When the prelude to the America's Cup
sailing race begins this week, eight out of
the 10 boats competing will have "Made in
Nevada" stamped on their masts.
Maybe not literally, but they will bear
Southern Spars logos, the name of the
Minden company that makes made-toorder
masts for the world's most
demanding sailors.
The race is called the Louis Vuitton
Cup.Ten teams from all over the world,
including three American teams all using
Southern Spars masts, will compete in New
Zealand for a month in a series of roundrobin
events. The sole winner of the Louis
Vuitton then will compete against New
Zealand, the last America's Cup victor, in
the 2003 America's Cup in February.
"With eight out of ten boats the odds are
pretty good the winner will be one of our
boats," said Claude Cognian, general manager
of Southern Spars in Minden.
Southern Spars has been making masts
or spars as they're called in New Zealand
where the company has its headquarters
for about a decade. The original company,
based in Palo Alto, Calif., made products for
the defense industry. But when that business
went south the owner looked for other
markets in which the company could leverage
its expertise in carbon fiber.
That led to the manufacture of masts,
the tall, thin poles to which boats' sails are
attached. Carbon fiber is a strong, lightweight
material, which is why it's coveted by
racers who strive to minimize a boat's
weight. But it's expensive too - it's about 30
percent more costly than aluminum, the
more commonly used material for masts.
The company chose the unlikely location
of Minden because the then owner's
uncle lived in the area and the state was
easier to do business in than California,
said Cognian. The company is located on
a Carson Valley road that looks more like
Iowa than Nevada, much less like the seaport
where one would expect to find a
boating business.
The location has proved to be a problem.
Finding experienced engineers as
well as manufacturing workers is not easy.
"There's not a lot of marine knowledge
here because we're in the middle of the
desert," said Cognian.
But it hasn't been insurmountable.
Two years ago, North Marine Sails, the
world's leading sail maker, bought
Southern Spars and built a large office
next door to its 55,000-square-foot office
and plant in Minden.
Southern Spars caters to what Cognian
calls the "top half percent" of the wealthiest
people in the world. Each mast is custom
made, and Southern Spars does the design
and engineering as well as the manufacturing.
(Except for the Americas Cup sailors
who do their own design, which can be a
headache, said Cognian, because they sometimes
try to push the technology too far.)
A typical mast can be priced between
$350,000, for a $2 million boat, said
Cognian, to as high as $1.6 million for the
mast on a $10 million to $15 million boat.
"The business," said Cognian, "is recession
proof. These people lose a billion one day
and make it up the next."
The company's high insurance costs,
however, aren't recession proof. Its rates have
gone up by 30 percent twice since Sept. 11,
2001, said Cognian.
This year about half the company's
business will come from the America's
Cup. The Minden plant built the masts
for the British and Swedish teams as well
as two of the American teams - Team
Dennis Connor and One World. The
masts for the third American team, sponsored
by Oracle Corp., and two Italian
teams were made in New Zealand.
The Americas Cup business is cyclical.
The race is run every few years the timing
is determined by the winner and it
takes most of that time in between for
Southern Spars to make and deliver the four
to five masts that each team orders.
Another 40 percent of the business
comes from the custom orders of the rich,
recreational sailor, and the remaining 10 percent
comes from boat manufacturers.
Southern Spars hopes to grow the manufacturers'
business to 30 percent to 40 percent
of its overall business.
To do that, Southern Spars will have to
beef up its sales force. Amazingly, the company
has a single sales person. That's
because sailing is a small world where everyone
already knows each other, says Cognian.
The boat-manufacturing business is
also a lot more competitive. There are
more manufacturers, all competing
based on price. The average commodity
mast is $30,000, said Cognian.
But that business doesn't require the
same design and engineering effort nor the
same painstaking manufacturing process
needed for each custom order.
Right now Southern Spars in Minden
produces, on the average, 2.5 masts a
month. The average mast is 90 feet long -
the company recently made a 148-foot mast
-- and each mast mold is unique. The carbon
fiber is cut into pieces, which are placed
into each mold by hand. Assembly line
workers follow a complex spreadsheet of
measurements, which tells them where to
place each piece.
The mold is then placed in one of
company's several autoclaves. The
Minden plant has one of the country's
largest autoclaves, a 150-foot machine
that sticks at least 130 feet outside the
building. The autoclave process can take
as long as 15 hours three to four
hours to preheat the machine, six hours
to bake the mold and five hours to cool
down the autoclave so the company
has to man three shifts a day when the
machine is in use.
Otherwise, the company has limited
the use of overtime in an effort to
reduce errors.
The first mast the company shipped to
one of the current American America's
Cup teams shattered while in use. The
reason was never discovered, but the company
made tweaks in the design, the
materials and the manufacturing process
and all has been fine since.
As part of an effort to avoid that
again, Cognian has cracked down. Since
he joined the company a year and a half
ago, turnover has risen from about 5
percent to 10 percent. Training can last
up to six months so, in the past, the
company had been reluctant to discipline
workers for fear of losing them,
said Cognian. "But in our business," said
Cognian, "a 1 percent error rate can
be catastrophic."
