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Issue link: https://magazine.cyclenews.com/i/128341
Polaris Stops Watercraft Manufacturing Polaris Industries Inc. announced on September 2 that it will stop manufacturing personal watercraft effective immed iate ly. Polaris said it will assist dealers in liquidating existinginventories and will continue to provide replacement parts, service and warr-anty to marine dealers and customers. The company reported that the decision does not affect any of Polaris' other product lines. "T his was an extremely difficult decision for the board of directors of Polaris because our people are very proud and we have a proven record of succeeding in all we do," said Polaris president and CEO Tom Tiller. "However. the personal-watercraft industry and our position within the market simply is not where we need it to be for this division to be viable. This decision is designed to foster long-term growth and shareholder value." Tiller cited several factors that influenced 8 Polaris' decision . He noted that the personal-watercraft market has been in decline for several years, leaving industry sales today at about half the size of the market from its peak in 1996. with recovery uncertain. In 2003 , sales from the marine division comprised only 3 percent of total company sales . Less than 2S percent of Polaris dealers in North America carry marine products, and it generally makes up a small percentage of their overall business . As technology and the distribution channel have evolved, the marine division's lack of commonality with other Polaris product lines has created challenges for Polaris and its dealer base . Recently. the marine division has experienced escalating costs and increasing competlttve pressures, Polaris says. The marine business has never been profitable for Polaris, and generated a pretax loss from operations of $13 million in 2003. SEPTEMBER 15,2004 • CYCLE NEWS "This decision will ultimately strengthen Polaris' position in the powersports industry as we focus our research-and-development dollars and other resources on those product lines with greater growth potential, including our all-terrain vehicles (ATVs), utility vehicles, snowmobiles, Victory motorcycles and parts. garments and accessories," said Tiller. "Th is should result in accelerated product innovation that Polaris is known for and customers have grown to expect and further solidify the company 's strong financial performance." The marine division employs 35 full-time employees and 70 seasonal production employees in Medina, Minnesota, and Spirit Lake. Iowa. The assembly line in the Spirit Lake manufacturing facility that currently produces personal watercraft and AlVs on a seasonal basis will be converted to focus exclusively on ATVs, and all hourly employees will be retained. according to Polaris. Polaris remains committed to maintaining its 40th Anniversary strong presence in the Spirit Lake community, the release states. Fewer than 20 employees are expected to leave the com- pany as a result of this decision . Polaris expects to record a loss on dis- posal of discontinued operations during the third quarter 2004 of approximately $36 million (or $24 million after tax, which represents $0 .53 per diluted share) related to its decision to discontinue its marine division. This loss includes the estimated costs to support the dealers in selling their remaining inventory. additional incentives and discounts to encourage consumers to purchase remaining products. the disposal of factory inventory, tooling. and other physical assets, and the cancellation of supplier arrangements. The marine division invento- ry at dealerships is at its lowest level in a number of years, which will minimize the financial impact of this decision on Polaris and its dealers, according to Polaris.