Polaris Industries Inc. announced Thursday it has begun to phase out its Osceola, Wis., manufacturing operations; today the plant is home to Polaris’ Victory Motorcycle development, and ATV and snowmobile engine manufacturing. About 500 people work at the plant, according to RiverTowns.net.
The real kicker is that Polaris plans to outsource some of the work being performed in Osceola to Monterrey, Mexico, near the southern tip of Texas. Some of the work performed in Osceola will head to Polaris’ plants in Spirit Lake, Iowa, and Roseau, Minn. Euphemisms of choice paint a picture of “realigning” operations to Mexico and “enhancing” the lucky plants of Minnesota and Iowa. (The author here is a Wisconsin resident, after all.) This should all be completed by 2012.
“Pursuing opportunities in new markets outside the United States, while concurrently evaluating our cost structure to improve our long-term competitive positioning are key components to our growth strategy,” said Polaris CEO Scott Wine. “This decision was based on a thorough review of our worldwide operations and will allow us to improve our ability to meet the quality, delivery and cost standards desired by our dealers and customers.”
Snowmobile assembly will remain in the Roseau facility and Victory motorcycle assembly will remain in the Company’s Spirit Lake facility. Polaris also intends to sell certain manufacturing equipment to suppliers who will continue to make components for Polaris; still other manufacturing processes will be outsourced, and Polaris hopes the buyers will continue to do work in the Osceola plant.
Polaris expects this whole process to cost it about $35 million “over the next few years,” and it’s still planning to post from $3.48 to $3.60 earnings per share on the year. When the transition is completed, Polaris aims to save an annual $30 million pre-tax.