Karsten Manufacturing Corporation

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Karsten Manufacturing Corporation

2201 West Desert Cove
Phoenix, Arizona 85029-4912
U.S.A.
Telephone: (602) 687-5000
Toll Free: (800) 474-6434
Fax: (602) 687-4482
Web site: http://www.pinggolf.com

Private Company
Incorporated: 1967
Employees: 750
Sales: $159.5 million (2000)
NAIC: 339920 Sporting and Athletic Goods Manufacturing

Located in Phoenix, Arizona, Karsten Manufacturing Corporation is famous for its Ping golf clubs. Unlike other equipment makers, Karsten sells its clubs only through golf course pro shops, where customers are custom fitted. Because the privately owned company manufactures only when an order has been placed, it carries no inventory and is able to roll out new models with a minimum of lead time. Founded by engineer Karsten Solheim, the company has been at the forefront of golf innovation since the development of the Ping putter in the late 1950s. Despite its reputation for unsurpassed quality and technical expertise, the company has been eclipsed in recent years by more marketing-savvy competitors. Forced to adapt to changing conditions, a second generation of the Solheim family has taken control of the business, instituting a number of changes to forge a strong comeback. In addition to the design and manufacture of golf clubs, Karsten produces accessories, such as bags and apparel, and owns and operates Moon Valley Country Club in Phoenix. Karsten also owns several subsidiaries involved in the manufacturing process of its golf clubs. Because of their technical expertise these businesses have other commercial applications. Karsten Engineering, for instance, does research for clients such as NASA, IBM, and Motorola. Dolphin Inc., a foundry and brazing operation, not only casts putter and iron heads, but also produces precision parts for a number of air planes and weapons systems, including the Stealth bomber and the M-A tank.

Karsten Solheim’s Immigration to the United States in 1913

Karsten Solheim was born in Bergen, Norway, in 1911 and two years later immigrated to America with his family, which settled in Seattle, Washington. He learned the shoemaking trade from his father but was devoted to the dream of one day becoming a mechanical aeronautical engineer. He enrolled at the University of Washington but after a single year, with the country in the midst of the Depression, he was forced to drop out, unable to pay the tuition. He fell back on the craft his father taught him and for several years ran a shoe repair shop in Seattle. He soon learned a business principle that he would embrace for the rest of his life. When another cobbler opened a shop across the street and undercut the price to repair heels, Solheim followed suit but was surprised by the reaction of his old customers, who wanted to know if the quality of his work would remain the same. He concluded that quality, not price, was the key consideration. As a result he doubled his price, offered higher-quality leather, and ultimately drove away his cut-rate competition.

Solheim continued his engineering studies through college extension courses, but it was not until the advent of World War II and the defense industry’s desperate need for engineers that he was able to give up the shoe repair business. He needed only five weeks to complete a ten-week crash course in engineering at the University of California in Berkeley, then moved to San Diego to work at Ryan Aeronautical Corporation, becoming a flight research engineer and working on the Fireball jet fighter plane. He stayed with Ryan until 1951 when he took a job at Convair, serving as a project engineer on the first ground guidance system for the Atlas missile. Two years later he went to work as a mechanical design engineer for General Electric (GE) at its Ithaca, New York plant, becoming involved in radar and guidance systems. In 1953 he was transferred to the GE Electronic Park in Syracuse to work on the development of the company’s first portable television and while there invented the rabbit-ears antenna. A Chicago firm manufactured it, after GE proved uninterested in the item, selling millions. Solheim vowed that he would manufacture his next invention himself.

