SYDNEY — Once a manufacturing giant in this country, Speedo Australia now performs the role of design and distribution center for 2,000 doors in Australia and New Zealand.

A wholly owned subsidiary of Speedo International, Speedo Australia is headquartered in the suburb of Windsor, about 18 miles outside of Sydney. The company employs 75 people, including four members of Speedo’s global design and development team, as well as marketing, logistics, distribution and administrative staff. Speedo was launched in 1928 by Sydney’s MacRae Knitting Mills.

In early 2001, the original Windsor factory was converted into Speedo’s Australian distribution center, but the company still has a 15-member manufacturing staff there. Sample makers work directly with the designers and technicians who produce the brand’s labor-intensive garments, such as the Fastskin and Aqua Blade suits.

The Australian office accounted for about $1.6 million of the brand’s wholesale volume in 2002, according to a company spokesman. That’s down from $7.2 million in 2001. Some of the falloff can be attributed to the shift in production, as well as product demand for the Sydney Olympics. Despite the downturn, Speedo Australia still qualified for a government manufacturing grant for its on-shore production.

Speedo declined to give sales figures, but business analysts Dun & Bradstreet Australia said Speedo Australia was a $13 million business in fiscal 2002, a 20 percent gain compared with the previous fiscal year. Dollar figures have been converted from the Australian dollar at current exchange.

Seventy-five people is of course a far cry from the 2,000 employed by Speedo in the early Eighties, when it owned a half-dozen manufacturing facilities in New South Wales and Victoria. Bought out of receivership by the U.K.-based Pentland Group in 1991, Speedo Australia laid off 65 workers and closed the doors of its last factory in Windsor in 2001.

The company’s decision to shift the bulk of Australian and New Zealand production offshore has caused some controversy in Australia, where the erosion of local manufacturing is an emotionally charged subject.

The company’s biggest challenge now is maintaining its core business of performance swimwear, a segment that accounts for 10 percent of the $659 million Australian swimwear retail market, according to industry estimates, while trying to successfully segue into the far bigger beach-leisurewear segment.“We’re going after the big pool now. Performance is what Speedo is known for and we totally dominate that,” said Speedo Australia managing director Rob Davies. “We have between 65 percent and 70 percent of that market in Australia, which is a huge market share in one category. But around the world, 90 percent of the total [swimwear] market has to do with beach or leisurewear. That’s where the biggest opportunity for growth for Speedo is.”

In the past two years, Speedo has launched beach and leisure products and a summer print media campaign in local women’s fashion magazines, such as Cleo, Cosmopolitan, Marie Claire, Dolly and Girlfriend. In September 2001, the company opened a flagship concept store here.

Although Chatswood is, to date, the only Australian Speedo store to open, Speedo also has created Speedo concepts or “domains” in a number of Rebel Sport stores, in addition to about 18 concept shops in aquatic centers.

Tim Lees, Speedo Australia’s marketing manager, said the Australia arm has spearheaded Speedo International’s move into the beach-leisure arena.

“Australia was the first toe in the water,” said Lees, who said the U.K. office has swapped designers with Sydney to get a taste for the Australian lifestyle. Australia also has the second-highest per capita Speedo sales after the U.S., he said.

“One of the big differences between Australia and Europe is that in Australia our summer lasts so long,” said Lees. “People buy swimwear as general weekendwear here. In Europe, they buy swimwear to go on holidays.”

But it’s that performance heritage which is proving the biggest stickler in shifting the brand perception in Australia.

“Swimming is the most popular participation sport in Australia,” he added. “For a population of 19.7 million, Australia is the second most successful swimming-competition country in the world after the U.S. The U.S. has 15 times the population [of Australia] and they win about the same number of medals.”

David Bush, general manager menswear for the 36-unit upscale department store chain, David Jones, said, “Speedo is in the Australian lexicon. Most men will say, ‘Oh, I’m going to buy a pair of Speedos,’ not a pair of ‘swim briefs.’ It’s so iconic, it’s one of those brands that the kid’s coming in at 14 to buy his first pair of Speedos and his great-grandfather at 85 is still buying them.”Bush said over the last few years, Speedo has had a few strategic issues, such as manufacturing, change, “but the consumer really hasn’t blinked. They still see Speedo as an Australian brand and a desirable product.”

David Jones’ mainstream rival, the 63-unit Myer Grace Bros. department store chain, was upbeat about Speedo’s off-pool potential. Liz Randle, Myer Grace Bros.’ women’s swimwear, coats and sport buyer, said Speedo’s beach-leisure component helped beef up its swim offering in nine MGB stores. MGB’s Speedo business saw a double-digit sales increase last year, she said, and now plans to roll out Speedo’s beach-leisure items to 22 to 30 MGB stores.

“It’s obviously not a designer brand — they don’t claim to be a designer brand,” she said. “But it certainly performs well on our floor up against what I would call the fashion brands: Wayne Cooper, Zimmermann, Regatta Sport [MGB’s home brand] and Seafolly.”

Randle said of Speedo: “They obviously see there’s an opportunity there in fashion. I think the transition will be gradual. We’ve got to educate the customer, as well. When they come in and look for Speedos, they are not only going to find your aquatic component, but also a fashion component that, in terms of fashionability, is as good as a lot of the other fashion brands.”

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