Polaris lays off 77 in wake of reduced sales – December 4, 2006
December 4, 2006
Filed under Features
Polaris Industries Inc. has laid off 77 employees as part of a three-step plan the company hopes will lead to future business growth.
The layoffs, announced Nov. 8, represent a 2 percent employee reduction move for the Medina, Minn., manufacturer that has seen decreases this year in snowmobile and ATV sales.
“While we certainly regretted the fact that we had to eliminate 77 positions, it’s something that was necessary for us to be as competitive as we need to be given the environment that we’re in,” Polaris CEO Tom Tiller said in an interview with Powersports Business.
That challenging environment includes a declining snowmobile sales market, which was down 9 percent in the United States last year, and an ATV market that was down 3 percent through September, according to Motorcycle Industry Council statistics.
“Our sales are down a little more than that,” Tiller said of ATV?sales. “We’ve lost a little bit of market share this year. We need to become a little more competitive in our ATV business. It’s our largest business, and it’s very important that we at least maintain the velocity of the overall industry.”
Becoming more competitive in the ATV business is part of Polaris’ three-step plan to grow business in the next 12 to 15 months. How the company plans to become more competitive in the ATV arena, whether it’s by focusing on one segment like Can-Am has done or lowering retail prices, wasn’t something Tiller was willing to talk about.
Besides improving its ATV market share, Polaris also is identifying possible growth opportunities and to fund that, the company lowered its cost structure via the layoffs. The cutback of 53 salaried positions and 24 temporary, intern and contractor positions were made throughout the 3,500-employee company, including overseas.
Tiller, who said the staff cutbacks would not affect production or dealer services, said no other layoffs are planned at this point.
“We’re a very employee-friendly company and layoffs are the last thing in the world that we want to do,” he said. “But the reality is with the economy the way it is, interest rates increasing, where energy prices have been, we’ve definitely seen that impact in not just our performance, but the overall industry’s performance.”
In its third-quarter report, Polaris said it expects its year-end sales to be off 11 to 12 percent compared to last year.
“It’s a challenging environment,” Tiller said, noting another manufacturer, Brunswick, recently laid off 2 percent of its work force. “For Polaris, we’ve had record-level performance for 24 years in a row. This will be the first year it won’t be. It’s definitely an indicator that we are in a difficult time. But we’re still a healthy, profitable company.” PSB