Posted on 09/23/2003 6:09:04 PM PDT by muslims=borg
GILROY, Calif. -- When the gleaming reincarnations of Indian Motorcycles rolled off the factory floor four years ago, enthusiasts wondered whether the new machines would recapture the glory of the vintage line that had ceased production nearly a half-century earlier.
Now they have their answer: The Indian Motorcycle Co. announced on Monday that it had sputtered to a halt and was stopping production in its factory in Gilroy, Calif. It is laying off about 380 workers, virtually the entire staff.
The move means that the Indian brand will once again be relegated to the halcyon memories and oil-stained garages of its many devoted collectors, including George Clooney and Jay Leno. No longer will new machines roll off the assembly line, and no longer will the company lose large sums of money as it tries to compete with Harley-Davidson. The company said in its announcement that the halt to production was intended to "conserve cash and preserve its assets."
Frank J. O'Connell, chairman and chief executive, said that while sales had increased steadily since 1999, the company was also plagued by rising costs.
"The board made a decision that we have to go down a different path," O'Connell said in a phone interview. "Our volume continues to grow and dealers continue to grow, but the cost structure is out of line. It's a stand-alone manufacturing operation that's too expensive."
With the exception of a few sales people scattered across the country, the layoffs will all be in Gilroy, a Northern California town of 40,000 that proudly calls itself the Garlic Capital of the World. (Each summer, the town holds the prominent Gilroy Garlic Festival.) The Indian Motorcycle Co. owns a 150,000-square-foot factory in the middle of town.
The company said it would keep a skeleton crew of workers to sustain basic operations.
The company is controlled by the Audax Group, a private equity firm based in Boston that injected $45 million into the company in 2001. O'Connell declined to give any financial numbers but said the company had failed to break even during any of the years since it won the rights to the Indian trademark in November 1998.
The six-member board made a unanimous decision to shut down production, he said, in hopes that the company will be able to raise more capital.
"Costs have increased because we put in a lot of infrastructure to service dealers and parts," O'Connell said. He estimated that 200 dealers sell Indian motorcycles. There are several hundred outstanding orders that will go unfilled, he said.
Sales to dealers have risen steadily, he said, to 3,500 motorcycles last year from 1,000 in 1999.
One former dealer in Indian motorcycles, Steven V. DeStout, said that those numbers might be optimistic. Though it is true that the number of dealers -- and thus sales from the factory floor -- has increased over the years, he said, dealers are not necessarily able to sell the bikes briskly to customers. DeStout said that by the time he retired last year and shut down his company, Staz's American Motorcycles in Las Vegas, the sales of Indian bikes made up only a small part of his revenue, though that was not the main reason for his retirement.
The current Indian line consists of three models: the Chief, Scout and Spirit. Prices range from $25,000 for a high-end Chief to $17,000 or so for a Spirit. Last year, the company began making its own motors for the Chief, which had previously used an engine designed for after-market use on Harley-Davidson motorcycles.
The use of the engine meant for the Harley drew skepticism from some enthusiasts of the old Indian motorcycles. Though the Chief had many of the swooping lines of the pre-1953 models, its similarities ended on the most superficial level, they said.
"We called them the Pretendians, which is a little bit mean," said Wilson Plank, owner of American Indian Specialists, a restoration business based in Fullerton, Calif. "But the factory never tried to insult us. They were too busy trying to get their act together and keep it going."
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Well, they sold 3500 bikes to dealers last year. If you figure they got about $10k per bike, that works out to earnings of about $100k per each of the 380 employees they laid off. Considering salaries, floor space, equipment, etc., they were clearly losing money.
My bud owns one of the first Indian dealers in the PA/NJ/DE area. According to him, one of the main problems with the Iron Redskin is that you can't use HD/HD Clone aftermarket parts, even though the original bikes had 88 cube S&S motors and Andrews tranny's
Stuff like brackets, seats, pegs, floorbards and that stuff was drilled a quarter inch off standard, so you had to go through a Indian dealer to get any kind of stuff like that. That turned a lot of would be buyers off.
The new Chief, with the 100 cube proprietary motor is a piece of junk. The motor itself doesn't have the power of a 88 cube Twinkie motor, and it isn't even as reliable as a well built Shovelhead. I've rode the Chief and it is uncomfortable, handles like crap and sounds like it is going to blow up at any minute, kinda like a Iron Sporty. Your're looking at 25 grand plus for a Chief. If you really wanted one, for that kind of money, you could get a real Indian, one with a flathead, 3 speed, left hand throttle and right hand spark advance. Matter of fact, my bud has a 47 Chief in the showroom, semi-restored and running. The owner will take 20 grand for it. He still has a 2001 Chief with 40 miles or so on it and he can't give it away.
Fortunately for him, he is the third largest Big Dog dealer in the US and he can't keep the bikes on the floor.
His shop is the Chrome Palace in Cherry Hill NJ, and his website is The Chrome Palace
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