CARLSBAD, Calif. -- The Asian economy was in crisis. The U.S. Golf Association was at war with equipment manufacturers. Callaway Golf earnings were in a free fall.
The spring of 1998 didn't look like the best time to break ground on a plant that ultimately would cost $170 million. Nor did it look like the best time to join a market where the product -- a white ball with dimples -- would not look much different from what already was out there.
Then again, Ely Callaway has never bought into conventional thinking.
''Was it a risk?'' the 80-year-old chairman and founder asked. ''The greater risk was if we didn't enter the market.''
With a high-tech plant and no-nonsense approach, Callaway Golf Ball became the latest company looking for a piece of the $1.5 billion industry. The ball was launched by Brian Henninger, the first player off the tee in the Mercedes Championship in January.
The official launch was the PGA Merchandise Show in Orlando, Fla., the first week in February. Where it goes from here is anyone's guess.
Golf balls offer lucrative margins for manufacturers, ranging from an estimated 30 percent to 60 percent, with an average of 31 million dozen sold each year. But the market is fierce.
Acushnet controls nearly 50 percent of the market, led by the Titleist brand. TaylorMade had its debut a year ago with the Inergel ball, while Nike stepped up its year-old campaign by going after more PGA Tour players.
Maxfli has added a new premium ball called the Elite, while Spalding is taking its popular two-piece Strata to mass merchandise stores such as Wal-Mart instead of only golf specialty stores or pro shops.
Where does Callaway fit in?
''It's a big market, we're not in it, and there's room for somebody to do a better job,'' said Callaway, using the same philosophy that got him into the club business that produced the Big Bertha and netted $714 million in sales last year.
From the start, Callaway set out to do things differently.
The name of the ball is ''Rule 35,'' a slight dig at the USGA, which has only 34 rules of golf. Rule 35 is to ''enjoy the game.''
The balls come in sleeves of five, instead of the traditional three, because of research that players tend to go through 4.5 balls per round (suggested retail price is $22).
Boxes of two sleeves are grocery-sack brown and look as if they contain a pair of women's dress shoes. There are no charts on the box explaining the technological advances of the ball, which is just the way Callaway wants it.
''Instead of techno-babble about cover compression or isocasahedral dimple patterns or thermonuclear urethanes built into the core, we tried to keep it very simple,'' said Chuck Yash, the new chief executive officer of Callaway who headed up the ball company.
Is it wound? A three-piece? Multilayer?
''If we're going to unclutter the messages, there's no use getting into it,'' Callaway said. ''We like people to react to the ball when they hit it.''
For emphasis, Yash took the boxes of two dozen competitors and stacked them in a pyramid on the table, all with multicolored graphics explaining the differences between such things as distance, control, spin and durability.
Callaway has made two balls -- a blue label for soft feel, a red label for firm feel -- although company officials say both are designed with essentially the same characteristics. Arnold Palmer used one of each during the two-day Senior Skins competition.
''Instead of segmenting to a distance ball, or a durability ball, or a tour ball, this has everything,'' Yash said. ''It offers complete performance.''
The message is simple, but the development of the ball was anything but that. One of the designers worked on the 777 wing for Boeing. Yash recalled one meeting in which he looked around the room and realized he was the only one without a Ph.D.
It all comes together in a plant -- and a technology -- that Callaway can call its own. Two stages during the process involve lasers that separate the good eggs from the bad eggs, so to speak, lending to more consistency.
Yash says Callaway never backed off his commitment to build a ball, even in the dark days of 1998. There was a shakeup in management. Seven hundred workers were laid off that fall. To go forward would require an additional $50 million, and there would be no turning back.
''Even during the tough times, Ely was very supportive,'' Yash said. ''He knew that long term, this is a good business for us. It's the second golf equipment business. If we do our work right, we can build ourselves a healthy franchise in golf balls.''
The other options to join the ball market would have been to farm out the work or to buy an existing ball plant. Callaway initially mulled an offer to buy Spalding before deciding to start from scratch. Not only did it build a plant, but also the tools that go in the plant.
''The creativity is in your own hands,'' Callaway said. ''That's the real reason we did it. If we had bought a ball from someone else, they would not give us their best technology. That's the reason we've done well with our golf clubs, because we control our own research and development.''
Now Callaway will see if it can do the same with a ball.
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