Tomberlin Group Takes Aim at Small Machine Segment

Tomberlin wears a crisp white shirt and a bright yellow-striped tie, without a sports coat, but he greets casually dressed co-workers like long time friends with no sense of authority or condescension. “How are you?” he asks. “How are things going?” “You’re looking good.”
People respond with smiles, as he guides a visitor through the tight hallways and small work areas.
“It’s not about bricks and mortar,” he says with a smile and a soft southern tone. A casual visitor to this building at 3123 Washington Road, located only a short drive from the world famous Augusta National Golf Club, home of the Masters, one of the most prestigious golf tournaments in the world, would have to agree.
It certainly doesn’t look like the headquarters of a company that’s a main supplier to Wal-Mart that serves close to 500 dealerships in six countries, and has significant business interests stretching from North America and Europe to China, Taiwan and Brazil. Tomberlin expects to add about 200 dealers in the next two years, mainly in the western United States.
And Tomberlin himself doesn’t show it, either. Like many successful powersports entrepreneurs, he doesn’t put on airs. Even though he drives a powerful 740 series BMW, he shares a breakfast of eggs and grits with an out-of-town visitor at Ruth’s, a small strip mall eatery that features Formica-style booths, good food and quick service.
Revenue estimates for the diversified, privately held Tomberlin Group are difficult to come by, but industry estimates put the organization’s revenues at more than $50 million. There are three components comprising the Tomberlin Group, each contributing about one third of the organization’s total consolidated revenues:
– Tomberlin Product Group manufacturers and sells products such as go-karts and wagons to big box retailers;
– Tomberlin Outdoors manufactures small displacement power machines and sells and services them through its international networks of dealers and service centers;
– AVI (Asian Ventures, Inc.) provides international consulting and purchasing services. It also produces and sells the proprietary HowHit engine with displacements from 49cc to 250cc.The HowHit powers many of the Tomberlin products and also is sold to other equipment manufacturers.

THE EVOLUTION OF A BUSINESS
Tomberlin, 44, has been dealing with consumers in unpleasant circumstances since he began building one of Georgia’s largest pest control service in 1986. He eventually sold that operation, and in 1988 began looking around for other opportunities. As it turned out, he found that opportunity when he purchased a Polaris ATV that same year, one that offered some areas for improvement.
A long-time ATV enthusiast and father of two, Tomberlin rode the 250cc machine on his farm and found it lacking. “It wasn’t a positive experience,” he recalls today. And he particularly didn’t think it was safe for his kids to ride because it was designed for adults, but he couldn’t find anything better to buy.
So, he called Polaris headquarters in Minnesota and offered some suggestions on how they could improve the product. “That 250 is what led to conversations about improvements and riding in the south,” says Tomberlin. “There was a lot of water and vines down here, and they were breaking off cables. It was an environment that they hadn’t tested,” he points out.
To Polaris’ credit, management listened to his ideas, and soon Polaris managers were test-riding vehicles at RiverCross, the 750-acre Tomberlin farm and training center in southeast Georgia. RiverCross includes eight miles of riding trails and an 8,000 sq. ft. training facility. “We developed a very good, positive relationship that we have to this day,” he says. “They are a great company with great people.”
The relationship built during those rides and tests and frequent conversations led to Tomberlin launching a small 10,000 sq. ft. Polaris only dealership in Augusta in 1997. “I was very passionate about Polaris,” he says, “and at that time, pool cleaners in the South had more brand awareness than Polaris.”
Three years later, he opened a 20,000 sq. ft. Polaris store in Atlanta. At the time, that store contained cutting edge retailing features and soon became a model store for Polaris’ new dealers. Tomberlin also operates a 100,000 sq. ft. warehouse in Augusta for parts and finished goods. There is a smaller 30,000 sq. ft warehouse in San Diego to handle imports from Asia.

