By Joe Delmont
THIEF RIVER FALLS, MN—Officials here say the need for Arctic Cat to control its own destiny in the ATV market has spurred it to begin producing engines.
The $10 million project was launched about four years ago, and the first engines are expected to roll off the production line here in August. Machine production using the new engine is planned to begin in the fall. Arctic plans to produce 3,600 engines in the first year.
The 641cc single cylinder four-stroke power plant will drive Arctic’s new ATV, the 650 H1 4x4 automatic. No MSRP has been released.
While the 641 is the only engine Arctic is building today, it is seen as the first in a family of ATV engines to be built by Cat.
The new quad also will be available with last year’s 633cc four-stroke V-twin from Kawasaki as a 650 V2 model.
New features on the H1 line include wider fenders for better water and mud protection, integrated floorboards, a redesigned seat for improved ergonomics and a new 650 LE model that comes with polished aluminum spoke wheels and a quieter ride, thanks to a sealed air intake relocated in the front.
A BIG MOVE
The decision by Arctic Cat management and its board of directors to build its own proprietary engine is a major step for the company tucked away in this northern Minnesota community near the Canadian border.
First of all, it’s not easy to produce an engine that’s reliable and that delivers consistent performance. Arctic has always purchased its ATV engines from Suzuki Motor Corp. in Japan, and it buys all of its snowmobile engines from Suzuki, as well.
Additionally, Suzuki owns 32% of Arctic Cat’s common stock. The special Class B stock allows Suzuki to elect one director to Arctic Cat’s board of directors.
Arctic’s new engine contains about 480 parts that come from some 50 new suppliers around the world. Many of them are Suzuki suppliers who were introduced to Arctic by Suzuki.
It’s a question whether Arctic can save money producing its own engines, says Chris Twomey, Arctic chairman and CEO. “Over time,” he says, “we hope to be able to produce the engine for a lower cost than what we presently are buying it for. But that won’t happen immediately; you have to get scale volume. It is a little gutsy for us to think we can buy and produce a product cheaper (than Suzuki), but that’s the goal.”
Even though Suzuki probably has lower costs because of its production volume and because it can buy parts in volume, Twomey sees savings coming from currency fluctuations and NAFTA duties. Under NAFTA rules, 62% of the cost of a product has to be North American content. In an ATV, 30% - 40% of the total cost comes from the engine.
But the bottom line for Arctic is that building its own engine gives it flexibility to meet market needs as it sees them.
“I want to control my own destiny,” says Twomey. “We’ll continue to buy engines from suppliers like Suzuki and Kawasaki, who make great engines that meet the demands of our customers. And we’ll continue to make our own where they don’t share our vision of what customers want.
“If that means we need to have more than one engine, then we’ll have more than one engine.
“At the end of the day, I feel comfortable that we made the right decision, but the customer will be the ultimate judge,” he says.
Arctic fired up the first engine and put it on the dyno about five months ago. It’s been emphasizing testing and quality control since Day One.
The new engine doesn’t use any break-through technology — in fact, it doesn’t have one new patent. Arctic’s goal is to build an engine that performs as reliably as the other Suzuki engines on which it is based.
The conservative approach and proven design should simplify things for Arctic dealers and give consumers confidence in the new product, says Twomey. But if any reliability concerns arise among consumers, Arctic will provide whatever warranty protection is needed, he says.
Ole Tweet, vice president of new product development, ramrodded the engine project. Given the importance of building a bulletproof engine, the first thing he did was go outside the company for help.
Arctic retained an unidentified German engine consulting firm to help with the project, and then hired people from the auto manufacturing and computer analysis fields to make it work.
“I tried to get people with knowledge of engines and skilled computer design people,” says Tweet.
One of the biggest problems for Arctic to address was the matter of materials and tolerances. “The basic design is straightforward,” says Tweet, “but you have to control the materials and the tolerances. We were lucky that Suzuki shared some vendors with us.”
One of the most visible hires that Tweet made was Steve Schwartz, engine manufacturing manager. Schwartz, who had spent 22 years in manufacturing for automotive and electronics firms, was charged with setting up the engine manufacturing line and guiding the quality control process.
The 60-foot line is set up in a 24,000 sq. ft. building adjacent to Arctic’s main facility here, one that used to house the company’s apparel sewing operation.
There are eight stations on the line, and it takes approximately 60 minutes for an engine to complete the run.
Quality control is built into the operation, from the assembly process that involves setting up trays of parts to ensure that no parts are missed, to the cold spin test and the final hot test on the dyno.
The cold spin test is done on a custom-built machine that was adapted from the auto industry. It runs a series of 53 tests in about three minutes to check all the functions of an internal combustion engine. The cold spin test checks for very tight parameters that Schwartz and his team set up. “We tell it what we want (from the engine) and it tells us if we are getting it,” says Schwartz. This type of testing rarely is done by small engine manufacturers, Schwartz says.
Finally, a 20-minute run on the dyno completes the testing. “That’s a lot more subjective; we just want to see how it runs. Now, the cold spin, that’s pure data,” he says with relish.
During a daily quality control audit, two engines are pulled off the line and run for four hours, followed by disassembly and inspection.
MORE THAN AN ENGINE
While the new engine was expected to be the hit of Arctic’s dealer meeting May 25-27 in Cancun, Mexico, the company also prepared a prototype of a side-by-side ATV, similar to the Polaris Ranger and the Kawasaki Mule.
Twomey says 65% of ATV owners say they ride with a passenger, and he says Arctic is listening to what consumers are asking for.
“And we’re producing,” he says.”Other manufacturers are doing this; they’re obviously hearing the same thing.”
The machine most likely will be produced at least by 2006, says Twomey. “We want to see what feedback we get from the prototype.”
Interestingly, Twomey notes that Arctic tried to sell a side-by-side vehicle made for it by Toro several years ago, but the effort bombed. “The dealers didn’t want it and neither did the customers,” recalls Twomey. “But our customers are 10 years older now and they want to do different things with an ATV in a different way.” psb