Taking Up Golf in 1953

That Solheim’s next invention might involve the game of golf was highly improbable. A tennis player, he never even tried golf until moving to Ithaca, when in 1953 at the age of 42 he played a round with coworkers and became enamoured with the game. Putting was particularly troubling to Solheim, who soon concluded that a large part of his difficulties could be attributed to design flaws in his putter, which no matter how consistently he stroked it would twist just enough to send the ball off course. Knowing that a tennis racket employed perimeter weighting, in which the weight was distributed to the rim to allow the strings to provide greater power, Solheim decided to apply the same principle to the putter. By putting most of the weight at the heel and toe of the putter’s blade he would be able to create a forgiving “sweet spot” in the center, allowing the player a much better chance to hit the ball straight. Solheim tested his idea by having a neighbor weld some metal to the back of the heel and toe of a putter, changes that helped the club head to complete a stroke. He then worked out the design of a new putter by gluing two popsicle sticks to the sides of a pair of sugar cubes with a shaft rising from the center. By the time he had constructed a prototype of his new putter, the 1A design, he had been transferred by GE to Palo Alto, California, where he worked with a team that produced the first banking computer system. Years later he recalled trying out the putter for the first time in 1959 in his kitchen in Redwood City, California: “I heard this noise, it startled me so much I dropped the putter on the floor. And then I knew that’s what I would call my new putter: Ping.”

As he continued to work for GE during the day, Solheim spent his weekends visiting golf course pro shops, giving away free putters to resident professionals to elicit feedback to help him improve the design. He even was known to lay out graph paper on the practice green to provide objective proof that his putter hit the ball straighter. One proshop owner in 1959 urged him to manufacture the Ping putter and sell them through the club professionals. He also warned him not to quit his day job, advice that Solheim followed for several years. To fund the enterprise he took out a $1,100 bank loan, the only financing he would ever need. First in Redwood City and then in Phoenix after GE again transferred him in 1961, Solheim began to produce Ping putters in his garage at night, hand-grinding the heads in his garage and then heating them on the kitchen stove to fit them on shafts. His sons helped out, drilling holes in the putter head to accommodate the shaft and adding the grips. To market his revolutionary putter Solheim began to attend professional tournaments, lingering at the practice green to ask the players to try his putter. Many were reluctant because they considered the Ping to be ugly, a fact to which Solheim was indifferent, insistent that his club should be accepted because of what it could do, not its appearance. Golfers by nature were willing to try almost anything to improve their game, especially their putting, so enough pros gave the Ping a chance to begin to build word of mouth about the new putter, aided to some degree by Solheim engraving his name and address on the head. Winning tournaments, of course, translated into sales, as casual golfers, hoping the magic would rub off on them, invested in the same equipment as the victor of that weekend’s tournament. In the early 1960s the sale of Ping putters was spurred by Gloria Armstong’s win in a his-her tournament and John Barnum’s win of the 1962 Cajun Classic. A Sports Illustrated article on the “musical putter” also helped sell the Pings.

In 1962 Solheim received a patent on the heel-toe weighting design on his putter, but continued to work on improving the design while also beginning to develop irons. Because he lacked access to a wind tunnel, he had a son drive him 100 miles an hour in the desert in order to hold his prototype irons out the window to check the drag caused by a typical swing. In January 1966 an idea for a new putter came to him in a flash of inspiration. Unable to wait to get the concept down on paper he grabbed a record sleeve and sketched the design. His wife Louise thought the new putter should be called “answer,” a name that Solheim liked but that possessed too many letters to fit on the club. She then suggested that the “w” be left out. The legendary “Anser” putter, used by countless tournament winners, was born, and Karsten Solheim was on the verge of finally quitting his day job.

Marketing of the Anser was still limited to word of mouth, but those voices would become greatly amplified by the rise of professional golf on television, fueled by the popularity of Arnold Palmer and the rising star of Jack Nicklaus. When Julius Boros won the PGA Tour’s Phoenix Open in 1967 using a Ping Anser putter, sales took off. Solheim, not intending to quit his engineering job, continued to meet the demand for his putters through his garage operation, much to the annoyance of his neighbors, but when GE decided to once again transfer him, this time to Oklahoma City, he decided to try the golf business full time. He was 56 when in July 1967 he incorporated Karsten Manufacturing and then bought a 2,200-square-foot building in Phoenix. Years later he told an interviewer, “When I moved into that little room I felt like I was a king.” He soon hired his first employee and a year later had 30 people on payroll. Even as a businessman Solheim revealed his innovative spirit. His company had no job descriptions; he simply hired talented people and allowed them to find their most valuable function in the organization. Within two years annual sales grew from $50,000 to $500,000, despite a problem with the United States Golfing Association, which outlawed all but one of the Ping putter designs because of a bend at the base of the grip that helped the head swing square to the ball. A settlement was eventually reached, resulting in some changes to the clubs. This difficulty with the establishment foreshadowed a more contentious battle years later.

