Black Diamond Equipment, Ltd. Business Information, Profile, and History

Company Perspectives:

We are an employee-owned company made up of climbers and backcountry skiers who are committed to designing and producing the best equipment imaginable. Input into our design process comes from all corners of the world--the gear you use is the result of ideas, experiences, and inspiration from a global family of climbers and skiers we trust. Because we're located at the base of the Wasatch Mountains in Utah, in the same day we can test an ice tool concept on the Scruffy Band, ride tele prototypes in the Cottonwood Canyons, and torque a shoe design on granite. The bottom line? Black Diamond gear is envisioned, designed, and manufactured by climbers and skiers with a mission--to make the best climbing and backcountry gear on the planet.

History of Black Diamond Equipment, Ltd.

Black Diamond Equipment, Ltd. (BDEL) specializes in designing and manufacturing mountaineering and backcountry skiing gear. It has broadened its markets somewhat by adding a popular line of headlamps, though it has eschewed such traditional brand extensions as clothing. The word "passion" is often associated with BDEL, and most of the company's employees are enthusiastic users of its products. In 1991, Black Diamond relocated from the California seaside to Salt Lake City, where the nearby Wasatch Mountains offer a great testing ground. Black Diamond pitches its goods through an elaborate catalog. Product lines include crampons, ice picks, ice screws, pitons, carabiners, backpacks, gloves, helmets, headlamps, telemark skis and bindings, and the AvaLung, an avalanche safety device.

Origins

Yvon Chouinard was born in French-speaking Lisbon, Maine, and moved with his family to California at the age of eight. Some years later, the young climber bought a book on blacksmithing, an anvil, and a coal-fired forge--spending less than $100--and soon after graduating from high school began making his own pitons (spikes for wedging into crevasses) out of hardened (chrome molybdenum) steel. Fellow climbers loved Chouinard's pitons because they could be reused repeatedly, allowing them to scale higher walls. In 1957, Chouinard visited top climbing spots around the country, selling pitons from the trunk of his car.

With $832 borrowed from his parents, Chouinard acquired aluminum forging equipment and began producing his own design of carabiner, a hooking link used to secure climbing ropes. Chouinard Equipment products were soon being distributed regionally via speciality stores such as the tiny North Face chain.

Forbes reported Chouinard was also working as a part-time detective for his brother, Jeff, who led Howard Hughes' security operation. After a tour of Korea in the Army, in 1966 Chouinard and his partner Thomas Frost set up shop in a tin shack next to a Ventura, California, slaughterhouse.

In 1969, Chouinard began making ice axes with curved picks, a popular innovation which increased their utility on different surfaces. Products were marketed to potential customers via a mailed list. At that time, Chouinard dominated the minuscule climbing gear market in the United States.

The corporate entity Great Pacific Iron Works Inc. was created by Chouinard in 1973. A line of clothing, Patagonia Outdoor Apparel, grew from the very successful import of some Scottish rugby shirts in 1974.

The cumulative effects of Chouinard's original product began to hammer at the company's environmental conscience, the result of numbers of the pitons being left behind in the rock. Consequently, Chouinard became an advocate of "clean" climbing that made use of such products as its Hexentrics and Stoppers nuts. The company introduced the first tubular ice screw in the late 1970s.

While Patagonia grew, Chouinard Equipment shrank to only six employees by 1982; sales were about $1 million a year. Peter Metcalf was hired as marketing and sales manager in 1982 and was made general manager within a year. Lost Arrow Corporation was created in 1984 as holding for the Chouinard-related businesses. Under Metcalf, sales reached $7 million by 1987, he told Inc., and the company employed 60 people. By the end of the decade, annual revenues were $9 million.

Around this time, the company began hiring Beal Ropes of France to produce ropes under the Black Diamond brand. After 15 years, Black Diamond dropped its own brand of rope, becoming a distributor of Beal-branded ropes instead.

Climbing increased in popularity in the 1980s, bringing a number of novices into the sport. Chouinard Equipment was eventually forced into bankruptcy by lawsuits alleging not that it made defective equipment but that it failed to warn customers of the fact that rock climbing was dangerous. The company filed for Chapter 11 bankruptcy on April 17, 1989.

Black Diamond Created in 1989

Chouinard's former employees created Black Diamond Equipment, Ltd. on December 1, 1989, acquiring the assets of their one-time employer in a leveraged buyout. The Black Diamond name and symbol were reminiscent of Chouinard Equipment's diamond-C trademark. The buyout was structured along the lines of an employee ownership plan. Forty staffers bought in; financial support also came from rope supplier Michael Beal and Japanese distributor Naoe Sakashita.

One of the employees was Peter Metcalf, who had attained the position of general manager of Chouinard Equipment before the company went under. Unlike his old boss, Metcalf was not attached to California's surfing scene, and Black Diamond soon began looking for a new home. Access to an airport with customs capabilities was important.

