North Sails Group

Navigation by innovation┬áKeith Regan learns how innovation has been in North Sails GroupÔÇÖs DNA from the start and how it believes that staying the course on a new product launch is the right tack even in stormy economic seas.  Since Lowell North founded it in a San Diego loft in 1957, North Sails Group has grown into the largest maker of sails in the world, a market share that starts at the top of the performance chain.  North Sails products are found on the vast majority of sailboats that race in the AmericaÔÇÖs Cup, around-the-world races and other sailing sagas. Over half of the North Marine Group familyÔÇöwhich also includes Southern Spars and EdgeWater PowerboatsÔÇöNorth Sails is based in Milford, Connecticut.┬á The company also typically produces some of the most expensive products in its market, says Jay Hansen, executive vice president of North Marine Group. ÔÇ£WeÔÇÖre the most expensive, and we always have been. WeÔÇÖre also the biggest, and not by just a little bit. There arenÔÇÖt many businesses that can say they sell the best and the most expensive and are also the biggest.ÔÇØ An unwillingness to produce lower-cost options has kept North out of the lower-priced OEM market, with most of its sales going directly to the owners of performance sailboats, both racing and cruising, around the world. Sailing, especially beneath the highest-cost, cutting-edge sails, may seem like a pure luxury item, the type of thing that can be cut back on when times get tough, and indeed, many sailing yachts around the world are on the hard or out of the water for economic reasons. Still, many people who can afford to do so continue to sail, even if itÔÇÖs harder to afford than in the past. ÔÇ£ThereÔÇÖs more of an emotional cachet to sailing,ÔÇØ says Hansen. ÔÇ£People arenÔÇÖt willing to give it up as they might another luxury.ÔÇØNorthÔÇÖs 3DL sailmaking technology has become a favorite of high-performance sailing captains and boat designers, with 10 of the 11 boats in the most recent AmericaÔÇÖs Cup using North sails. Only the boat with the smallest budgetÔÇöwhich also finished lastÔÇödidnÔÇÖt fly North sails, says Hansen. All the boats in the current Volvo around-the-world race are also powered by North sails. ÔÇ£That gives a sense of the market share where performance is all that matters,ÔÇØ he adds. ÔÇ£Those are staggering numbers you just donÔÇÖt hear of.ÔÇØNorth Sails is poised to release the next generation of its sails technology, ramping up for a mid-2009 launch for its 3DI technology, which Hansen predicts will quickly surpass the companyÔÇÖs own 3DL as the standard among performance racers. ÔÇ£We firmly believe the new product is quite a big step up in terms of performance. ItÔÇÖs less stretch for a given amount of weight.ÔÇØ Getting 3DI to market was a costly and risky undertaking, especially when the economy began to go south rapidly in 2008. ÔÇ£We could have easily gone into a shell and stopped working on it, but we continued to go to the banks and borrow money to make it happen. We believe the way to get through these times is to go through them with an eye on the future and on winning even more market share and producing even better products.ÔÇØAccording to Hansen, sailmaking is believed to be about a $250 million a year marketÔÇöor at least it was before the current recession struckÔÇöwith much of that spending concentrated on high-performance craft such as the vessels that compete in the AmericaÔÇÖs Cup and other major races. Owners who put together AmericaÔÇÖs Cup teams often hire a North Sails designer right after choosing their boat designers. ÔÇ£WeÔÇÖre the experts on everything above the water,ÔÇØ Hansen says. ÔÇ£WeÔÇÖre the company that has invested millions in our products, including investments that didnÔÇÖt pan out. In some ways a sail is a more difficult thing to design than an airplane wing,ÔÇØ he adds, noting that North Sails has consulted with aerospace companies such as Boeing. ÔÇ£An airplane wing is a rigid foil, and a sail is completely dynamic. WeÔÇÖve invested a lot of money in software to do the analysis and design.ÔÇØDonÔÇÖt expect a big marketing splash when 3DI is ready for market. North Sails will follow its past practice of rolling out the product through its sales force, taking it to the most elite racing boat owners first and allowing word of mouth to help drive demand even as the company builds more capacity to produce the new sails. ÔÇ£ItÔÇÖs a small industry; captains of boats talk to each other, and the boat owners talk to each other, and having the word get out that way builds some buzz.ÔÇØWhile product is king at North Sails, Hansen believes organizational changes at the company have helped it remain profitable and growing. The company has given managers the authority to have full day-to-day say on matters that help advance the strategic planning and operations of the business. The other arms of North Marine Group follow a similar innovation-first mantra. Southern Spars, the carbon mast and rigging manufacturer, designs its products to work in tandem with North Sails, though they are not always sold together. And the company is working with the US military and its EdgeWater division to redesign the way powerboats are structured and built.ÔÇ£It may sound corny but itÔÇÖs actually true, and itÔÇÖs something weÔÇÖve been doing for 50 years. The best way to get out of a recession is to innovate your way out. It costs money and investment, and you typically lose money on new products, so itÔÇÖs very risky. As a company, weÔÇÖve probably invested more in technology and design than the entire rest of the sailmaking industry. ThatÔÇÖs always been the way we approach things, and we werenÔÇÖt about to change that due to outside economic factors. This recession is not easy. We sell what are basically luxury goods, and it has affected us and will continue to affect us. But we fully expect to come out stronger relative to the marketplace and the competition.ÔÇØ  ÔÇô Editorial research by Michael Fretwell┬á