 4 years?
I hope that many will. I believe that the Chinese government plans that there will be around 300 million Chinese skiing within the next ten years and we of course want to be a part of this story. At the moment, China is not a big market for Elan, but the sales there are growing, and we expect them to grow further. In general, the Chinese lack knowledge about skis, but we expect that to change rapidly and, together with Slovenian ski instructors, we are trying to help.
We also have a very good distributor in China, so whenever a new large ski resort opens, we are present with our skis, which skiers can either rent out or buy. Chinese ski centers are usually located around 100 kilometers from large cities and towns, which is a big plus for the ski industry as that means it is easy for skiiers to get to the slopes. They also provide great ski conditions on both natural and artificial snow. China, therefore, presents a big potential market where we intend to stay. We have built good relations in China and intend to keep things that way.
Will VR Capital and Bank of America Merrill Lynch still be Elan’s owners during the Olympic games in China in 2022?
I doubt this very much. We have recently been approached by multiple external parties who have showed an interest in the acquisition of Elan. Hence, we have hired a financial advisor based in Frankfurt, Freitag & Co., to explore these expressions of interest and we expect that one or more transactions will be completed by the end of the year.
Elan manufactures skis under its own brand but also for other producers. What is the proportion?
In 2017 we manufactured roughly 360,000 pairs of skis, approximately two thirds of these under our own brand and the rest for other ski companies. This year, we expect our production to grow to approximately 400,000 pairs of skis and the ratio to remain about the same.
Back in the day there was an unwritten rule that in the summer Elan produced skis, whereas in the winter you produced boats and sailboats.
This rule is a thing of the past as today we produce skis throughout the entire year. It’s similar with sailboats, which we usually begin manufacturing in the late fall. Every customer wants their sailboat in April, but we can’t please all of them since we are limited to a maximum number of roughly eight yachts per month.
Importantly, Elan is currently in the best financial situation it’s been in the last 50 years and we’re making investments in new facilities and new technologies. Last year we spent €5 million on capex investment, and the year before €2.5 million, and we plan to spend another few million euros on investment this year. We are always assessing capacity utilization and looking for ways to smartly expand production and grow our business, always remembering that things move in cycles.
We live in the time of global warming. Does this mean that in the future skiing might become a privilege of the rich? How have you adapted to this and do you also focus on directing your innovations towards solving this question?
If your business is the production of skis and winter gear, then you’re in a similar position to farmers, since you depend on the weather. When it comes to global warming, this can significantly affect the number of days with snow cover and the less snow there is, then the fewer consumers wanting new skis there are. Although we have given this a lot of thought, I’m not sure there’s much else we can do apart from trying not to contribute towards global warming ourselves.
However, I would also like to point out another phenomenon that some scientists are talking about as it relates to climate change - with the increase of average air temperatures and melting Arctic ice, the amount of cold water coming from the Arctic towards Western Europe is also increasing, impacting ocean currents and hence the European weather. This could mean that winter weather in Europe will be even colder in the future, which could provide a long-term benefit for ski manufacturers, and for skiers as well!
Elan’s innovation last year was the folding touring ski. Where do you wish to market those?
Our folding skis have very distinct characteristics as they can be used to jump out of a helicopter, traverse demanding terrain, etc. Therefore, they are perfect for the military, mountain police, and emergency responders. The folding skis will eventually be available in stores, but since they will be quite expensive, we don’t expect a big retail market for them. However, we wish to one day produce a folding ski which will be affordable for every consumer. Imagine having a pair of skis you could put in a small regular check-in bag and hop in a cab with it. It’s what we want, but we aren’t there just yet.
The European Union prides itself on having the fastest economic growth in the last decade. How can this be capitalized on by your nautical division?
The nautical industry has been experiencing changes, in large part dictated by the growing charter industry, since an increasing number of people wish to spend their vacation on the Adriatic coast. Elan has already established strong connections with the charter industry and in the future we will strive to further build on those. We want to offer great and quality sailboats at a reasonable price, since buying a sailboat for €300,000 can be financially demanding for most. Another desire of ours is to establish a long-term business model for the nautical division, independent of the trends of economic growth.
Are your sailboats also sold in the US?
Yes. We currently sell our sailboats at 5 locations in the US, on the East and the West Coasts as well as in the vicinity of Chicago/Toronto. American sailors like spacious and comfortable sailboats. Our products were received very well, and people see Elan sailboats as elegant and modern-looking, as well as having great performance characteristics.
Since taking over Elan, you have employed an additional 200 workers. Which one of your divisions contributed the most towards the recruitment of additional staff?
The two divisions which contributed the most were ski manufacturing and advanced composites for offshore wind power.
What are your plans for 2018?
We wish our growth this year to continue and a lot will depend on realizing new business deals in the field of high-quality and complex composites. If we work well, it will pay off later in the year and even more so next year.
I have read that you have ten pairs of Elan skis. Why that many?
I am one of Elan’s biggest customers for sure. I’m not sure I own just 10 pairs, but I am an Elan ambassador and I love selling our skis. All of my friends now ski on Elan. My favorite ski to use is the Elan Ripstick 96, which is truly wonderful. I encourage every reader to try the Ripstick. It will be hard to ski on anything else afterwards.