Making Waves

Paul Winton and Scott Fenton’s innovative surfboard ‘manufacturing cells’ are set to revolutionise the world’s surfboard industry.

I find the two kinaroad shareholders in their ‘bunker’ – a nickname Paul Winton and Scott Fenton have given their (almost) secret ‘manufacturing cell’ close to Auckland’s Victoria Park.

This is where, for some months now, they’ve been perfecting their secret weapon to conquer the world’s surfboard manufacturing industry; using a B2B business model that sells self-contained manufacturing cells to buyers worldwide, delivered cleverly in shipping containers to where the market demand is centred – usually near major beaches or lakes.

It’s a worthy prize – the global surfboard market is currently exploding. It’s estimated to be worth around $2.5 billion; the past four years has delivered year-on-year growth of 11 percent. To put those figures in context, it’s slightly smaller than the golf market, and about the same size as the snow-ski and tennis markets. And there are no dominant brands.

The stakes are high – but Paul and Scott are more than up for the opportunity, backed by top investment partners including Callahan Innovation.

Kinaroad (named after Taranaki’s Western-most point) was founded by Paul in 2010. Almost a year ago he handed the reins over to Scott, a former New Zealand windsurfing professional, to allow him to focus of technical support and capital raising/partnering strategy.

With a PhD in mechanical engineering, Paul had spent a number of years consulting to private equity firms in industries that are in a state of flux. In the mid-2000s he bought a stake in a small windsurfing company “that was in the wrong stage of the value chain”.

“We had to either move all production to Asia to build scale and become a marketing company, or figure out how to make the boards locally, with much less labour and skill involved,” he says.

It was time to draw on his robotics and automation networks, and the associated mathematics around the technology, in order to change how the industry makes boards and bring production back to local markets; close to retail stores and users. Paul picked up on the global trend to mass customisation (for example, the Zara clothing brand) linked to market demands. “So if it’s a big surf season, you follow the stores selling more boards.”

Today, in essence kinaroad is slip-streaming two macro trends – demand shaping (“following consumer demand”) and re-shoring; bringing production back from Asia.
Consumer demand is the key to this business – as Scott explains, demand for board brands is driven by live streaming of professional events around the world. “So there’s much faster visibility on what’s hot and what’s not, which is problematic if you’re manufacturing in Asia, with four months lead times.

“So the problem that needs solving is shortening that lead time from months to days, to meet quick demand.”

Scott says the manufacturing cells they’re initially taking to market are for high-volume ‘Mini Mal’ mid-range surfboards. Down the track they’ll also target high-performance short boards and the fast-growing stand-up paddle market.

He says market growth is being driven by the livestreaming exposure of surfing events, and, particularly in Europe (led, surprisingly by Austria), paddle boards. The latter often referred to as “the bike of the water”.

Manufacturing evolution
The kinaroad concept is the latest, and arguably most exciting, step in the evolution of surfboard manufacture which has evolved from the handmade craft-based model of 15 years ago to large scale Asian production and the introduction of CAD (Computer Aided Design) and CAM (Computer Aided Manufacturing) technology. Stripping out and de-skilling the labour content is the key to survival – and this is where process automation and lean manufacturing (design from the bottom up) have an important role to play.

Kinaroad’s bespoke design software system, which integrates with the robotics, controls the design parameters that the brand designer works with, explains Scott.

“The beauty of our system is that a designer can design a new board and produce a batch of just one, if you like. We don’t have to do runs involving hundreds,” he says.

“This flexibility and efficiency allows brands to produce a mixture of product depending on what the market’s demanding at the time.”

That also eliminates the problem of redundant stock and end-of-season discounts, he says, and improves margins for the brands and retailers.

After four years of R&D, knocking off the high risk technical components associated with such a venture, kinaroad is now raising capital to ramp up growth.

There are four components to the kinaroad offering: the online design tool; robotics and automation; composites (resins, carbon-fibres etc); and manufacturing optimisation software.

Testing through Takapuna-based Primal surfboards has produced excellent feedback on the final product.

Scott and Paul say kinaroad is breaking new ground in robotics for precision machining, and this makes a great ‘NZ Inc’ story because this country has deep levels of competence in the fields of composites, robotics/automation, and digital 3D design.

Lessons and plans
All that planning and development work have provided plenty of lessons for the two directors – particularly around perseverance and overcoming technical challenges. Having talented “world-class” people on board and a solutions mindset has got them through the roadblocks, says Scott. “That’s a lesson for all start-ups – understand the core competencies required to accomplish your vision, and get the right people. You can’t do great stuff by yourself.”

You need to surround yourself with an advisory/governance team that has some of the smartest people in the country, adds Paul. “People from diverse backgrounds who can offer different perspectives.”

Right now, kinaroad is getting its Auckland ‘cell’ up to full capability, before commissioning cells for buyers. The initial new cells will be owned by kinaroad, says Paul, and then subsequent sales franchised. Leading offshore board brands have already shown a lot of interest.

“This is an offshore game,” says Scott. “In five years’ time we would expect to have around 35 of these cells worldwide, producing around six to seven percent of the world’s boards – which represents some 175,000 boards.” It’s a mind-blowingly big opportunity, with Queensland and California being the initial targets.

Paul and Scott’s business relationship, forged initially through a mutual contact at Callaghan, is tailor-made for the company. Paul is the strategist-cum-technology whizz and business development champion, and is pleased to say that Scott rounds out the company’s capability set. “With hindsight, I should have had him on board much earlier.”