Jun. 30, 2008 – New IronHorse owner emerges from dealer network
June 26, 2008
Filed under Features
By Neil Pascale
The new owner of V-twin custom manufacturer American IronHorse said the company will not immediately return to production but is working on prototypes for 2009.
Scott Meyers spoke to Powersports Business about the future of the Fort Worth, Texas, manufacturer a couple of days after purchasing the company, which had gone through Chapter 11 proceedings.
Meyers said he paid $2.5 million and received $6.7 million in credit from Textron Financial, the company’s previous main lender, for IronHorse, which was considered to be one of the largest production custom builders in the United States just a short time ago. IronHorse’s previous management was forced to file for Chapter 11 earlier this year. Its bankruptcy filings said the company had suffered tremendous sales declines, going from earning $96 million in 2005 to just $25 million two years later.
Meyers, previously an IronHorse dealer, does not expect any huge revenue rebound happening soon.
“Like any kind of industry, this will recycle,” he said of IronHorse’s sales. But he doesn’t foresee sales reaching the 2005 level again any time soon.
Meyers has seen the industry segment downturn first hand, having custom V-twin dealerships near Minneapolis and near Bozeman, Mont. Before that, he worked in the defense and aerospace industry. In 2001, he was president of Alliant Techsystems, which at the time was a $1.1 billion company. Before that, he was the director of Magnavox Electronic Systems, a manufacturer of defense electronics products.
Meyers sees parallels between the custom bike business and the defense industry.
“When Ronald Reagan was able to take the Berlin Wall down, you couldn’t give away a defense business,” he said. “Nobody wanted it because there was no need to have any military. Well that didn’t last too long.”
Meyers does promise longevity in his IronHorse ownership, noting he has no desire to go public with the company, like the former management had.
“I’m not going to be out there pushing bikes,” he said. “I want our dealers to make a good amount of profit out there and pay their bills, pay their salaries and utilities and walk away with some money. If you keep flooding the markets, all of a sudden you’re going to be selling those bikes below what you paid for it.
“The demand is not what it used to be, and that’s what we’re going to watch real closely.”
Meyers also noted his lending partner, Textron, is committed to the long term.
“All contracts with them are well over 5 years going forward,” he said, “so this is not going to be a short-term thing.”
Over the short term Meyers and Co. will reconnect with dealers, something he initially did as he examined whether he wanted to purchase the company.
“We have some great dealerships that wanted to continue on,” he said. “That was a very upbeat thing for me.”
Meyers, however, does not expect the company’s dealer network of more than 100 to remain at a similar level going forward. “Quite honestly, I see us being half of where we used to be,” he said of the company’s future dealer network number.
What type of motorcycle that dealer network will be selling — one at a premium price or one in the $20,000 neighborhood — is still being looked at. American IronHorse unveiled its Slammer and nearly $40,000 base price tag in late 2006 but then six months later announced it was developing a lower end model. What pricing category does Meyers want to focus on?
“We’re working through that,” he said. “Maybe we’ll offer both opportunities.”
Meyers did note that IronHorse dealers are fairly split on that topic, with some opting to stick with the premium consumer who has not been hit by the current economic challenges. Others would like to see the brand develop a product for the younger rider and their more limited pocketbook in mind.
“Right now, the focus is concentrating on helping the dealer move the existing inventory out there,” Meyers said, noting the company is already bringing on some of its former employees to help with consumer and dealer service, including warranty work.
“It’s pretty exciting to come up with a production that we choose. Once we choose it, we’re going to be working hard on getting them out there and keeping the reliability high on it.”