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Heading north of the border – July 3, 2006

July 3, 2006
Filed under Features

FORT WORTH, Texas — Leading V-twin manufacturer American IronHorse (AIH) is continuing its aggressive dealer network buildup, expanding its North American presence not only in the States, but beyond.
AIH signed four Canadian dealers in May and plans to increase that number to as many as 20 by the end of the year, said Gary Sipes, AIH’s director of sales.
Although AIH isn’t the first American V-twin manufacturer to sell north of the border, Sipes believes Canada is “hungry for some custom bikes.”
Will AIH stretch its dealer network overseas?
“I think we have a lot of work to do in our U.S. market,” Sipes answered.
Plus, Canada does not pose the regulation challenges that the European and Australian markets do. And, so far, Canadian dealers have agreed to pay in American dollars, meaning currency will not, at least initially, be an issue.
“Canada was a quick, easy transition for us,” Sipes said.
AIH was planning on sending its first 40 bikes to Canadian dealers in June. But the privately held company will continue to focus on building its U.S. dealer base. AIH signed 15 new dealers in 2005, has signed six more this year and would like to see that dealer network continue to increase beyond the current 100.
“We’re in about 51 of our 100 top target markets currently,” Sipes said. “We’d like to be in the other 50 in the next two or three years.”
Not only is the AIH dealer base growing, but it’s also changing.
“The value of the (AIH) dealer is much higher than in the past,” said Sipes, noting that the average AIH dealer’s floor plan budget has expanded from $10 million to $50 million over the past 18 months. “They’re stronger financially, credit-worthy. They have business plans that are very aggressive. These guys are very passionate about their product.”
And a different group of dealers that AIH initially sought out.
“I think every manufacturer goes through this,” Sipes said. “When you start out, you just can’t wait to get your bikes on the market, so you really look for anybody who will help you. Some of these guys you outgrow. Maybe their credit lines were $100,000 so they could keep four or five bikes. When now if you’re an IronHorse dealer, you have to take 15 as a minimum up front.”
Larger orders means increased production, something AIH has tackled in a facility that it’s quickly outgrowing. The company moved into its 250,000-square-foot Fort Worth facility in 1999. It initially rented out half the facility. Now, it not only uses the entire facility, but has had to make moves to increase manufacturing space. That includes using an outside company to ship their new bikes twice a week to a central warehouse in Elizabethtown, Ky., a practice that started in December 2004. The company also has moved most of its polishing out of its main manufacturing building and has partnered with RC Components to supply its tires to again free up more facility room.
“We’re just making it work,” Sipes said of AIH, which on average produces 100 bikes a week. “Every six months or a year, we’ll move stuff a little bit to make it more in-line manufacturing where we don’t have any slowdowns or bumps.
“But definitely we need more room.”
Sipes said AIH executives are not actively seeking another facility but have had site discussions with the city of Fort Worth. “We want to stay here,” he said. “We don’t want to move.”
As AIH tinkers with its manufacturing processes, Sipes will continue to look for new dealers. AIH will shortly begin an advertising campaign for new dealers that will run in powersports magazines as well as nonindustry publications, like Entrepreneur and Franchise magazines.
Sipes will be looking closely at the following types of dealerships:

  • existing dealerships that do a lot of service work and currently sell used bikes;
  • existing dealerships that carry AIH competition;
  • and passionate entrepreneurs that have the necessary capital to start a business. AIH has had recent luck with such ground-up set-ups, including in San Antonio and San Diego.
    Although Sipes won’t rule out metric dealers, he said such locations generally have problems selling AIH bikes, which often run in the mid-$30,000s and up.
    “A lot of guys go into metric dealers knowing that they’re looking for a $12,000 to $15,000 unit and they get sticker shock by our stuff,” Sipes said. “They’re not aware of our product.”
    That product could be seeing some major revisions for the 2007 line, which will be introduced in July. Just what those revisions will be — revamping older models or coming out with an entirely new model — isn’t something Sipes could reveal.
    “We have some surprises up our sleeve for 2007,” he said, laughing and adding. “Keep your eyes open.”

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