Feb

20

All surfers know about Clark Foam, a company that produced 90% of the foam blanks used in surfboard construction. Gordon ('Grubby') Clark started his company in the late 1950s and completely revolutionized the surfboard business. He made a quality product, economically, and provided superior customer service. His deliveries were always on time, and he made sure his customers were taken care of. His company was innovative, always striving to make the best product, and make good money for himself. One could compare the self-made Clark to Hank Reardon in many ways. Both had vision, pulled themselves by their bootstraps, used science and research for commercial gain, and fought with the authorities. Both had to navigate a series of roadblocks, and jump through hoops to do business the right way. For years, the government was trying to close Clark down because he did not fit the norm. Using environmental laws as the excuse, they finally drove him out of business through expensive threats. Clark could have fought to keep his business open at great cost, but instead chose to close it on his own terms, and go on strike.

Here's Gordon Clark's goodbye letter to his customers, suppliers and friends.

Since Clark Foam closed its doors a few years ago, after initial supply disruptions, the free market created opportunities for people to fill the niche. There are now as many surfboards being produced worldwide as ever. However, the production of many boards has been outsourced to a factory in China, 1200 miles from the ocean. Surfboards being built by people who have never seen the ocean, never ridden a wave. The surfboard blanks that are used in the USA for custom boards are, to quote my shaper friends, not of the same quality and consistency of Clark blanks. They are not, as a rule, produced in the USA any more, being imported from Third World countries. The manufacturers of the new blanks cut corners, produce inconsistent product, and have rotten customer service, in addition to the quality issues.

Gordon Clark is a rugged individualist who never asked for, nor gave, any quarter. He is a success and was punished for it. Some people refer to him as a real SOB but many more respect his vision. His problem, like that of everyone, is that the government is in the business of removing freedom, not protecting it. Clark should have been applauded for his beautiful business model. Instead his plant is in ruins.

Since Clark left the scene, surfboards just aren't the same. The market has placed a premium on used boards with a Clark Foam label as they sell for a higher price, all things considered, than a generic brand.


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9 Comments so far

  1. Dan Costin on February 20, 2009 5:40 am

    I read the letter. Clark certainly doesn’t sound like Rearden. He says he should have shut down years ago. “Wo [sic] do emit over 4,000 pounds of styrene fumes per year.” Apparently the overseas plants that compete are more modern and rely on better infrastructure. “We did our last research into new foams in 1993. What we did was, in a large part, illegal even then.” He’s had toxic chemical runoff 3 times. “The Surfrider Foundation would have us closed down.” “The State of California and Orange County California are trying very hard to make a clean, safe, and just home for their residents. This is commendable and I totally support their goals.” And, finally, “I also failed to do my homework.”

    The price argument is misleading: there’s a premium on real ivory, too. Do you propose free enterprise should be allowed to harvest the rest of the ivory to correct the price imbalance? And hardly anyone is going to want to have this stuff in the water and in the air around them. If you like the idea of unfettered chemical production, there are some industrial sites in China you can pitch your tent in. Not for long, I bet, once their cancer rates start to go up.

    The world moves on. The waves will still be there, and the sharks will continue to sample the “seal on toast” buffet. It’s the natural order of things.

  2. Ken Drees on February 20, 2009 11:28 am

    Government run amok. What happens to the future of speculation when the government nationalizes the banking system, levies high taxes on profits, audits and puts constraints on trading?

    Like this manufacturer driven to the point of closure (death of his business by noose like regulatory bodies and regulations from a government run amok), is the american way in general also being slowly squeezed to death?

    There is a lot of talk here on Daily Spec about where the money comes from for bailouts, what is money and what is happening in general to the supply of it, the deflation of asset prices and the inflation caused by over printing. The fact that we are asking these questions tells me that there is something deeply wrong with our systems, our methods and our economic health.

    Is the nation waking up to the fact that its technically broke in more ways than one? Yesterday’s Rick Santelli video may be one more step towards a new conciousness towards change. Rush Limbaugh’s WSJ letter in today’s edition asks if the government is going to try and constrain free speach by using a fairness doctrine approach to am band talk radio.

    The bailouts are not endorsed by a high majority of the people, do they intuitively know that its the wrong medicine for the problem? Is there collective wisdom of a body of individuals? Politicians are getting more calls and emails than ever before.
    Honors high school kids watching the President’s speach on TV during class, laughing as the President unrolls his plan to use 75 billion dollars to help 9 million homeowners–do the math.

    Eventually people will realize that they have been tricked. Whether you are a victim of a Madoff or a foreclosure, or by the loss of a job. Somewhere down the line in the future the collective body will understand that they have been swindled and deeply injured.

