Polaris Cuts Staff Makes Changes

Due to lower sales than anticipated in three areas—ATVs, international and snowmobiles—Polaris has announced that it will lay off up to 77 employees, including some at its Medina, Minn. headquarters. Officially, Polaris states that it has made this decision as a result of lower than expected sales of its ATVs to dealers, but speculation is that it applies to snowmobiles as well.

Then again, the failure of the Fusion series to light up show room traffic might be a residual issue for consumers, if not dealers. There is also the fact that those sleds had too many problems which quite quickly led to bad word-of-mouth amongst the Polaris faithful. The Fusion line has been the biggest problem-maker for Polaris Industries since the ill-fated Comet of 1964.

As for the staff reduction, much of that move—a reduction of 2% of its 3,500 employees worldwide—can be traced to stagnation in the ATV market and an over production situation of ATVs that were not taken by dealers. Sled sales reflect the lack of quality snowfall for the past few years. And, we would guess that international sales have flattened as well due to tight restrictions on sleds and ATVs in Europe and snowbelt areas.

Of course, the failed ‘partnership’ with KTM didn’t help Polaris, and we expect some of this backlash can be traced to that move, as the Polaris/KTM deal would have taken Polaris to annual sales of US$3 billion from its current realm of slightly less than $2 billion.

As happens with multi-line powersports firms, watch for ‘realignments’ and consolidation to make sales, service and marketing staffs more efficient and responsive to dealer needs. It is quite common for ‘similar’ products powersports to share sales reps and service reps to cut costs. Then in a few years when a new ‘cure’ comes in, the lines will be separated out again to better service the perceived differences and then staff is expanded. You needn’t be an MBA to foresee this. Just old enough to have seen companies like Yamaha, John Deere, Kawasaki and Bombardier do it a number of times in the past. Yes, what is old is new again!

However, we are quite pleased to note that Polaris isn’t clueless. Check out the Polaris web site for sleds and see that the company is smart enough to utilize its past glory to assist the new models. In its five decades of sled manufacturing, Polaris did make some very significant inroads and did enjoy a great deal of success with its Mustangs, Colts, RXL, TXL and other models.

While no one is asking, we think Polaris—despite its current challenges—can spring back with consumers if it reassesses its past in regard to where it wants to go. Snowmobilers react to change more slowly than many marketing types might like, but when they like a brand, they can be stubbornly loyal to it unless a manufacturer totally turns them away. Polaris seemed to be very good at weakening that bond with its consumers, but we are seeing some signs of hope that Polaris may be getting a clue.

Business 101 states that it is much easier and less expensive to keep a customer than get a new one. Polaris just needs to treat its customers with a bit more respect—and that goes for vastly improving dealer relations. Dealers are the direct link to the snowmobile customer. An unhappy multi-line Polaris dealer has the option of selling another brand to his customer.