The announcement of Polaris Industries buying Indian Motorcycle Limited from the UK based Stellican private equity firm was quite a surprise to many. But the fact that Indian Motorcycle would go for sale was not unexpected by most industry insiders. Not because they thought that the Kings Mountain company was in financial trouble but simply because Stellican specializes in the purchase, turnaround and re-launch of iconic brand companies which have gone bankrupt (like Chris-Craft and Italian Riva boats) with the intention of reselling them as soon as they are back on their feet.
For sure Stellican could not anticipate how deep and long our US recession would be, and it may have pushed Chairman Stephen Julius to loose patience and decide to resell Indian Motorcycle sooner and for a lower price than initially expected (since Polaris Industries is a public company, transaction amount and terms will be disclosed later in its financial reports.) Indian’s plant is ceasing operations with about 25 employees and was opened only 3 years ago. With sister company Chris-Craft installed next door (closed in 2009 after only 1 year of operation but still with a base in Tampa, Florida), nearly 800 jobs were expected and the Cleveland County paid more than $1 million toward the 2 plants purchase with the city promising reimbursement of property taxes for a decade. At least, even if slowed or stopped in its plans by the recession, Stephen Julius must be credited for putting back Indian motorcycles on the road and creating a small but very good network of dealerships (21 in North America)
Beyond Polaris Industries CEO Scott Wine’s expected statement – “We are excited to be part of the revitalization of a quintessentially American brand” and “Indian will be an autonomous business unit” – very little details were given about Polaris business plan for Indian models. Since Tuesday’s announcement I learned that the North Carolina Indian’s Kings Mountain plant already stopped production and that it will take at least a couple of months to move machinery and re-establish the manufacturing at Polaris Industries 600-worker Spirit Lake factory (Iowa), where it already makes Victory cruiser and touring bikes. The Minneapolis company says it’s too early to determine how many jobs will be added at its northwest Iowa plant, where it introduced the Victory motorcycle 13 years ago. Marlys Knutson, spokeswoman for Polaris, said it’s also too early to say when Indian production will begin in Iowa. Victory dealers will have the choice of adding the Indian motorcycles to their lineup. For the rest, future of the 25 employees of Kings Mountain, status of existing Indian dealers and type of Indian models to be marketed, it looks like Polaris is still brain storming about a strategy.
After contacting some Indian and Victory collaborators (corporate and dealers), it seems that: 1- no Indian Motorcycle employee has yet received an offer to move to Iowa or if a few have received such an offer, it’s unknown by the others. They all have worked very hard at re-establishing the brand and I think they should all receive an offer to join Polaris. 2- after a couple of days of anxiety for some, all Indian dealers seems now convinced of an even brighter future becoming part of a larger company and expect a more diversified models line up at more affordable prices. Because they believed in the resurrection of Indian, they have invested an average of a couple of millions in an exclusive quite luxurious dealership. They see Victory dealers selling Indian motorcycles as a strong positive for clients because they will now have access to a wider number of shops and mechanics having expertise to work on Indian Motorcycles. Some just wonder how some territory conflicts between an Indian and Victory dealer are going to be handled by Polaris management. 3- there is a consensus among dealers that even in an economy not back to full strength, a lot of disposable income is still available for expensive bikes like the Indian Chief, although all wish at the same time a couple of lower priced models in the 18-22k range. The name “Scout” was pronounced by all Indian dealers I talked to…In a few months it will be very interesting to observe Polaris marketing strategy and how it intends to position Indian versus Victory models. (to follow)