William L. Coney Blog: Hogan’s Rough Week: Rebirth or Death Knell?

By John Barba

The dust is finally settling on this week’s big news out of Texas. The Ben Hogan Golf Equipment Company dropped a bombshell on the first business day of 2017, laying off nearly all of its Forth Worth workforce. There's no way to put a positive spin on that, but what originally appeared to be the death knell for the company may, in fact, be an opportunity for a reboot.

“It’s unfortunate sometimes when expenses get a little bit out of whack with revenues,” Hogan CEO Scott White tells MyGolfSpy. “A lot of small companies, whether they’re in the golf industry or not, are often forced to go through this kind of thing. It’s never a fun day.”

Early reports indicated 100% of Hogan’s work force was let go, but White confirms approximately 30 people were laid off. At this time there’s only a skeleton crew left at the Forth Worth headquarters. The entire manufacturing staff was let go, as was the entire marketing team and salaried sales staff, including the directors of field sales, national accounts, and international sales. Approximately 15 independent field sales reps remain.

“We want to clear the slates,” says White. “We really want to start with an empty building and decide whom exactly we need to come back and in what capacity. That’s the process we’re going through this week and next."

White says a handful of manufacturing people will be brought back on a contract basis almost immediately to fill new and existing orders as needed.

“Letting the manufacturing staff go is a very short-term measure. We know we need people here to build clubs. A lot of those people will be coming back pretty quickly.”

Corporate Reset

So what is Hogan trying to do? White is pretty candid.

“We have some very generous investors and financial institutions that we work with,” he says. “And like any investment group they want to see a return on their investment at some point.”

“We’ve been at this now close to three years, and without going into the gory details, we weren’t coming any closer to profitability. Not to say there was an expectation to be profitable within three years, but we needed to cut expenses and reconfigure how we’re doing business to get closer to profitability.” – Hogan CEO Scott White

White says the move was not forced upon Hogan by anyone, but there have been what he calls strategic discussions.

“The process has forced us to do a lot of soul searching and figure out where we should be and what’s our sweet spot. I don’t think up to this point our plans have been indicative of where we think we need to be.”

It's clear that Hogan needed immediate and drastic cost cutting. Sources have told MyGolfSpy that Hogan was behind in payments to media outlets and product suppliers.

How Did This Happen?

Hogan re-launched to great fanfare at the 2015 PGA show, where it debuted its Fort Worth 15 irons and TK 15 wedges. The company bought a prime spot at Demo Day and had a large, elaborate booth in a prime location at the show – all before selling a club.

Also, the company leased and remodeled a large portion of the old Fort Worth Star-Telegram building for office and manufacturing space. The office space itself was very lavish, and plans were in the works for a first-class manufacturing facility featuring a monorail system. By any measure, Hogan was building a world-class infrastructure, again, before selling a single club.

In retrospect, it appears Hogan built the façade of a big company, hoping to backfill that façade with sales and substance with an “if we build it, they will come” attitude.

“That’s a fair statement,” says White. “I don’t want to criticize because I wasn’t here then, but I think there was the hope the Ben Hogan brand name was going to contribute to immediate success on a pretty grand scale.”

“We built a big, pretty glass building with lots of expensive machinery and equipment in it, and anticipated we were going to make a huge impact very quickly. I think a more conservative and more thoughtful approach might have been more prudent – just build this up as revenues increase. We do have a first class facility here, and our hope is to stay here, but probably in a little bit different footprint.” – Scott White

Even before the layoff, Hogan was not planning on having a booth at this month’s PGA Merchandise Show, instead opting for a separate meeting room. At this point, White says he’s not sure what level Hogan’s presence will be.

Odds of Survival?

When a company opens the year laying off almost all of its workforce, it usually means it’s time to turn off the lights, ‘cause the party’s over. White insists that’s not the intention.

“We have no intention of undergoing any of those scary concepts of bankruptcy or foreclosure,” he says. “We’re just trying to reboot and reconfigure the organization. We have no intention of folding up tents or shutting down operations. It’s just going to be a smaller tend and smaller operation.”

Which is probably how Hogan should have returned to the market in the first place. When Terry Koehler brought the Hogan brand back, he did so in a grand way, trying to live up to his particular vision of what the brand was. In fact, if you study the Hogan brand, it went through a variety of stewardships over the years – some were successful while others, clearly, were not. It’s an iconic brand, to be sure, but it has been bought and sold so many times that its actual legacy has been diminished to the point that it has become a bantam weight boxer trying to fight in the heavyweight division.

White’s intent, seemingly, is to restart Hogan that way the brand should have restarted: in its own weight class.

“I’m the master of poor analogies,” says White. “But as I explained to the group, this is like hitting the pause button on your stereo. We’re going to reboot and make sure that going forward we’re a viable, profitable organization. We don’t have the luxury of other organizations with huge bank accounts and lines of credit. We just want to build in a very methodical and logical fashion.”

Perhaps a better analogy might be found in Ben Hogan himself. Hogan was riding high in early 1949 until that ride came to a crashing halt, courtesy of a Greyhound Bus. Hogan cheated death, but the question was whether he’d ever walk again, let along play competitive golf.

We all know how that turned out.

Consider this week to be the Hogan Company’s bus crash. White and crew have a new opportunity to restart, this time the way it should have been done to begin with.