Acushnet Company Business Information, Profile, and History

Company Perspectives:

Titleist is committed to satisfy golfers with golf products of superior performance and quality. The Titleist culture will be one of challenging up and supporting down. Recognizing that the ultimate competitive advantage is an environment that utilizes and develops the creative energies of all associates, our objective will be to develop goal directed work teams empowered to anticipate and respond to changing consumer/market conditions. Destiny is not a matter of chance. Destiny is a matter of choice.

History of Acushnet Company

A subsidiary of Fortune Brands Inc., Achusnet Company is devoted to producing golfing equipment and accessories. The Fairhaven, Massachusetts-based company boasts three of the most important brands in the industry: Titleist, Foot-Joy, and Cobra. Titleist produces the top selling golf ball, a favorite of touring professionals for several decades, but the logo also adorns other golf products, including clubs, gloves, bags, and accessories. Foot-Joy is best known for golf shoes and also markets dress and athletic shoes as well as golf gloves and accessories. Cobra's focus is golf clubs, but it too makes accessories. In addition to eight manufacturing, sales, and distribution centers located in the United States, Acushnet also operates facilities in countries across the world, including England, France, Germany, South Africa, Japan, and the Peoples Republic of China.

1910 Origins

Acushnet was founded in 1910 by a graduate of the Massachusetts Institute of Technology, Phillip W. "Skipper" Young, along with two college friends. Their partnership was called Peabody, Young & Weeks but subsequently became known as Acushnet Processing Company, named after the town in which they set up shop, Acushnet, Massachusetts. Although the company soon moved to New Bedford, Massachusetts, it retained the Acushnet name. Its original focus was on rubber, taking advantage of a process Young developed to reconstitute rubber waste and scraps into a workable material. Acushnet developed a steady business with the major Akron, Ohio, rubber companies, which sent them their rubber scraps to be processed. By the end of World War I, in 1918, Acushnet was the world's largest supplier of reclaimed uncured rubber. However, with the dramatic drop in rubber prices in the early 1920s, falling from more than $3 per pound to just three cents per pound, Acushnet was forced to shift its focus. The company began to produce a number of molded rubber products, including bathing shoes and caps, toy boats, and hot water bottles. Acushnet became involved in the golfing business because of Young's fondness for, and frustration with, the game. According to company lore, he was so dismayed by the inaccuracy of his golf shots one day that he decided to x-ray some golf balls to see if the cores were properly centered. He found that most were well off the mark and prone to erratic shots. As a result, he decided to develop a better golf ball.

The first golf balls, dating as far back as the 15th century, were made of wood, either from elm or beech. Although durable, they were far from aerodynamic and could travel only around 100 yards. Next came leather spheres filled with cow's hair. The first major breakthrough in the evolution of the golf ball was the "feathery," introduced in 1618. Inside its leather sphere, painted white for better visibility, were goose feathers. The ball was packed while wet, so that upon drying it would become tight and firm and capable of being driven twice as far as a wooden ball. This process was labor intensive and thus resulted in a product that was expensive beyond the reach of average people. Next came the Gutta Percha ball, developed by Reverend Adam Paterson of St. Andrews, Scotland. It was made from rubber, the name referring to the gutta percha gum used as a raw material. The gutta percha ball could be mass produced, making golf more affordable, but it also had a tendency to break into pieces while in flight. Then, in 1898, Coburn Haskell introduced a more durable golf ball, one that had a solid rubber core around which was wrapped rubber thread that was then enclosed in a gutta percha covering. By the early 1900s, the Haskell ball became the standard in golf. As Skipper Young discovered, however, the balls were not precisely manufactured.

Introducing the Titleist in the 1930s

After introducing the x-ray machine to golfing technology, in 1930 Young patented a machine that could wind rubber string around a rubber core in a uniform manner, which led to the development of a "dead center" golf ball that he named Titleist. To demonstrate the effectiveness of his new ball, Young also developed the first mechanical golf swing machine, a two-headed affair that with its consistent stroke was able to show that there was only a minor variance among individual Titleist balls. As a result of this foray into the golf ball business, Acushnet split into two divisions, one devoted entirely to golf and the other to the company's remaining rubber products. An important decision made early on was to limit the sale of Titleist golf balls to golf course pro shops, thus attaining a higher margin.