Company Perspectives:

Today Ping Engineers are dedicated to designing the perfect club.

Introducing Irons in 1969

Solheim’s work on irons came to fruition in the late 1960s. He applied the heel-toe, perimeter weighting principle to fashion a sweet spot on the irons and also employed investment casting, which was far more precise than the popular forging method. Other equipment makers produced shinier clubs, making Karsten irons look almost homemade, and once again Solheim insisted that his clubs be judged by their results. He refused even to add chrome plating in order to please customers.

Performance eventually converted the reluctant, and that performance was enhanced by other Solheim innovations. He heat-treated the clubheads to resist corrosion and add strength, but it also allowed them to be adjusted for loft and lie, meaning the clubs could be custom fitted to take into account the customer’s stance and swing. In the early 1960s Solheim had calibrated loft and lie angles for pro golfers, work that now led to the creation of the Ping Color Code Fitting System. Each set of clubs was then numbered and the specifications kept on file, so that customers in need of a replacement would be able to obtain an exact replacement from the factory. The practice of custom fitting also meant that any Ping clubs found on the shelves were either used or fakes. Combating counterfeiters would become a major area of concern for Karsten over the ensuing years.

Between 1969 and 1976 the company came out with its Karsten I, II, III, and IV irons, followed by the popular Eye series starting in 1979. The company also produced woods but never captured much of the market. Nevertheless, Karsten dominated in putters and irons, making it the top golf equipment manufacturer and allowing Solheim to branch out into other golf products and other business activities, such as Solheim Engineering and Dolphin Inc., as well as the 1984 purchase of Moon Valley Country Club. It was Solheim’s success as a golf club designer, in fact, that led to a major distraction in the late 1980s, one that contributed to Karsten’s loss of focus in the 1990s.

In 1984 the USGA decided to permit U-shaped grooves in the face of an iron, as opposed to traditional V-shaped grooves. Solheim was quick to take advantage of this rule change with his Ping Eye 2 model, which quickly proved popular, ultimately becoming Karsten’s best-selling club in history. Because the grooves were hard on soft-covered balls, Solheim rounded off the edges, which the USGA ruled was a violation and banned from professional play. In essence, the clubs provided extra spin, which made it easier for golfers to execute shots from difficult lies. Solheim insisted that his clubs were consistent with the USGA regulation and eventually took the organization, and later the PGA Tour, to court. Both suits were settled out of court, the USGA in 1990 and the PGA Tour in 1993. Karsten’s older irons were deemed legal but future clubs would have to comply with USGA regulations.

As Karsten emerged from its legal squabble in the 1990s it found itself operating in a new business environment. Other equipment manufacturers had followed Solheim’s lead and greatly improved on their technology, but unlike Solheim they were more willing to please their customers and not insist that pure functionality rule the day. Moreover, they effectively advertised their wares, instead of relying on reputation, no matter how strong that reputation might be. Karsten began to lose significant market share, with its top-selling irons falling second to rival Cobra in 1995. It was clear that change was needed and as a result Solheim’s son John Solheim took over as president and soon presided over the first layoffs in nearly three decades and instituted a number of changes over the next few years. The company updated its marketing approach, replacing its staid print ads with bolder designs and adding broadcast advertisements; it introduced oversized metal woods that had become popular with players; and instead of merely offering bonus money based on performance to professionals who played with Ping equipment it began to offer a salary to select players.

In the late 1990s Karsten was well on its way to recovery, while at the same time its founder, suffering from Parkinson’s disease, began to steadily decline. During his last years he was bound to a wheelchair. He died from complications of the disease on February 16, 2000, at the age of 88. Although a maverick who was never part of the golfing establishment, Karsten Solheim was acknowledged by all as one of the most important influences on golf club development in the modern era. His sons now led the company he created and a third generation was preparing to carry on his commitment to innovation and craftsmanship.