October 31, 2011
Georgia On My Mind
Big time snow in the east over the weekend, I hope this is an indication of more to come!
I received a comment from ‘Bosco’ asking my thoughts on ‘what-if’ Yamaha moved snowmobile production to North America: “I know you probably can’t comment but was just thinking about the impact on the industry if the sleds get built in Georgia with the ATV’S. It looks like Yamaha is really starting to align them self’s with the aftermarket suppliers and bringing them into their product development. It would seem that building them here and keeping corporate out of it over there would ramp up new product to market. Thanks for the great effort here! (BLUE FOREVER!)”
This subject has been kicked around as long as I can remember. First off, what would be the impact to the industry? Probably not much. I think the impact would be realized more internally based on the assumption that the Yamaha sled division would become more profitable. We would be able to purchase cheaper parts from North American manufactures who are already supplying Cat, Doo and Polaris. We would also be saving the costs of shipping crated units from Japan.
Now if this additional money was invested into development and technology then the industry would feel the impact with Yamaha raising the ‘competitive advantage’ bar more frequently. On the other side of the coin, Yamaha snowmobiles are manufactured using proprietary techniques developed for large volume quality control and consistency. Our CF die-casting and automated assembly lines are a couple of examples. It would be a great challenge to move the current manufacturing process to Atlanta and I’m guessing here, but it would probably be very cost prohibitive based on the small number of snowmobiles we produce, this being a relative quantity compared to our motorcycles and marine products.
Now I don’t think we would ever leave ‘corporate’ out of the picture as Bosco suggests but having NA production would most likely impact product planning and allow quicker response to market changes and requirements. To that end, maybe the factory in Georgia would not be the ultimate location in lieu of a facility a bit farther north> I elect we build a new factory in Muskoka!
Another factor, Yamaha is first and foremost, an engine builder. If we moved our snowmobile production to Atlanta, our engines would still be built in Japan as there is no engine plant in North America, so it really boils down to chassis and assembly. We know there are certain advantages we could enjoy with North American production, but there are also some major draw-backs, mostly in the costs associated with the start-up, that pretty much negate the opportunities.
The one factor that could really swing the vote is found in the roots of the industry and that is growth. With the economy in recession and the industry showing no signs of increasing sales, we are faced with competing for the same slice of the pie year after year. Making things more difficult; we have the costs of meeting environmental conditions, climate change ‘doomsayers’ warning of a December malaria epidemic in the Arctic and a crusty demographic of aging motor-heads demanding more performance every season (Hey CR, why don’t you guys bring back the Snowscoot?) ;-) . It’s my hunch that the directors and share holders of the company would not be easily convinced of the investment potential in pulling up stakes and moving to America.
All that said, I don’t think our snowmobile production has been based on strong business fundamentals and ROI in a very long time. Our past three presidents have all enjoyed sleds and shared in the passion for our sport. It’s a deep connection we all maintain with the thrill of winter riding, the beauty of frozen nature and the common bond, shared with other sledders. Come to think of it, maybe we should move to North America damn-it!