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August 2021

Increased Demand And Disruption In Supply A Bitter Soup For Operators

By: Steve Eubanks

The law of supply and demand remains inviolate. It’s like the law of gravity. You might not like it; you might not believe in it, but if you fall in your driveway, it’s still going to hurt. And hurt is what many golf customers are feeling this summer as they continue to wait on a product that was ordered in the early spring but has yet to arrive. Or when they show up and experience sticker shock at the rental price for a golf cart. Or when they want their favorite ball and realize everyone in town is out of stock.

These are not failures on the part of course owners. The delays, shortages and increased prices are not due to industry incompetence or price gouging. What golf is experiencing in the summer of 2021 is the aftershock of a shutdown, one that could continue to have ripple effects for at least a couple of years.  

Take equipment, for example. If you ordered a dozen golf bags, say for a high school team or a league, in February, there’s a good chance those bags did not arrive before the seniors graduated or the season was complete. If you ordered custom irons from a major manufacturer, there is a chance they might not arrive before Labor Day. Manufacturers know they have a problem. And they are braced for the blowback. But it’s not their fault, entirely.

As of early June, hundreds of thousands of golf shafts, clubheads, grips, golf bags and shoes were on container ships in the Pacific, having left the plants in Vietnam and Malaysia, bound for ports on the West Coast. But there they sat, at sea, along with many other consumer products, not because of any shipping disasters, but because of labor shortages on the docks. With minimal staff available to offload ships, a great deal of cargo has been delayed. You see it in the price of clothing and hardware. Nails are three times as expensive as they were a year ago. And golf grips, if you can find them, are going up as well. 

Those are areas the consumer notices most. If the personalized golf bag you’ve ordered for your father’s birthday doesn’t arrive for three months, you wonder what is happening in the industry. But the area where the course owner sees the biggest impact is golf carts.

The most valuable person in the industry right now, and the one that operators are paying top dollar to find, is the qualified golf cart mechanic. Not that the person repairing equipment hasn’t always been vital. But with today’s gap between supply and demand, a mechanic who can keep an old fleet running for one more year is worth his weight in gold.

Individual markets vary and there are as many deals on golf cart fleets as there are operators willing to negotiate. But the industry trend is clear: Carts are more expensive, often substantially, and the wait time to get them is longer than it has ever been in the past.

Individual purchasers are taking the biggest hit. Go to The Villages in Florida, the fastest-growing retirement community in the world, and try to buy a private cart. It’s not uncommon to pay as much as $18,000 for a brand-name electric, which is more than the base price of a 2021 Kia Soul and more than many residents of The Villages paid for the first houses 50 years ago.

Fleet prices are more reasonable but still jarring. Once again, this isn’t due to nefarious business practices or collusion of the part of manufacturers. The jump is due to disruptions in supply while demand has skyrocketed. 

If you played during the pandemic, you probably rode alone. That was one of the ways the game got back to normal. But that also increased the demand for golf carts by 40- to 60% in some places.

At the same time, golf cart manufacturers were shutting down plants for seven to 17 weeks in the spring of 2020. Once those plants reopened, with social-distancing protocols and new sanitation requirements, production resumed on a smaller scale. As one major golf cart executive who asked not to be named told Golf Business, “You can’t shut down for that long without falling dramatically behind. Major manufacturing isn’t a light switch that you turn off and on. Once we got back up and running, we’ve been playing catchup ever since.” 

Then, just like with clubs, bags and shoes, there are supply-chain problems. As another industry executive said, “Whether it’s tops, hubcaps or windshields, there are problems getting everything. There is a worldwide shortage of polycarbonate, for example. So, all the accessories have gone up. Then you have some knucklehead trying to turn his cargo ship around in the Suez Canal and things get clogged up ever further. Sure, your plant might be running at full capacity. You might be ready to build 300 carts a day. But if you can’t get the components, you can’t build the product.” 

It’s an industry problem that isn’t going away in 2021 and may not ease until late into 2022. So the advice from everyone on the manufacturing side is simple: Tell your customers to be patient. Deliver the bad news up front. And do whatever it takes to keep your current cart fleet running.

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