Carlsbad, Where Golf Is King
It’s another perfect day in Carlsbad, Calif. Johnny Miller tees up the ball, whacks it with a practiced ease and watches it fly into the golden sunlight. “Golf,” he says, “is a lot like life. It tests your character [and] your honesty.”
Of course, it doesn’t hurt that the club the onetime U.S. Open winner is testing is made from advanced composite materials--similar to those used to make Stealth bombers--or that it was designed by a crack team of engineers, scientists and metallurgists employing computer modeling and customized rapid-prototyping machines.
This is Golf Central, U.S.A., and Miller is standing at its very nucleus--the testing range of Callaway Golf Co., the world’s largest club maker. A few blocks away, Callaway’s nearest rival, Taylor Made Golf Co., has just moved into sparkling new headquarters, complete with its own high-tech design and testing facilities.
Just down the road is No. 3, Cobra Golf Inc. Within a good 7-iron shot are other names known on fairways around the world: Titleist, Odyssey and Lynx, not to mention golf apparel maker Ashworth Inc. Many smaller golf companies dot the topaz-colored hillsides where flowers, avocados and strawberries once flourished.
In the past decade, this sleepy seaside burb about 30 miles north of San Diego has emerged as the golf manufacturing capital of the world. Computers have Silicon Valley, and now golf has Titanium Valley, so named for the composite metal now used in many club heads. More golf equipment talent is packed into a few square miles here than anywhere on earth.
But Carlsbad also is emblematic of a transformation that has occurred up and down the coast of California, from the high-tech hotbed of the Bay Area to San Diego’s blossoming biotechnology community. Industries such as these, which make ample use of the technological and creative abilities imbued in the region, have risen up to replace the aerospace factories of old.
They are the foundation of California’s “new economy,” and they are a big reason why the state is once again envied and admired around the world.
“It tells us the infrastructure in place here--the R&D; institutions, the trained work force, and the buyer and supplier chains of companies that network with each other--they all provide a fertile environment for these companies to grow,” said Joe Raguso, executive director of the San Diego Regional Technology Alliance.
Carlsbad’s rapid metamorphosis is all the more remarkable because it remains largely unnoticed by the outside world.
A Low-Key Presence
Southbound drivers on Interstate 5 crossing the Buena Vista Lagoon into Carlsbad see nothing announcing that they are now in the golf mecca of the world. The most visible landmarks are an Andersen’s Pea Soup restaurant, the San Diego Gas & Electric power plant and the quiet beachfront.
For most of this century, Carlsbad remained primarily a farm town. There was no industry to speak of until the 1970s, and even then it remained small. Only the tony La Costa resort, opened in 1965, put the place on the map.
A confluence of events led to Carlsbad becoming the center of the golf club industry.
Taylor Made founder Gary Adams recalls that shortly after selling his 5-year-old golf club company to French ski equipment maker Solomon in 1984, he and his new bosses decided to move the company--then the leader in the club business, riding strong on the metal woods it pioneered--from Illinois to Southern California. They chose Carlsbad because of a plentiful supply of labor and cheap land.
The fact that La Costa was home to the nationally televised Tournament of Champions also made it a prestige golf address, Adams said.
About the same time, Ely Callaway was looking for a new home for his fledgling golf club company. Callaway, the former president of textile concern Burlington Industries, had sold his Temecula winery. Callaway Golf, his newest project, was then based in Cathedral City, but the desert was too hot for year-round testing of its clubs.
It didn’t take Callaway long to settle on Carlsbad. There was “lots of land, lots of workers,” he said. “The more I looked, the better I liked it.”
Then there was the weather, which Callaway calls “magic.”
Indeed, golf industry veterans wax lyrical about Carlsbad’s climate, which they contend is the best in the world to play a round of 18. It’s neither too hot nor too cold, gets little of La Jolla’s fog, and the breezes are mild.
It wasn’t until 1991, though, that Carlsbad became the legitimate king of the golf world. That’s when Callaway revolutionized the business with the introduction of its Big Bertha driver.
Named after the biggest cannon in World War I, the new club sported an oversized head capable of launching balls farther than other drivers. Its immense popularity has propelled Callaway to its position as the undisputed industry leader with $843 million in sales in 1997. Callaway has nearly 3,000 employees sprawled in 15 buildings, who churn out the world’s best-selling golf clubs 24 hours a day.
Callaway’s stunning success awoke a complacent industry. Rival companies beefed up their staffs, pouring huge investments into designing and marketing new clubs.
Consider Taylor Made. When Dick Rugge joined the company a decade ago, there was no in-house research and development department. Now, as head of R&D;, he oversees a staff of about 50 engineers, who spend their days dreaming up new clubs to help golfers hit balls farther and straighter, borrowing many of the techniques and materials used to make jets and missiles stronger and lighter.
From the club designs, manufacturers build prototypes, which are then put through a battery of tests. Machines shake the clubs, pelt rocks at them and swing them thousands of times. At Callaway’s test center, robots grip the clubs and hit balls while high-speed digital cameras capture images used to measure velocity, loft and spin.
A Stroke of Ingenuity
Out on the testing facility’s driving range, staff golfers try out the prototypes, smacking balls onto a field where computerized sensor pads have been laid like land mines to measure precisely where and how balls land. Celebrities such as saxophonist Kenny G sometimes drop by to swing a few.
