Tackling change

If you grew up freshwater fishing in America you most probably owned a Zebco fishing reel. Zebco, which now owns several other fishing tackle brands, is an iconic name in US recreational fishing. With headquarters in the small Oklahoma city of Tulsa, some of Zebco’s brands include Fin Nor, Quantum, Van Staal, Cajun line, and more.

An abbreviation of Zero Hour Bomb company, Zebco’s rich history dates back to 1932 when it started business manufacturing time bombs for mining use. The time bomb business fizzled, along with the local mining industry, about the time Zebco’s fishing reel section started to expand.

Marine industry giant Brunswick bought Zebco in 1961, owning it for 40 years before selling to WC Bradley in 2001. Brunswick also built the Tulsa facility where Zebco stands today.

“That was a great period for Zebco, being run by a large professional company. There are a lot of small tackle companies who never have the opportunity to make that transition,” said Zebco president Jeff Pontius.

Zebco went through a turbulent period in the late ‘90s when it was put up for sale by Brunswick.

“It [Brunswick] had a new chairman, he had a different strategy, and that strategy was to sell to categories that were dominated by a dealer based distribution channel and they wanted very high-end engineered products,” said Pontius.

“A lot of Zebco’s business was still to mass channel, chain sporting goods, rather than to top end dealers. Zebco belonged to Brunswick’s Outdoor Group and the whole lot was sold,” he said.

At a time when most US companies had long since moved factories overseas, Zebco was finding it financially difficult to keep its factory in the states and was building up losses.

“We ultimately had to make the decision to close our domestic factory and relocate to China. We had to relocate while we were for sale, which is never an easy thing to do.

“We didn’t have a choice, we were part of a much bigger decision, Brunswick had already decided to shut the factory when we came up for sale.”

Zebco accelerated the whole schedule, closing down production in the US while ramping up production in China, all in less than two years. “The closing down of a factory is easy to accomplish in a short period of time – the opening of a new factory in the same time is very difficult. There’s tooling and training, and more work. It took about 18 months, and we split it, we went to two facilities in China because we found it overwhelming for just one place.”

The company found significant savings in labour. “About 25 per cent and I’ve heard that from multiple other US companies that went across.”

Interestingly Pontius said Zebco’s quality rates improved. “That’s usually counter to what happens, but we had been cutting corners to stay here, we were trying to reduce the part-count and get by with less labour. With the savings in labour after the transition, we re-invested it back into the designs of the product – putting costs back into the product.”

As a result the company’s warranty and return rates rapidly improved. “At the start it was artificially high because of the uneasiness of the transition with the trade sending some products back, but there was a 40 to 50 per cent improvement in quality, even in the low end goods.”

Pontius said the company also worked to bring inventory down, taking away the growing stockpile of old products. “We then had a lot less capital invested in the business and it became a much more variable business model when you don’t have a factory.”

Zebco has a distribution facility near its Tulsa headquarters which is about 20,000 square metres. “You might say that’s a lot of fishing, but we turn that volume about three times a year.” Pontius said if you want to accommodate the whole of the US you need a big factory. “A lot of business success in fishing is not just designing a good reel, (it’s also about) servicing the customers. The same is true for your home market in Australia. If you can’t ship to dealers they’re not happy,” said Pontius.

New owner

WC Bradley bought Zebco in 2001. WC Bradley, the man, started his business selling cotton at the turn of last century before quickly expanding to other areas. In 1919 Bradley got together with a business partner and made an equity investment in Coca Cola, the partner became president, and Bradley became chairman. Bradley remained chairman of Coca Cola until the 1940s. Bradley’s family, which is based in Georgia, where Coca Cola is based, sold many of its old cotton businesses, but kept its Coca Cola stocks and has now invested in a lot of other areas.

“They bought us and several other smaller companies. The Bradley family grew up hunting and fishing and knew the Zebco brand. When they heard it was available, they liked this business, they thought they could help it grow, and they ended up being the highest bidder and we couldn’t be happier,” said Pontius.

“Through all the challenges of being owned by a large publicly traded company, it was nice to go private again and really focus on the business, and on the long-term, rather than focusing on quarter to quarter earnings.”

Pontius explained a dramatic increase in regulations governing publicly traded companies in the US came with a significant increase in costs. “We avoided having to deal with that and financial earnings became much better,” he said.

New business model

When Zebco made the decision to offer premium products with higher price points it required additional brands as Zebco had become synonymous with entry level freshwater fishing. The company took on premium brands including the iconic Fin Nor, Van Staal Quantum, and Cajun line brands.

“The brands are all kept separate with marketing, websites, catalogues, etc. The trade knows the linkage, but we don’t do anything to promote this to the consumer.”

Today, besides its premium product factory in China, most of Zebco’s products are produced in contract factories and that calls for an entirely different approach to business.

“When we closed the factory and went to contract factories to produce the product, we became very good at designing and developing the product, and we are very good at selling, branding and marketing. Because that’s what we’re offering to people now. When you outsource and shut a factory down you have to rethink the whole business model and that’s what we did. We invested in a lot of engineering, quality, and the test lab, which we hadn’t done before.

“Before then, the mindset was that R&D was there to support the factory. Now, R&D is the tip of the spear. R&D is what it’s all about – it’s driving innovation, driving loyalty to your brands and products and that was a major shift in thinking for us, and it’s what gave birth to us being more successful,’ Pontius concluded.