VAL D'ISERE, France (Reuters) - Snow conditions are ideal from the Alps to the Rockies, the off-piste is heavenly and the groomed slopes rock-free. Yet most of Europe's leading ski companies will lose money again this season.
Rossignol, Dynastar, Fischer and Atomic and Salomon have all cut jobs and moved production to cheaper sites in Asia or Eastern Europe over the past few quarters to stem losses.
Despite their efforts, their businesses remain vulnerable and melting glaciers and declining consumer confidence are only part of the problem.
Growth in rentals is eating into ski makers' sales and giving more power to ski-hire shops that can squeeze small wholesale prices out of their suppliers.
"The rental market is killing ski makers and the trend is showing no sign of abating," said Eric Vaesa, head of the Ski Republic rental shop in the Alpine French resort of Val d'Isere.
"If it is minus 15 degrees (Celsius), a customer will ask for skis that cut the ice, if there is powder snow the next day he will want to change his skis for a wider pair."
There are an estimated 50 million skiers in the world -- not all regulars -- and the number of pairs of skis sold annually has more than halved in the past 15 years to 3.5 million.
Leisure habits have changed. Skiers today make shorter trips than a decade ago, usually for a long weekend or a week, and rent to avoid having to transport their gear. They can also save money by renting if they do not travel to the mountains frequently.
Many skiers have switched to snowboards, whose annual sales are now about 1.3 million units. Ski makers have also suffered from the Japanese falling out of love with the Alpine sport.
Those who rent are often Italian, French, Scandinavian, East European, German and British, rental shops say. Austrian, Swiss and German skiers usually bring their own gear.
The ski market has been overtaken by the ski boot market, with 3.7-3.8 million pairs sold annually, says Michael Schineis, head of winter sports at Finnish group Amer Sports which is behind Atomic and Salomon skis and boots.
Ski boots are smaller investments, costing 150-300 euros compared with 400-900 euros for skis. "Many people today prefer buying boots than skis," Schineis says. Amer's ski unit is hoping to make a profit this year.
Manufacturers know that the fat of the industry is not in making skis but in renting them and in many ways they have made the same mistake as music majors a few years ago. Both were caught napping while their market took a major turn.
Ski makers missed out on the rental market, while music companies failed to get into online digital retailing quickly and let Apple dominate the market with iTunes.
"Ski makers told themselves that renting skis was not their business and now they are losing out on it," Rossignol Chief Executive Bruno Cercley told Reuters. "But we are trying to think of ways of sharing the value chain with rental shops."
Some ski makers argue that entering the rental market now is not an option as prime sites at the bottom of the pistes have all been taken by powerful local families. They worry that shops would stop buying from them if they competed with them directly.
"It is true that we missed out on the rental business. But we made the strategic decision not to enter that market," said Klaus Hotter, head of winter sports at Austrian ski maker Head which saw its sales rise 11 percent in 2008.
Rental shops make their money back on a pair of skis or boots after renting them out for three weeks, pocketing attractive returns during the five-month skiing season.
In contrast, ski manufacturers are stuck with high fixed costs, a shrinking market, unpredictable demand and unfavorable terms with rental and retail shops.
Ski makers get orders from shops in March or April, they deliver the goods in the autumn and are paid for them only in January or February. That leaves them gasping for cash to finance their production and at the mercy of banks.
"It is unacceptable that we have to finance nearly one's year working capital for the shops," Rossignol's Cercley says.
Retailers and rental shops are increasingly doing business on the Internet but manufacturers say they are unlikely to go online for the same reasons they did not go into renting gear.
The ski market, which enjoyed a brief revival with the introduction of carving skis in the late 1990s, fell about 25 percent after the snowless winter of 2006/2007, leaving shops with piles of unsold stock, some of which remains to this day.
Diversifying into summer sports might hold the answer to reduce exposure to the frail ski manufacturing market, said Austria's lossmaking Fischer, the last major European ski maker to be controlled by its founding family.
"We are trying to develop a more balanced business model," Fischer Chief Executive Jan-Hein Habes told Reuters.
Editing by Clare Fallon