    When it was asked why the 1 trillion dollars of bailout funds cannot just be divided up and given to the people to spend as they like(fully eliminating all debts), the answer was that it would be very dangerous and inflationary. I ask then what is the differnce — creating a trillion dollars through debt issuance and then spending that money on a myriad of programs and agencies and pork projects any different?

    We are in the sweet spot where a dollar will still buy a half gallon of gas, or a 5 # pound bag of sugar, or a burger on the dollar menu. I am amazed that today I can still buy something with my federal reserve note.

    When people are out of work they have plenty of time to think about things. They also have plenty of time to determine who is to blame for their collective state of affairs. Napolean said that the people are always 4 missed meals away from revolution.
    We are closer today towards that reality than we were yesterday.

  3. k.z. on February 20, 2009 12:02 pm

    This question can be investigated by asking yourself (and answering honestly): Would you mind living next door to a factory which uses toxic chemicals, and raising your children or grand-children there? IMO this is the same as how much easier it is to send other people's sons off to war.

  4. John Tanker on February 20, 2009 12:32 pm

    Can someone please address the crazy proposal by Rep. Peter DeFazio to impose a 0.25% tax on all futures,options, and stock transactions? It will put a ton of people out of business! I buy 1,000 shares of IBM at 80 dollars and I'm taxed 200 bucks for that one trade? Hello? Vic and others - get busy on a thread to discuss this. John

    HR 1068

  5. Allen on February 20, 2009 2:50 pm

    While I sympathize with the beleaguered owner, I am extremely troubled by his attitude towards TDI- gee, just because I can mix household chemicals and come up with some industrial processes doesn’t make it safe. The former employees on permanent disability are also troubling is they are truly disabled. Safety by government inspection is quite frankly negligence on the owners.

    Maybe he should have invested in some process renovation by some competent engineers instead of lawyers. The attitude of California is shitty, and remaining there foolish. What he should have done was move to Utah or Nevada and built a new plant there with all the safety equipment necessary. Shoving pollution to China is not an acceptable long term solution.

    Further, just quitting under regulatory pressure shows he was tired and wanted out. If he was truly profitable, the move to a new location would have been easy.

  6. Gregory Rehmke on February 20, 2009 2:57 pm

    There are lots of “toxic” chemicals. Salt, for instance. Or bleach. What matters is whether other people are harmed, or at risk of being harmed. Peanut butter from unclean factories can kill people. Regulations are not the right way to protect the public. Insurance and a common law legal system are. For those interested is a market alternative to the mess described in Clark’s letter, I recommend “The Common Law: How it Protects the Land” http://www.perc.org/articles/article653.php. State and Federal Clean Water and Clean Air Acts were and are counterproductive. Gordon Clark’s insurance company, or an intermediary would review safety and emissions levels at the plant. If Clark couldn’t afford the insurance, he would have to shut down.

  7. Rocky Humbert on February 20, 2009 7:31 pm

    At the risk of sounding like an economist (which I am NOT), it is generally accepted that externalities (such as pollution) are poorly handled by free markets.

    If China tolerates toluene emissions while California does not, China will be the low-cost surfboard producer for some length of time. But Americans should be grateful that the Chinese are willing to not only buy our treasuries, but also sacrifice ghastly birth defects and cancer so Americans can ride the perfect tube.

    More seriously, heavy-handed regulation towards polluters is sub-optimal too. Pigovian Taxes see: http://en.wikipedia.org/wiki/Pigovian_tax
    are an economically superior way of handling these issues. And vastly superior to bureaucrats in Sacramento.

  8. Kel on February 22, 2009 10:38 pm

    Whoever wrote this doesn't really know much about the situation. Clark was a dictator in business. He would blackball customers who bought from his competitors. He held the market hostage for decades and handicapped the development of new product entering the marketplace by keeping the people down. His business plan was very similar to that of the Doctor in Grapes of Wrath. The way history is remembered is a funny thing, how it is distorted. The market in the US is better off now than it was with Clark in control.

    At the time of his closure the local EPA said that they had no outstanding issues with Clark Foam. So many details in this piece are just plan wrong. Poor research makes it possible to tell a good story.

    His manifestos, multipage letters to his customers, were all time. These focused on how to control the industry, not letting in any new developments that might hinder his business. Ultimately he just decided he had had enough and closed down, walking away a rich man.

  9. jeff watson on February 23, 2009 9:20 am

    @Kel,
    As people have responded to the post, their personal mental filters have added and subtracted content, changing and shaping the information with conjecture and personal opinion . The post was about Clark's John Galt moment, nothing more or nothing less. And Clark's letter was his John Galt moment, in fact his manifesto was a quintessential John Galt moment. Confusing personal opinion with information, where none existed before is also a common, deadly mistake that the general public makes when trying to predict the markets.

    Jeff

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