The Russian invasion of Ukraine could have significant impacts on the cross-country ski market around the world. Ukraine manufactures approximately half of the 4M skis and snowboards sold globally at a factory owned by Fischer Sports in Mukachevo in Western Ukraine, a country newly at war with Russia. 

Fischer Sports Equipment Company, the world largest manufacturer of skis, manufacturers about 60% of its own brand’s skis and manufactures skis and snowboards for other brands including Rossignol, Alpina, Scott, and Dynafit in Ukraine. Overall, experts have estimated that more than a quarter of the world’s skis across all disciplines come from the Fischer factory in Western Ukraine.

On Wednesday, February 23rd, Russia began a full-scale military invasion of Ukraine with strikes on locations within 130 miles of the factory in Mukachevo. In addition to obvious potential direct impacts, global conflict is likely to impact trade significantly as economic sanctions and other trade tactics are likely to be used as tools in the conflict.

We already know how the shuttering of Fischer’s factory can disrupt the cross country ski hard goods market; a fire raged through the Ukrainian factory floor on October 12th, 2020. By then, most of the skis for the 2020/2021 season were already produced and were shipped into retail on time. However, despite other brands ramping up capacity at other factories, many retailers have not been able to secure any in-season reorders this season, and a percentage of demand is going unsatisfied. In response, many retailers have increased their pre-season orders. Left to self-correct following the factory fire in Ukraine in an environment of increased demand spurred by the pandemic, the industry found ways to avoid the worst symptoms of unaligned supply and demand last season after the fire. However, adding disruptions caused by global conflict on top of the ongoing disruptions caused by Covid and the October fire could cause significant additional disarray.

The bullwhip effect (also known as the Forrester effect) is defined as the demand distortion that travels upstream in the supply chain from the retailer through to the wholesaler and manufacturer due to the variance of orders which may be larger than that of sales. Retailers unable to meet demand inflate their orders, distributors seeing increased orders from their retailer customers increase their factory orders, and the factory increases orders of supplies based on speculation of current demand. Unfortunately, unmet demand isn’t always pent up, customers look to other options when they can’t get the cross country skis they want. For example, a customer looking for a specific pair of skis that are simply not available may decide to spend their money on an eBike this year. By the time supply meets demand, that demand has often diminished leaving retailers and distributors stuffed with unsold inventory, and factories littered with supplies to make products few are buying. The impacts of the bullwhip effect can last years as oversupply is discounted and moved, or in worst cases destroyed and harmony between supply and demand signals brings stability to the market.

Global conflict is an obvious threat to markets, it’s important to be aware of likely direct and indirect impacts on the horizon. Although Russia exports relatively few goods directly to the U.S., shortages of commodities caused by the conflict could have tertiary impacts across all markets.  Global conflict could reduce participation in outdoor recreation and strangle consumer spending. Hopefully, this conflict will be resolved quickly, but it’s at least equally likely to continue for an indefinite period. Cross country ski companies should consider all potential market disruptions and consider planning for a variety of economic scenarios. Some companies may find opportunities lined up right beside these challenges.

SnowSports Insights is working with the CCSAA to track major cross country market trends in 2022, and global conflict between nuclear powers in countries that manufacture significant percentages of the global cross country gear supply qualifies. We will work to keep you updated on known direct and indirect market impacts.

For more information, contact Kelly Davis, Snow Sports Insignts, kelly@snowsportsinsights.com.

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