In 1991, BDEL relocated from California to Salt Lake City. The company originally planned to move to Park City, on the other side of the nearby Wasatch mountain range, but the developer's financing collapsed. Subsequently, Metcalf decided to locate the company in a kitschy, abandoned shopping center that was styled in the fashion of Bavarian chalets and situated on the East Bench of the Salt Lake Valley. (It was formerly the home of Engh Floral.) Metcalf paid a little over $1 million for a seven-acre property that would include the company's offices, manufacturing, warehousing, and an outlet store. The new location offered a convenient testing ground for climbing and skiing gear, as well as a great location to find and recruit knowledgeable experts in relevant sports.

Black Diamond had 48 employees and revenues of $7 million in 1991, reported Inc. About one-third of sales at the time came from backcountry skiing products, reported the Salt Lake Tribune. In the first half of the 1980s, Chouinard had developed two new bindings for telemark skiing.

Most of Black Diamond's climbing equipment was produced at its Salt Lake City headquarters, while facilities in Italy supplied shoes, boots, and ropes, and a Texas subcontractor, Flatland Mountaineering, produced climbing harnesses. Black Diamond was the second-largest producer of carabiners in the world, noted the Tribune. The company hired another Utah firm, Chums Ltd., to install custom automation equipment to speed up its carabiner production in 1992. The company also had its own automated sewing operation.

Black Diamond developed a line of plastic telemark ski boots, called Terminator, in conjunction with SCARPA of Italy in 1992. International sales accounted for 15 percent of total revenues, with the fastest growth coming from Asia.

Continued Growth through Innovation and Acquisitions

Sales grew quickly in the early 1990s, exceeding $20 million in 1995, when the company had 200 employees. Metcalf was named "Utah Small Business Person of the Year" by the U.S. Small Business Administration. Recreational Equipment Inc. (REI) picked Black Diamond as its "Vendor Partner of the Year" over 1700 other companies. Metcalf wrote an inspirational article for Inc. magazine about how the value of training, teamwork, and commitment carried over from the world of climbing to the world of business. Chouinard had also written on the value of dedication, commitment, and confidence in both fields.

Todd Bibler sold the high altitude tent-making business he had founded to Black Diamond in 1996 in order to cope with competition from large companies. Bibler Tents was relocated from Boulder, Colorado, to Black Diamond's Salt Lake headquarters. Franklin Climbing Equipment, a small, eight-person maker of holds for climbing walls based in Seattle, merged with Black Diamond in 1998.

By the end of the decade, Metcalf told Inc., Black Diamond had 250 employees and annual revenues of $30 million. Black Diamond began leasing a new warehouse in Salt Lake's Ninigret Park in 2000. BDEL also updated its electronic distribution systems and opened a branch office in Switzerland.

Through acquisitions, Black Diamond was expanding its range of products, particularly those related to backcountry skiing gear. It acquired the Ascension line of climbing skins (attached to skis to provide traction when scaling slopes). Skye Alpine Inc., a manufacturer of ski bindings and climbing skins, was acquired in the spring of 2002. In 2000, Black Diamond began selling LED headlamps designed for backpackers as well as climbers and skiers. These soon became one of the company's best-selling items.

Among Black Diamond's employees was Alex Lowe, whom Outside Magazine had dubbed the world's best climber. He died in an avalanche in October 1999. Lowe and other BDEL employees had been known to rise in the wee hours of the morning to hit the backcountry slopes before work.

Several other Black Diamond employees had been lost to avalanches over the years, so it was natural that the company's next big product would be an avalanche safety device. The AvaLung was a vest with a network of porous tubes that deployed in the event of an avalanche, allowing the user to breathe air from the snowpack. It was invented by Denver psychiatry professor and backcountry skiing enthusiast Tom Crowley. Black Diamond spent a half million dollars making the design practical.

The first version retailed between $200 and $300. The lighter, smaller, and, at $100, cheaper AvaLung II was introduced in 2001. It was credited with saving a skier trapped for half an hour under five feet of snow in February 2002. Black Diamond was one of ten Utah companies honored with an Entrepreneur of the Year award in 2002.

Principal Subsidiaries: Black Diamond Equipment AG (Switzerland).

Principal Divisions: Ascension Enterprises; Beal Ropes; Bibler Tents; Franklin Climbing Equipment; Scarpa Mountain Boots.

Principal Competitors: Backcountry Access LLC; Entre Prises USA Inc.; Metolius Mountain Products; Petzl America; Voilé Mountain Equipment.

Chronology

• Key Dates:
• 1958: Chouinard Equipment is formed in Ventura, California.
• 1989: Black Diamond (BDEL) is created from bankrupt Chouinard Equipment.
• 1991: BDEL relocates to Salt Lake City.
• 1992: Terminator ski boot is developed with SCARPA of Italy.
• 1996: Bibler Tents is acquired.
• 1998: Franklin Climbing Equipment becomes part of BDEL.
• 2000: LED headlamps are introduced; a new warehouse is opened.
• 2001: AvaLung II is introduced.
• 2002: Skye Alpine is acquired.