Cat Moves Ahead on Engine Production
Arctic Cat, Thief River Falls, Minn., has begun production of its proprietary 641cc four-stroke engine and expects to begin producing ATVs with the new powerplant early next year.
At the same time, Arctic said it is working on the development of a diesel engine for the British Army. At this point, the engine won’t be built by Arctic Cat; it’ll be outsourced to an engine builder, Chris Twomey, Arctic Cat president and CEO told Powersports Business in a recent interview.
Arctic is working with Roush Technologies, a British subsidiary of U.S.-based Roush Industries, Inc., to develop the diesel-powered ATV.
The diesel quad is based on Arctic’s 650cc series. The model includes a large 24.6-liter rear mounted fuel tank to offer extended range, has larger wheels and tires, and can haul a half-ton payload.
Roush Technologies started the project two years ago. A small pre-production run is expected to be completed by the end of this year, with full production beginning next year. (See Page 18 for a more complete report on the diesel development.)
“The project is in its infancy,” said Twomey, who declined to provide details other than to indicate the project could be expanded to consumer applications. “Obviously, we try to sell everything,” he said, “but we’ll have to see about other markets. At this point, we’re not sure if (the engine) will be proprietary or if we’ll just buy a diesel.”
Arctic’s new engine began rolling off the production line in Thief River Falls in early October at the rate of about five engines a day. That’s up to double figures now. The company’s goal, said Twomey, is to build inventory so that it can drop the motors into ATVs by next March. Arctic’s ATV line produces about 350 machines daily.
The $10 million engine development project has gone a bit slower than planned, but Twomey said he’s comfortable with that. “It’s more important that we do it right,” he says, “than doing it right now. We’ve built in tremendous safeguards and that’s leading to product quality.”
There haven’t been any substantial problems or delays, he says. “It’s just a new skill for us. First, we had to learn the design aspects. Now, we’re learning the production aspects; we never made an engine before. We’re just facing the typical kinds of issues when you have parts coming in from all over the world. There haven’t been any surprises; it’s just slow and steady.”
2005 Outlook
Twomey says that Arctic is optimistic about the upcoming snowmobile and ATV seasons. “In general, we’re in a good snow position,” he says. “I’m absolutely convinced that (the recent) slowdown is related to lack of snow; consumers are ready to come back and ride.”
To support his optimism, Twomey points to sled registration data that showed more snowmobiles registered in the United States last year than any time in the last 27 years.
The registrations correlate directly with snowfall, he points out. Registrations were up in areas that had snow and down where snow was light. In the eastern United States last year where snow was heavy, registrations were up 13%, but in the Midwest, where snow was light, they were down 7% to 10%.
“Consumers are voting with their dollars,” he says. “They are ready to go out and use their sled.”
Arctic sees the U.S. economy growing in the range of 3% to 5% next year, and consumer confidence seems to be improving, even though it was lagging a bit before the election.
Even though the U.S. ATV market has grown only by about 2% through September, Twomey sees the market growing at a slightly better rate next year. “It appears that the ATV market is growing,” he says, “but we have to offer new and innovative product to get (buyers) to come back. It’s still driven by product and innovation.”
ATV inventories at Arctic are at about the same level they were last year at this time, he says. Snowmobile inventories are lower than last year. “If we have normal snow, we’ll be really in good shape by the end of the year,” he says, noting that the company produced fewer sleds this year than in 2003.
Next year, ATV safety will continue to be a concern for the industry, says Twomey. And the fact that many ATV makers don’t subscribe to the ANSI manufacturing standards is a growing concern, he says. The standard, developed by the industry, the Consumer Product Safety Commission (CPSC), and the American National Standards Institute, Inc., spells out design, manufacturing and testing requirements for ATVs.
“The fact that Arctic Cat is committed, and a number of others are committed, should give consumers confidence that the product they buy is designed and developed and tested so that it is safe for the consumer,” says Twomey. “I’m amazed that others don’t follow that.
“It’s an issue for consumers. They have to understand that not all (machines) are made to the same standard. When you buy an electrical product, you see the UL label; maybe we have to do something like that.”
Land use also will be an important issue next year, even though it may not be an urgent problem. “We have to work with user groups,” says Twomey, “to make sure our voice is heard and we get our fair share of recreational areas.”
Noting that oil and gas prices were dropping a bit in early November, Twomey says those prices really don’t affect powersports directly. “It affects consumer disposable income and that affects us,” he says.
At some point, though, high oil prices will affect manufacturing costs and will have to be passed on to the consumer, he says. At Arctic, manufacturing cost increases were built into MSRP on 2005 models, usually at about the 1% or 2% level. Where substantial improvements were made, MSRP on some models were hiked 3% to 5%, usually on snowmobiles.