With the advent of World War II, Acushnet shelved its golf business for several years, instead devoting its resources to the production of molded gas masks, for which the company became the Allies' sole supplier, as well as an oxygen mask developed in conjunction with Harvard Medical School and important war materials such as torpedo gaskets and o-rings. With the end of the war in 1945, Acushnet returned to making golf balls and other consumer products. In 1948, the company introduced what it called "dynamite thread," which along with other refinements resulted in increased yardage. A major milestone was reached the following year when Titleist became the most played ball at the prestigious U.S. Open tournament.

In the 20 years following World War II, Acushnet's golf division grew alongside the popularity of the sport. During this span, the number of golf courses more than doubled, from 4,000 to 8,700, and the number of people who played 15 or more rounds of golf each year expanded from 2.5 million to 8.5 million. The amount of money spent on golf equipment increased from around $60 million to $150 million, one-third of which was spent on golf balls. Acushnet took steps to maintain its leadership in golf ball technology by launching a research and development team that studied golf ball aerodynamics. The company also moved beyond golf balls when in 1962 it acquired John Reuter Jr., Inc., maker of the popular Bulls Eye putter. In 1969, Acushnet added other golf clubs as well as golf bags to its product line by acquiring Golfcraft Inc. It was also during this period, in 1968, that the company changed its name from Acushnet Process Company to Acushnet Company, Inc. While the rubber and golf divisions accounted for an equal share of the company's revenues of $45 million, the golf business proved to be more profitable.

Acushnet became involved in golf carts in 1975 by acquiring Shelford Group of England. A year later, Acushnet was itself acquired, bought by American Brands, Inc., a company that was initially involved in the tobacco industry but in time added other consumer products, such as Sunshine Biscuits and James B. Beam Distilling Co. (American Brands took the name Fortune Brands Inc. in 1997.) As a subsidiary of American Brands, Acushnet continued to operate both golf and rubber products divisions for another 18 years. Finally, in 1994, management from the rubber division bought their operation from the parent company, naming it Acushnet Rubber Company, Inc. In 2002, the company dropped the Acushnet name, choosing instead to call itself Precix (pronounced "precise").

Acushnet, the golf subsidiary, continued to grow under new ownership, and in 1985 added another major brand, Foot-Joy. The company was just one of dozens of shoemakers operating in Brockton, Massachusetts, when it was founded in 1857 as the Burt and Packard Company. It was known as the Field and Flint Company in 1910 when it first became involved in the golf shoe business. The Foot-Joy line of golf shoes was introduced in the 1920s and received a major boost when the American Ryder Cup team, which played the best Europeans in a team tournament, selected Foot-Joy as its official shoes. By 1945, a majority of professionals on the U.S. PGA Tour wore Foot-Joys, a distinction the company retains until the present day. Field and Flint was acquired by the Stone and Tarlow families in 1957. As Titelist had done earlier, new management opted to limit the sale of Foot-Joy golf shoes to pro shops. The company took on the name of its signature brand in 1970, dropping Field and Flint Company for Foot-Joy, Inc. In 1975, a controlling interest in the business passed to General Mills, Inc., which two years later bought the rest of the company. As part of General Mills Fashion Group of companies, Foot-Joy became involved in golf gloves in the early 1980s, its Sta-Sof golf glove becoming the top seller. It also added golf socks, which also became number one in the category. When the corporate parent decided to reorganize to focus on its core businesses, a number of suitors made a bid for Foot-Joy, including a management group led by Richard and William Tarlow, who had sold the business to General Mills ten years earlier, as well as Converse, Inc. and Spalding. Acushnet emerged the winner, paying nearly $57 million for Foot-Joy.

Not only did Acushnet and Spalding spar over Foot-Joy, the two leading companies in golf equipment spent considerable time in court from 1981 to 1990 hashing out patent issues. The initial dispute involved Spalding's 1974 patent for a sodium and zinc golf ball cover called Surlyn. It was a major advance because it prevented excessive cracking. Titleist and a number of other ball manufacturers adopted the formula and Spalding went to court to protect its patent. After eight years of litigation, a federal judge in 1989 ruled against Acushnet. While Acushnet filed an appeal, it sued Spalding over patent violations regarding golf ball dimple patterns, fluorescent ball covering, and golf ball molding. Finally, in November 1990, the two companies settled their differences, agreeing to a cross-licensing of patents.

