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    Polaris to phase out U.S. engine plant

    Posted by AmSnow
    on Friday, May 21, 2010

    Polaris Industries is planning to phase out its U.S. engine assembly plant within the next two years and build a new facility in Mexico that will focus on off-road vehicle production.
    In a press release the company said the move, which affects about 500 jobs in Osceola, Wis., will improve the firm's "on-time delivery to customers and provide significant savings in logistical and production costs."
    In a conference call Friday morning the company said it's looking to build a plant in the Monterrey/Saltillo area of Mexico, which will result in the eventual sale, or closure, of its Wisconsin engine plant. Polaris CEO Scott Wine indicated the new plant in Mexico will focus on off-road products (ATVs and side-by-sides), ultimately including engine assembly. Polaris expects the new plant to be running by the first half of 2011 and for the realignment of its U.S. facilities to be completed by 2012.

    The ultimate plan appears to be creating three "manufacturing centers of excellence."

    To that end, Wine said the firm intends to "enhance" its Roseau, Minn. and Spirit Lake, Iowa, facilities. Without giving many details he indicated that Roseau will continue to focus on snowmobile production, with snowmobile engine assembly moving there, while motorcycle engine assembly would move to Spirit Lake, where Victory motorcycles are made.

    Wine and Polaris also indicated that painting and welding work would move closer to the final assembly points. So that would bring additional work to Roseau and Spirit Lake. The intent, he says, is to create three manufacturing centers so the company is not dependent on any one.

    Likewise Polaris says it will outsource some non-strategic component manufacturing, including selling some equipment to suppliers who will continue to make parts for Polaris. Some of that may take place in the current Wisconsin plant, the release said, but the amount of jobs that will affect isn't certain.

    Wine said Polaris is making the move to Mexico to better serve new and anticipated customers in Central and South America. He says the move there puts its ATV manufacturing closer to those markets and the majority of its U.S. sales, which are in southern states. Being in Mexico will improve Polaris speed to market, plus improve the firm's costs and quality.

    He also said other off-road powersports competitors have already moved to lower-cost locations to make their equipment and this restructuring will make Polaris more competitive as it works toward its goal of $3 billion in sales by 2014. Polaris had sales of $1.6 billion in 2009 and products from its off-road division made up about two-thirds of those sales.

    Polaris expects the restructuring to save it $30 million annually when complete, while the transition costs over the next two years will be $20-25 million. Capital expenditures could be as much as $35 million to build and equip the new facility in Mexico and retrofit the Roseau and Spirit Lake facilities.

    -By Mark Savage



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