Swiss ski core manufacturer Hess to close

Swiss Toni

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In a recent interview with the Handelszeitung, a Swiss German language business newspaper Stöckli CEO Marc Gläser said that Hess & Co AG https://www.hessco.ch/en/ the Swiss ski core manufacturer is to close at the end of 2022. See the 3rd line in the 2nd paragraph. https://www.handelszeitung.ch/speci...-ceo-marc-glaser-uber-wachstumschancen-543800

Other sources https://www.schreinersicht.ch/artikel/Aus_nach_fast_100_Jahren--6200 (also in German) say the closing date is actually the end of January 2023.

I’m pretty sure that Hess ski cores are used by all the World Cup teams apart from maybe Fischer who have their own core production facility in the Ukraine. Hess cores are also used in many European manufactured high-end recreational skis.

The closure was announced in September, so the ski manufacturers don’t have very long to find replacement suppliers. Hess could be the only supplier of cores made from rotary cut veneers, I think Fischer also make this type of core but I don’t know if they supply other companies. Finding another plywood manufacturer willing to make these might not be easy.
 
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Swiss Toni

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The company has been struggling to survive for some time, a lot of their production is exported to the EU, the current Euro / Swiss franc exchange rate makes Swiss exports very expensive. In the past few months, the general economic situation has deteriorated even further.

Since 2020, Hess & Co AG has been posting annual losses averaging CHF 300,000 p.a.. As a result, the company is experiencing liquidity problems, which the company has so far only partially been able to compensate for with additional loans and private funds from the owners.

Prospects for 2023 gave no hope of improvement. The price increase for electricity alone will cause additional costs of two million Swiss francs compared to 2022. The price of logs has also increased by at least 15%. These additional costs cannot simply be passed on to customers.

If they hadn’t have decided to close they would have gone bankrupt.
 

Tony S

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I guess if their customers couldn’t get by without them, they’d have found a way.
Not sure. I've learned in my workplace that the extent and criticality of external dependencies are often too far under the radar. That's because we don't like to hear or think - much less talk or plan - about things that don't support the fictional "self made" story.
 

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Not sure. I've learned in my workplace that the extent and criticality of external dependencies are often too far under the radar. That's because we don't like to hear or think - much less talk or plan - about things that don't support the fictional "self made" story.

yes, with the huge spike in energy prices in Europe expect to see other similar casualties. Even where a company is an essential or sole supplier, if what they can sell the product for fails to cover costs they can not continue for long
 

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If there is a large enough demand, a provider will appear.
The Nordic countries have the forests, do they have the mills capable of producing the laminates?
With their history of furniture making they should have the facilities.
 
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Swiss Toni

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I guess if their customers couldn’t get by without them, they’d have found a way.
The ski manufactures will be able to get by without them, for consumer skis they will probably just use the less expensive glued laminated timber cores. There are 2 companies in Slovenia that manufacture these, they are currently mainly used in mid-range carving skis and wide skis, racing and high-end carving skis usually have cores made from rotary cut veneers. So we will likely be getting cores with less performance for the same price.

The cores in the top stack of are made from glued laminated finger jointed poplar boards, the ones in the bottom stack are made from rotary cut beech and poplar veneers.

SkiCores.jpg

If there is a large enough demand, a provider will appear.
The Nordic countries have the forests, do they have the mills capable of producing the laminates?
With their history of furniture making they should have the facilities.
Ski cores are very much a niche product, compared to other laminated wood products demand is negligible. The forests in the Nordic countries are mainly coniferous forests, ski cores are mainly made from European hardwoods, the most widely used woods are poplar and beech. The Scandinavian plywood mills probably wouldn’t be interested as they mainly make birch and spruce plywood.

China isn't really an option, they do make ski cores, but they are pretty basic. As they are made in pretty small batches, the ski manufacturers specify what the cores are to be made from and how they are laid up I doubt that they would be interested.
 

Tony S

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What exactly are rotary cut cores, and how do they differ from other types of ski cores?
We definitely had posts that explained that. Trying to remember where! Maybe search "rotary" and "veneer" on Advanced Google, constraining the domain to SkiTalk.com.
 

cantunamunch

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What exactly are rotary cut cores, and how do they differ from other types of ski cores?

A rotary cut veneer is one that is cut off the surface of a spinning log, as opposed to sliced off a plane of the log. There are plenty of companies worldwide who do that.

The problem is glueing those veneers back up in an orientation useful for ski cores.

We definitely had posts that explained that. Trying to remember where! Maybe search "rotary" and "veneer" on Advanced Google, constraining the domain to SkiTalk.com.

Hess:


Lusti:

 
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David

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Seems like one of the ski manufacturers would buy them cheap?
 
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Swiss Toni

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Seems like one of the ski manufacturers would buy them cheap?

If one of the ski manufacturers or one of the ski component suppliers were interested I think they would have already bought them. As well as ski cores Hess makes plywood for use in the construction and furniture industries and plywood products such as bed slats and seat shells, I doubt that a ski manufacture would be interested in that side of the business.

Google "ESG score" and you will get your answer why they are going out of business.
Very hard to get financing.
Using glues that are made from oil and and cutting down trees is not considered "Green" anymore.

Hess is a family owned business so an ESG score probably won’t be available. They are closing because of the financials, the value of the Euro against the Swiss franc has fallen by 40% since 2007, so far this year it’s down 4.97%, their electricity costs will increase by 62% next year and price of logs has increased by 15% all this makes the business non-viable.

I think all the plywood made today uses phenolic resin adhesives, there doesn’t seem to be an alternative. Most of the wood they use is obtained locally from sustainable sources. Forestry and the timber trade are strictly regulated in Switzerland, placing illegally harvested timber and products made from it on the Swiss market is illegal.

According to Hess their cores are used in 30% of the skis made today, taking into account that there are still quite a lot of foam cored skis on the market this is a significant proportion. I hope the manufacturers have some sort of plan for their replacement.
 

cantunamunch

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Hess is a family owned business so an ESG score probably won’t be available. They are closing because of the financials, the value of the Euro against the Swiss franc has fallen by 40% since 2007, so far this year it’s down 4.97%, their electricity costs will increase by 62% next year and price of logs has increased by 15% all this makes the business non-viable.

Talking of, is there any chance the EU-Swiss agreements will be re-negotiated enough to affect CHF/Euro, or is that a political black hole no sane negotiator wants anything to do with?
 
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Swiss Toni

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Even if the EU / Swiss agreements were to be successfully re-negotiated I don’t think it would make any difference to the exchange rate. Investors tend to put their money into the Swiss franc in uncertain times, there is a lot of uncertainty in Europe at the moment. Surprisingly industry still makes up about 25% of our GDP.
 

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They are closing because of the financials, the value of the Euro against the Swiss franc has fallen by 40% since 2007, so far this year it’s down 4.97%, their electricity costs will increase by 62% next year and price of logs has increased by 15% all this makes the business non-viable.
So another supplier restarting the business in Switzerland is a nonstarter for now?

Looks like exporting the finished product to the EU market is cost prohibitive, add to that the high cost of electricity and energy.

Likely we will see much higher costs for ski equipment here in the US (despite the strong USD) as well as continued supply shortages in the near future.
 

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