The 1990s and Beyond

In 1990, Acushnet reorganized its golf business, forging a single operating unit, Titleist and Foot-Joy Worldwide. A third major brand joined the fold in January 1996 with the acquisition of Cobra Golf Inc., maker of high-tech golf clubs. Cobra was a much younger entity than its sister companies. It was launched in 1973 by Thomas Crow, a former Australian Amateur Champion who also had 20 years of experience in golf club design working at Melbourne-based Precision Golf. Crow emigrated to San Diego, California, and launched his own golf club company, producing a unique club called the Baffler, the first utility wood that golfers could rely on to help them escape from especially tricky lies. The company then built on a reputation for innovation. In the mid-1980s, it embraced lightweight graphite shafts. Later, it developed the first full sets of oversized irons.

At first, Cobra Golf Inc. operated as a separate unit from Titleist and Foot-Joy Worldwide, but in August 1999 Acushnet's management decided to consolidate the golf club business. Although the brands continued to maintain separation, their operations were combined and streamlined to cut costs and gain efficiencies. A year later, the Titleist and Cobra sales forces were also consolidated, a move designed to help Cobra, which lacked a large enough stand-alone sales force to achieve the level of sales Acushnet expected from the brand. In 2000, Acushnet did away with the two division format, opting instead to do business as a single entity, Acushnet Company, featuring its three premiere brands.

In the last two decades of the 20th century, Acushnet expanded its golf business internationally. In 1983, the company formed a joint venture with Tokyo Tire and Rubber Company to distribute Titleist products in Japan. Acushnet Foot-Joy Thailand Ltd. was launched in 1990 to manufacture Foot-Joy golf gloves. Acushnet GmbH became operational in Germany in 1992. A year later, operations were established in Canada, Sweden, France, Denmark, and Austria. In 1994, Acushnet Nederland BV was launched, followed in 1995 by a joint venture in Taiwan to manufacture Foot-Joy golf shoes. The Acushnet South Africa office opened in 1996. Finally, Acushnet Singapore Pte. Ltd. launched operations in Singapore and Malaysia in 2002.

Leading Acushnet into the new century was president and CEO Walter R. Uihlein, a long-time executive with the company. An avid golfer from childhood, Uihlein went to work at a local pro shop as a teenager. He was, by his own admission, entranced by the image portrayed by the Titleist sales rep, who was always better dressed than the competition and had the air of the consummate professional. One Titleist rep, Jim Kernohan, took Uihlein under his wing and helped him land a job with Dunlop after college. As soon as a sales job opened up at Titleist, however, Uihlein was quick to lobby for the position. An enthusiastic and hard worker, he quickly made his way up through the ranks. Hired as a sales rep in 1977, he was promoted to national sales manager little more than a year later. By age 33, he made vice-president, and three years later, in 1985, became the youngest general manager in the company's history. In 1989, he became president and CEO of Titleist and added the chairmanship in 1995. In that same year, he became president and CEO of Acushnet.

The emergence of Tiger Woods in the late 1990s increased golf's popularity and also added to the complexities Uihlein faced in leading Acushnet into the new century. In 2000, Woods dropped his endorsement of Titleist balls, opting instead for the new line of Nike golf balls. Although Acushnet lost some sales, Titleist continued to own a third of the market. In fact, Titleist faced greater challenges elsewhere, as a number of other companies began introducing a wide variety of high-tech balls. Titleist kept pace by offering its own advances. Acushnet as a whole had to contend with increased competition as well as the fallout of poor economic conditions that adversely impacted golf. The number of rounds of golf worldwide fell off, resulting in a glut of golf balls in inventory. In the summer of 2002, Acushnet cut nearly 300 jobs. In May 2003, the company announced further cutbacks, with another 200 jobs to be shed over the course of the next year, including the elimination of Ball Plant I, the original ball-making facility in Acushnet, Massachusetts, which opened in 1932. Despite making fewer golf balls, Acushnet was still able in 2002 to crack the $1 billion mark in annual revenues for the first time.

Principal Competitors: Callaway Golf Company; Nike, Inc.; The Top-Flite Golf Company.

Chronology

• Key Dates:
• 1910: The company is formed as a rubber processing business.
• 1932: A Golf Ball Division is created.
• 1968: Acushnet Company name is adopted.
• 1976: The company is acquired by American Brands, Inc.
• 1985: Foot-Joy, Inc. is acquired.
• 1994: The company's Rubber division is sold off.
• 1996: Cobra Golf Incorporated is acquired.
• 2000: Tiger Woods drops his endorsement of Titleist balls.
• 2002: Acushnet reaches the $1 billion mark in annual revenues.