Cycle News - Archive Issues - 2000's

conservative culture, the treatment of foreigners has not been as open and friendly as elsewhere in the country. But I've never felt that, and I think the relationship between Hong Leong and its employees here has been a model one that others can look at and strive to emulate - in both directions. My only handicap has been expressing myself - my German is okay up to a point, but if I'm trying to get a complicated idea over, I have to resort to English and hope they can get itl But the fact that everyone here is so dedicated to the success of MZ as a company is the main reason, I think, that I've been so readily accepted. They realize we're all pulling in the same direction, and that makes a big difference. Did you have any involvement with motorcycles before you came to MZ? Honestly, no - but I've learned to ride one since coming here, and I must say that coming from a very different background, I've found the world of motorcycling to be a warm and fascinating place with a wonderful sense of community that is one of its great strengths. I've had to fast-forward my catching-up process, and I'm still learning about the business - but I think on the other hand that coming from outside, I can bring an objective view that helps take us forward. Why did Hong Leong purchase MZ? What is your long-term strategy for the company? We acquired MZ late in 1996, but it wasn't 'til the dust from that had settled that we could start to get a handle on the operation a year or so later. That's when I was sent here by HL management to establish a business plan with a clear timeline, and since then we've been working towards fulfilling that. Hong Leong is a very diversified company, with a market capitalization of more than US$ 12 billion and interests in many sectors grouped into four main divisions. The first of these focuses on financial services and includes several banks, insurance companies and credit unions, while the second concentrates on property development and building services, including a heavy involvement in air conditioning, which as you can imagine is a very important industry in a country as hot and humid as Malaysia! The third division is the Go-Ko Group, exclusively based in Hong Kong and offering a range of financial services and consumer products to customers there, while the fourth is Hong Leong Industries, to which we belong, and this is primarily a manufacturing group concentrating on concrete products, tiles, semiconductors, packaging and motorcycles. Originally, this was based on a 70/30-percent joint venture with Yamaha, beginning in Malaysia but then expanding to Vietnam, assembling and distributing products we made under license - but the problem was we couldn't expand out of that: Our agreement with Yamaha prohibited selling outside those markets. This was very restrictive not only from a technical but also a marketing standpoint so with Hong Leong management having decided there was an opportunity for growth and profits in the worldwide motorcycle market, the next step was to look around the world for an established brand, backed up by technology and with the potential for growth. That's what brought us to MZ, which at that stage in 1996 was in financial difficulties, essentially because it was undercapitalized and lacked resources to develop its own family of engines. It was opportune to buy the company and invest money in building it up again while developing originally engineered new products like the 125cc fourstroke range and the 1OOOS' twin, which owed nothing to our collaboration with Yamaha but had genuine potential in both Asian and world markets. That's where we stand today, developing the ability to create new models for our overseas target markets here in Zschopau, as well as to manufacture products for Western customers under the MZ badge. Is your primary focus on Asian markets, given Hong Leong's existing emphasis there? Well, it's true that the countries of the Southeast Asian ASEAN free trade area alone represent 500 million potential customers, with a current total sales volume of just under four million motorcycles a year. That excludes China, which of course is even bigger but where you cannot attack the market from outside - you have to be inside, as part of a joint venture, and we already have experience of two such collaborations, one of which has been terminated and the other still going on, though not terribly successfully. India is another big market operating under similar conditions, although there we haven't found the right partner yet - but we are well along the way to establishing a joint venture in Iran, which is a huge potential market where we are benefiting from the fact that Malaysia, of course, is also a Moslem country, too. So Asian markets are indeed very important for us. But what is your strategy for MZ in Western markets, such as the USA and Europe? MZ is charged with the responsibility to create products suitable for the developed markets, which basically means big motorcycles, and in so doing to redevelop the brand, which older customers associate with a very different kind of product - basically, the smoky old two-strokes we've moved a long way away from in the past 15 years. That's one reason we went 500cc Grand Prix racing in 1998/99 we wanted to rebrand MuZ as it was then and to underline our technical capabilities, which the two pole positions we gained on a very limited budget amply demonstrated. In