Sept. 22, 2008 – Building its European presence
September 22, 2008
Filed under Features
By Neil Pascale
MADISON, Wis. — LeMans Corp., the company behind national distributors Parts Unlimited and Drag Specialties, is aggressively going after a larger share of the European market.
Founder and CEO Fred Fox told a gathering at the company’s annual National Vendor Presentation that the company’s first warehouse in Europe will open this spring.
“We’re going to dominate the United States,” Fox said. “We’re expanding our growth in Canada but we’re going to work on Europe. That’s really the growth area that we’re going to have in the next 12 months.”
During his hour-long presentation, Fox also said the company will end its fiscal year on Sept. 30 up in sales despite slowdowns in the custom V-twin and ATV segments of the market. Fox also expressed confidence about the year ahead.
“We’re looking for a good year,” he said, although noting his own reservations about when the U.S. economy will start to rebound. “We’re not going to participate in any recession.”
LeMans Corp.’s participation in the European market will increase significantly in the coming year. Although the market presents several challenges, Fox is confidant LeMans can make big strides there during the next decade.
“Within 10-12 years, we think our European volume will be as big as it is in the United States,” he said.
Which suppliers will come onboard at Parts Europe is something that has not yet been announced. Fox says the company will start to unveil those companies at INTERMOT, the German motorcycle show. Some of those companies, Fox says, will include major manufacturers that previously have not had distributors.
To lure those and other companies, LeMans has worked on developing its European infrastructure. The company’s new warehouse, which is located in Germany near Luxembourg and France, is more than 200,000 square feet and includes four layers of shelving and conveyor belts. The company opened a larger warehouse near Reno last year that included much of the same design. That warehouse’s automation alone cost roughly $15 million. That’s why Fox calls the Germany facility “one of the biggest and most sophisticated warehouses ever built in Europe.”
LeMans also has extended its working partnership with UPS overseas so the distributor can “be the most competitive people in the European market on freight,” Fox said. “I think we’re their second or third largest customer for small parcels and we’re going to be that way in Europe. We’re shipping over there by air very economically.”
Fox expects the product mix in Europe to eventually mirror the United States. That doesn’t happen now. LeMans’ U.S. product mix is more heavily metric — LeMans classifies metric as anything not American V-twin — where so far the bulk of the European business LeMans has done is on the V-twin side. However, that alone still represents a significant quantity of shipments.
“We’re shipping now from here (in the United States) more than most of the distributors in Europe are doing out of their location,” Fox said, noting the company’s monthly volume to Europe currently exceeds more than a million Euros. “And you’ll see that skyrocket very shortly here.
“Europe is going to be tough, but logistics are a big part of it. We built the warehouse big enough. We’re getting capable, competent people that have been in the motorcycle business to make the decisions and we’re supervising them with people from here that know our systems. We’re just building a brick at a time, but it’s going to come fast.”
The U.S. market
Fox did see softening in certain market segments, including in higher-priced items, something that has been experienced throughout the U.S. retail industry. He says the V-twin custom segment has been especially hard hit, noting his company’s sales for that segment are down 20-25 percent.“That market is pretty much completely stagnant right now and we’re all kind of waiting for it to come back,” he said.
ATV sales also have been off nationally, although the parts and accessory sales have not declined as much as new unit sales. Fox says LeMans is off anywhere from 11-14 percent depending upon the ATV product. However that is still better than national new unit sales, which were down 23.4 percent in the first half from the year-ago period.
“So we’re getting more than our share and the dealer who still keeps product in the store still gets more than his share,” Fox said.
The tougher economy, however, is clearly having an effect on how some dealers are doing their PG&A business, Fox pointed out. “Dealers are short of money. They tell you that. Our salesman go in and (dealers) say, ‘Boy I would really like to buy something, but I’m so strapped I can’t buy anything right now.’ So we say, ‘The next best thing is sell it out of the catalog and call us and we’ll have it here tomorrow.’ And that’s working pretty well. A lot of the guys are having a pretty good year with that.”