Only a few prototypes make the grade. The designs are sent to outside casting houses, which make the metal club heads, while the final assembly of heads, shafts and grips is done back at company plants in Carlsbad.
Like the aerospace industry, Carlsbad’s golf business shrouds itself in secrecy. Security is tight, and new designs are jealously guarded. Company employees say they glance over their shoulders before discussing business at a restaurant. Some insiders confess that the attempts at thwarting espionage are little more than window dressing, because executives and other workers routinely jump from one company to another.
Asked if a chummy rivalry exists among the competitors, the 79-year-old Callaway practically snarls. “No!” he shouts. “I hate ‘em.”
Yet linking them all is a deep love of the game. Working in Carlsbad’s golf industry, many say, is a way to fulfill their passion.
“The director of golf at Pebble Beach thinks he has a better job than me,” said a grinning Dick Helmstetter, Callaway’s director of product development. “But he’s wrong.”
About 5,000 people now work in Carlsbad’s golf industry, but that number greatly underestimates its true impact. Dozens of other golf firms have sprouted in nearby Vista, Escondido and Rancho Bernardo, and suppliers of shafts and grips are scattered around San Diego County. Club makers keep foundries in Los Angeles and Orange counties and maquiladora plants in Mexico busy. And for every job directly linked to the industry, at least one other is created in various support services.
In the past decade, the amount of industrial space in Carlsbad has tripled. Companies gobbled up more than 2 million square feet of space last year--nearly 20% of the existing inventory--and an equal amount is under construction. Land prices have doubled from a year ago. New roads are being plowed at every turn.
The booming industrial sector also has touched off a housing boom. The average price of houses sold in Carlsbad soared 35% in the past year to $370,000. About 1,200 new houses came on the market last year, and developers have plans to build 5,000 more in the next five years.
The growth is evident at Carlsbad’s McClellan-Palomar Airport, which is now the county’s second busiest aviation facility after San Diego’s Lindbergh Field. Commercial flights--mainly commuter service to LAX--are growing at a 40% annual rate.
Worrisome Signs Appear
The town’s economic make-over hasn’t come without a cost. Geoff Armour, an assistant librarian at the Carlsbad library, doesn’t like the rush-hour traffic jams--a relatively new phenomenon. But he can’t deny the benefits of prosperity.
“Right now, the city is rolling in money,” he said, and he sees himself as a direct beneficiary: Carlsbad plans to build a $20-million library, twice the size of the old one and featuring a high-tech video theater and gallery space for traveling exhibitions.
Rob Leeds, a bartender at Tuscany restaurant in Carlsbad, a golf industry hangout, is also approving. On busy nights, he said, “you’ve got people at one end of the bar from one company, another company at the other end. You hear titanium this, graphite that.”
He could care less; he prefers surfing. But, Leeds says, golf “does the economy great.”
Yet some worrisome signs have appeared, raising questions about where the growth in Carlsbad’s golf industry will come from.
Golf companies this year are being hit by an industry price war and slackening demand from financially sick Asian countries. Meanwhile, growth in the overall golf market is flat. Callaway’s profits and stock price have slumped recently. Other companies, such as Lynx, have been struggling to survive.
“It’s almost a zero-sum game,” said Bud Leedom, publisher of San Diego-based Golf Insight & Investing newsletter. “If someone does well, someone else is losing.”
Carlsbad’s club makers also have to watch their backs as two rising stars, Hayward-based Orlimar Golf and Adams Golf of Plano, Tex., have seen sales soar. The upstarts have won customers through infomercials that boast of cutting-edge technology.
The pressure is intense to come up with hot new products, and the window of time that club makers can ride on innovations is constantly shrinking, said Rugge. Even though Taylor Made’s popular Burner Bubble club, introduced in 1995, is still selling well, “We’re working feverishly to try to replace it,” he said.
Some analysts are skeptical that another new product will energize the market. “It would be damned hard for me to see anything like that revolution in the next few years,” said analyst David N. Allen at Torrey Pines Securities in Solano Beach. “I think we’re just going to see refinements in technology.”
Skeptics also question how long golfers will continue to fork out $300 to $500 per club for top brands. Golf companies might take heed of the reaction of one recent visitor to Callaway’s assembly plant. When a tour guide quoted a price, the visitor asked, “That’s for a set, right?” Wrong. It was for just one club.
Another looming issue for the industry is the U.S. Golf Assn.’s recent threat to outlaw clubs with a so-called spring-like effect--i.e., Big Berthas. The USGA eventually relented, saying that all clubs now in use will remain legal. But there are fears of future limits on club designs.
Club companies now are looking elsewhere for growth. Last year, Callaway acquired putter maker Odyssey, and is pouring $100 million into starting a golf ball business from scratch, while Taylor Made recently announced plans to acquire a large ball manufacturer in Mississippi.
The companies are trying to sell duffers on the idea that they can bring the same technological prowess to balls that they did to clubs, and thus steal sales from leading ball makers Titleist and Spalding.
Callaway Chief Executive Donald Dye talks of ways to make golf more accessible to the masses, such as partnerships with schools and three-hole courses that could be played during a lunch hour.
Yet most Carlsbad golf honchos are outwardly as confident about their businesses as Tiger Woods is about hitting the green from 150 yards out. Golfers, they contend, are highly emotional about their equipment and are constantly striving for perfection.
Said Callaway: “We are light years away from having an ideal golf club.”