developing MZ's position in Western countries, we will use both the revenue generated from this and the brand strength to leverage into emerging markets under the MZ name, with models having a clear European, even German, heritage. Is this why you decided to develop and manufacture the 1000S parallel-twin engine yourselves in-house, rather than commission an engine from Rotax or another supplier, as Aprilia has traditionally done, for example - although didn't it take it a lot longer, and wasn't it more expensive to do it that way? Originally, we started out along such a path towards the end of 1998, with what appeared to be a very cost-effective joint venture in Switzerland with Swissauto and Weber, who were developing a small-capacity twin-cylinder car engine, in which our role would have been to adapt that to a motorcycle application. This would have made MZ's total development costs much lower, but by the middle of 2000 it became clear that this pTOject was not viable, for various technical reasons but especially since it was conceived as a 750cc motor that could not be increased in capacity all the way to 1000cc, which the market now required. We therefore extracted ourselves with some difficulty from this project, and so our R&D team under Juergen Meusel started at the end of 2000 with a clean sheet of paper to create the 1000S engine in-house. The fact that as a small company we brought our own design of large-capacity four-stroke engines from zero to production in under three years, with hundreds of thousands of test kilometers successfully refining its performance and reliability, is a source of great satisfaction as well as demonstrating MZ's engineering capabilities for the future, which we hope to develop for third-party use on a consultancy basis. The fact that we have access to rapid prototyping facilities is a great asset, which we are learning to use in constructive ways outside the motorcycle industry, as well as inside it. How large is the MZ workforce, in total, and what's your production level? We have just under 200 people working here at Zschopau, of which the engineering staff working on R&D comprises 40 persons, plus another 20plus on the technical support side. That's a very high proportion compared to other companies and underlines our commitment to engineering quality, and to building our range of products, which still has some way to go. We built 10,000 units in the model year just ended and generated 20 million euros ($22.5 million) in turnover, but for 2004 we aim to increase this to 12,500 motorcycles and 44 million euros ($49.5 million), with the difference represented by the number of higher-value 1000S models we're targeting for the first year of production, beginning in November. We're currently manufacturing the first 100 preproduction motorcycles, but we're not going to rush into series production until we know we're capable of meeting the very high quality targets we've set ourselves. This will be MZ's entry into the large-capacity four-stroke market, and we can't afford to produce anything for sale which doesn't meet the highest expectations in terms of manufacturing quality and reliability. We have one chance to get it right· and we're focusing all-out on taking that. Sounds like you're reading from the same hymn sheet as John Bloor and Triumph! Are you making the entire motorcycles here in MZ, including building the engines, or are you buying them in from an outside supplier, already assembled, as Aprilia and BeneIIi do? We will manufacture the complete motorcycle ourselves here in Zschopau, which, as I think Mr. Bloor also believes, is the only way you can be sure of maintaining quality control. We have already begun assembling the engines ourselves in-house, and the chassis will be manufactured here in Zschopau, too. It's fully our own product. What are your projections for the 1000cc twincylinder range? We're starting out with the full-fairing sports model, and then later we will produce a Naked version, for which we already have the styling established and which I think will have a ready market, especially at the very competitive price we plan to offer it at against the Ducati Monster and Aprilia Tuono. But so as not to distract us from getting the 1000S into production and concentrating on getting that model established, I've held the Naked bike back one year, so it'll be launched in 2004 once we have the 1000S up and running. I think this is the correct strategy for a small manufacturer, to focus on doing one thing at a time very well before moving on to the next model. That's a mistake we've learned to avoid from certain Italian manufacturers - when we at MZ display something new, we must be pretty sure we'll have it in our dealers' showrooms within the next twelve months. That didn't happen with the 1000S, because we were using that to prepare customers for thinking of MZ as a four-stroke manufacturer - but that won't happen again, although I must say that we do need to get market feedback for a forthcoming new model, so that by showing it in public we can optimize its final execution by listening to what our customers say about it. Any plans for a sports tourer using the 1000S engine in retuned or remapped form? I wouldn't say there's a specific plan for such a bike, but what we have are several more parallel-twin product possibilities after the Naked bike, _._._--~ eye I e n e _ so

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