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Oct. 15, 2007 – Hot News

October 15, 2007
Filed under News

Arctic Cat: Closing S.D. plant won’t impact production
Arctic Cat’s intention to close its Madison, S.D., plant, which will result in a $1 million a year savings, will not affect its ability to increase production, a company official said.
Arctic Cat recently announced the sale of the company’s Madison plant, which houses painting, welding and subassembly work.
The Madison operations will migrate to the company’s main manufacturing facility in Thief River Falls, Minn., which employs more than 1,500 people. Arctic Cat plans to hire 50-60 employees in Thief River Falls to handle the additional work. All 89 jobs at the company’s plant in Madison will be eliminated, and affected employees will be offered opportunities to work in the company’s other plants, as well as employment assistance. The company intends to close the Madison facility by February. Arctic Cat expects the sale of the Madison property will have no initial material impact on its balance sheet. Longer term, the company anticipates this action will save approximately $1 million a year in operational costs.
Kale Wainer, media relation specialist for Arctic Cat, says the move isn’t expected to have any effects on the company’s ability to increase production, either now or in the long term.
“Arctic Cat is putting together a well implemented plan to help the changeover to be a smooth success,” he said. “This type of move is something we are familiar with as we just transferred our engine facility to St. Cloud, Minn., from Thief River Falls. This is a somewhat similar process. We really don’t foresee any problems if we need to ramp up production with everything under one roof.”
Impact on employees
In a recent press release, Arctic Cat CEO Christopher Twomey acknowledged that while the move will enhance operational efficiency, the move has created some difficult decisions for current Madison employees.
“We recognize that this decision is difficult for our Madison employees, with whom we have developed a great relationship,” he said. “By providing this long notice, we expect that most of these employees will be able to find other employment either in the Madison area, where current employment opportunities seem strong, or at another Arctic Cat facility. We appreciate their hard work and dedication.”
Ron Ray, vice president of operations at Arctic Cat, says it’s too early to pinpoint how many current employees will accept positions at the company’s Thief River Falls facility.
“I think that process will take a month or more,” he said. “There are great people in the South Dakota plant and all people were offered a job in Thief River Falls based upon their seniority and skill. Many people are asking more about the move, many do not want to move.”
The decision to sell the plant was made recently, as a South Dakota manufacturer was planning on building next to Arctic Cat’s lot, and a deal was made to sell the existing facility as well.
“We decided on this move a couple weeks ago,” Ray said. “A study was conducted approximately 21?2 months ago as to what were the estimated economic benefits if we consolidated these two plants into one. More than 50 percent of those cost reductions were from freight costs from the Madison plant to the Thief River Falls plant. As snow volumes have reduced, we have the ability to do more work at the Thief River Falls plant and have the people to do so.”
A difficult move
Ray says although the transfer of machines and other equipment to Thief River Falls won’t be an easy task, the company is prepared to handle the Madison plant’s operations in-house while the transition takes place.
“The (Madison) plant did a lot of very technical and automated welding, not to say that Thief River Falls doesn’t,” he said. “I think there are 12 robots and automation cells welding things from steering posts to exhaust systems there. But, that is what Arctic Cat does and the Thief River Falls plant does it well. Many of these systems were designed and built at Thief River Falls and moved to South Dakota.
“Our main facility has multitudes of skilled labor and the people to carry out the projects. Moving the paint system will be technically difficult, but there are no doubts we can accomplish that as well. We have several layouts in several locations available in the Thief River Falls plant.”
— Steve Bauer
Custom Chrome U.S. president to resume duties in Europe
After a little more than a year as president of the U.S. Custom Chrome operations, Holger Mohr will resume his previous role as managing director of the company’s European operations.
Global Motorsport Group Inc. (GMG), the owners of Custom Chrome and fellow distributor Motorcycle Stuff, did not specify why they were making the change, only that Mohr spent a year working on “initiatives aimed at improving the market position” of the U.S. company. Mohr was named president of the U.S. operations in early August 2006.
“In 2007, both the industry and GMG have faced many challenges, and we’ve made real progress toward improving the business in response to them,” Mohr said in a press release.
Frank Esposito, an industry veteran, was named new president of Custom Chrome’s U.S. operations.
Pwc manufacturer goes direct
Hydrospace Austria has announced the company recently reached an agreement to distribute Hydrospace products direct to a U.S. dealer network. Previously, Pompano Beach, Fla.-based Riva Motorsports, operating as Hydrospace USA, had been the company’s exclusive distributor, a deal that has been in place since 2006. Under the terms of the agreement, Hydrospace Austria will assume direct control of U.S. distribution, marketing and technical support for the brand.
“Our move to direct distribution in the USA was necessary due to the challenging euro/dollar exchange rate,” explained International Sales Manager Thomas Breuss. “Our new distribution strategy will allow us to offer our line of exciting watercraft products at competitive pricing. Riva Motorsports will change rolls from distributor to dealer, joining our network of 20 HSR-Benelli dealers nationwide.”
The Hydrospace manufacturing facility is located in Pöchlarn, Austria. Engine design and production is handled by the sister company, Benelli Motori, located in Pesaro, Italy.
Harley will temporarily shut down five plants
In wake of a recent decision to reduce its third-quarter production, Harley-Davidson announced it will close some of its manufacturing plants for a limited time in November.
The company said it plans to shut down five plants for a week in November, and that some sites will also have to“take additional steps to achieve their production reductions.”
The sites that will close the week of Nov. 26 will include Harley-Davidson’s final assembly plants in York, Pa., and Kansas City, Mo., as well as powertrain operations in Wauwatosa, Wis., and Menomonee Falls, Wis., and Tomahawk Operations in Tomahawk, Wis.
Harley-Davidson previously reported it would reduce its third-quarter shipments to 86,000-88,000 units from the expected 91,000-95,000 units after slower than anticipated retail sales in August.
BRP-Rotax to open innovation center
BRP’s affiliate BRP-Rotax GmbH and the Austria government will build an advanced research center for the development of new engine technologies, according to Marketwire.
The project represents a total investment of $11.79 million. BRP will cover 75 percent of the costs with the Austrian government covering 24.5 percent and the Wels-Land district government covering 0.5 percent.
BRP President and CEO Jose Boisjoli said this investment reiterates BRP’s “global leadership position.”
“The RIC will work closely with BRP’s advanced technology and design and innovation centers in Canada to help develop synergies between Europe and North America and to better support BRP’s global needs,” Boisjoli said.
Josef Fuerlinger, a BRP-Rotax employee since 1990, has been appointed general manager of the RIC.
CORRECTION
In the Sept. 3 issue of Powersports Business, there is an incorrectly attributed quote in the “A delicate balancing act”?article.
The quote was, “In the past, people knew they could always refinance or ‘flip’ their houses, so they were willing to spend more. A motorcycle or an ATV is a toy for most people, and we’ve seen that they’re more hesitant to finance them like they would a car or truck. When you have that disposable income that’s considered by a lot of homeowners to be ‘free money,’ it’s a lot easier to spend it on recreation.”
The quote should have been attributed to Seth Graham, owner of Graham Powersports in Portland, Ore. We apologize for the error. psb

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