By Neil Pascale
One of the more well-known scooter brand names has changed hands in wake of a bicycle maker’s decision to focus on its core business.
Pacific Cycle, the manufacturer of Schwinn bicycles, sold the rights to its scooter brand to the privately held Tomberlin Group, a manufacturer and distributor of on-road and off-road vehicles. The agreement, which started June 1, allows Tomberlin to sell the Schwinn Motor Sports brand in North America and to
20-30 countries internationally.
“This is not so much Schwinn coming into Tomberlin as much as Tomberlin now leading with Schwinn,” said Mike Tomberlin, owner of the Augusta, Ga.-based Tomberlin Group. “We’re very comfortable being in the background to just facilitate and meet the expectations of what this brand deserves.”
Five members of the Schwinn Motor Sports are moving with the brand to Tomberlin, including George Simone, the former vice president of Schwinn Motor Sports and one of the people that started the scooter brand in 2005.
Simone says former owner Pacific Cycle, a division of Dorel Industries, came to the realization that the company would either have to invest more heavily into the brand or concentrate more on its core product, the Schwinn brand of bicycles, and look for a possible Schwinn Motor Sports suitor.
“The similarities between the powersports business and the bike business stops at two wheels,” Simone said of the two industries.
Pacific Cycle “felt comfortable divesting themselves of it (the scooter brand),” Simone said, adding, “and I think that was possible in part due to meeting Mike. There was a very good chemistry from the day we met. It was one of those relationships where even though we were competitors we were always very friendly and congenial to one another.”
Tomberlin says the two companies had initial conversations about two years ago but that discussions heated up six-eight months ago. What ultimately led Tomberlin to purchase the brand was a “perfect storm” of business conditions, he said. Those conditions include the increased regulatory environment — “which we have been a huge proponent at the state and Congressional level,” Tomberlin said — that has affected the number of vehicles coming in from the Far East. These stricter standards coupled with the economic downturn also has resulted in fewer competitors for Schwinn, Tomberlin notes.
“We’ve been very quiet in motorsports for the last three-four years with this flooding of Asian product that we did not feel was compliant,” he said. “So now it seems like a perfect storm from a business perspective for us to really go about being what we believe can be the next major brand in the American market.”
Schwinn retailed close to 9,000 units last year, Simone says, noting that number could have been much higher if not for an inventory shortage. Simone said Schwinn Motor Sports “stopped taking new dealer applications and orders from dealers in July because our supplier just couldn’t meet the demand.”
Coming off that success, does Simone have any concerns about moving the scooter brand from a large public corporation in Dorel Industries, which grossed more than $2.1 billion in 2008, to a much smaller privately held company?
Simone did not, noting he is looking forward to having the chance of making “an extremely huge impact” on a smaller company’s bottom line. Plus, he sees benefits to the brand from an industry knowledge point of view.
“In reality, the expertise in the powersports business in that corporation was limited to a very, very small group of people,” he said of Pacific Cycle. “This move to Tomberlin we have probably increased the manpower by tenfold as far as the resources that are specifically devoted to seeing us succeed.”
Tomberlin notes those resources also will be aimed at improving customer service, both for consumers and dealers.
“I don’t subscribe to the theory that you have to have billions in your P&L before you can accomplish anything,” he said. “Nor do I think that of our dealers as well. We now have entrepreneurs serving entrepreneurs. Motorsports is our core skill set. I would stack up what we do against anybody regardless of what their top-line revenue is. We’re large enough to accomplish what we set out to accomplish within this industry segment.”
Simone said for the short term there are no plans to make changes in a manufacturing site, although farther out the companies will look at their current Asian manufacturing facilities and “decide which one is the best in terms of quality and innovation, replacement parts and delivery.”
There also should be few short-term changes for the Schwinn and Tomberlin dealer networks, which collectively number around 500, Simone says. “Mike and I share a very common philosophy when it comes to business and that’s about relationships,” he said. “It’s very important for us to give our dealerships the ability to be profitable and manage their businesses.”
Where there will be changes is in Schwinn’s product line. Simone says he expects changes in the 2010 model lineup, with the possibility of the company adding a 300cc or 400cc scooter. Schwinn’s 2009 lineup included four 50cc offerings and three 150cc vehicles.
“We really have some exciting things coming down the pipe,” he said. “You have to remember that Mr. Tomberlin has a fairly extensive background in alternative energy and that’s where we can see the product line going. We’re very, very focused on bringing new products.”
Copyright 2009 Powersports Business