BECOMING A MANUFACTURER
As Tomberlin moved back into retailing, he had a disturbing experience in the Augusta store. “A young man walked into my dealership one day,” recalls Tomberlin, “and he was trying to sell us a kid’s ATV built in Taiwan. But he didn’t know any facts, and he told me things that weren’t correct.”
Tomberlin was in a quandary: He had a need but he felt Polaris wasn’t engaging the young rider. “We had a tremendous number of young people coming in with Dad and then leaving with Dad without making a purchase. That’s what got us involved with youth machines.”
Tomberlin went to work. He got on a plane and visited Asian manufacturers, spending nearly six months developing a product and lining up suppliers. Polaris wasn’t interested in kids’ quads at the time, so Tomberlin put together his own manufacturing company and began selling machines designed for youths out of his dealership. AlphaSports was launched in 1999.
“The launch of AlphaSports was natural,” says Tomberlin, “since I determined from managing my own dealership that youth riders were not being adequately served by existing products. It was apparent that safety would be enhanced by manufacturing a product that closer met the skill level of entry level riders.”
The AlphaSports program was put together quickly and focused on safety and back-end support that met the needs of dealerships. Tomberlin says repeatedly that one of his strengths as a manufacturer is his ability to see situations through his eyes as a dealer.
As part of the focus on safety, Tomberlin took the unusual step for a small manufacturer of joining the Specialty Vehicle Institute of America (SVIA), an industry group that promotes safe use of ATVs through rider training. It also serves as a resource for ATV research, statistics and vehicle standards. AlphaSports was the first non-traditional manufacturer to join the SVIA.
The SVIA and its training division, the All-Terrain Vehicle Safety Institute (ASI), promote ATV safety education and safety awareness. The organizations stress the message that youths under 16 years of age shouldn’t ride powersports equipment powered by engines with displacements larger than 90cc.
“We fundamentally believe that safety sells,” says Tomberlin. “(With) a safer product, it is more likely that you will enjoy a longer presence in the market.
“We have to acknowledge what is good for the industry, and we have to be focused on the impact that our products have in the market.”
AlphaSports was a homerun almost immediately, says Tomberlin, and it was difficult to keep up with demand. “We believe we have quietly set the example on how to approach this market segment,” he says.
“It was extremely successful,” says Tomberlin, without providing sales figures. “We enjoyed the benefits of being the first-mover.”
In addition to producing and selling machines, Tomberlin also built a system to service the machines for his customers. “We had an awareness of life cycle support,” says Tomberlin. “It was important to us to be able to support customers from a parts and warranty view, but also with safety.”
Eventually, Tomberlin put together a deal with Polaris to provide the OEM with kids’ quads manufactured in Taiwan. The same basic machines were sold under the Polaris and AlphaSports labels.
“Mike was very instrumental in helping us develop our youth products,” says Polaris CEO Tom Tiller. “He was very connected as we began looking at Asian sourcing, and we didn’t know our way around that part of the world at that time. It’s fair to say we would not have succeeded as quickly without him.”
Calling Tomberlin a “strong supporter” of Polaris, Tiller said he was “one of a handful of guys who thought they could help build a snowmobile company into an ATV supplier in the South. At that time, no one had heard of Polaris in the South.”
Because of Tomberlin’s role with Polaris and his success in producing and backing the AlphaSports machines, he began hearing from other large American companies inside the powersports industry and outside, as well. The companies wanted Tomberlin to help them find international partners and suppliers. These requests led to the formation of AVI (Asian Ventures, Inc.), an international consulting operation.

AVI EXPANDS TOMBERLIN’S REACH
“We seem to have developed a strong talent for performing due diligence on non-American manufacturers,” says Tomberlin. “Many of the suppliers we selected way back then have become major players today.”
Another way to look at it, says Tomberlin, is that AVI is really Tomberlin’s purchasing department that companies pay to use from time to time. AVI maintains an office in Taiwan and a contract staff of three in that country.
Tomberlin’s philosophy of downplaying the importance of bricks and mortar is obvious in his AVI operations. He doesn’t own any offshore manufacturing facilities, preferring instead to consider his suppliers as employees, units that have strengths and weaknesses that can be developed and coordinated and shifted about as necessary.
A substantial investment in any foreign manufacturing facility could lead to inefficiencies, he says, by increasing dependency on that supplier and reducing the company’s overall flexibility.
An important part of the AVI revenue stream is Tomberlin’s HowHit engine, a small displacement engine that he manufactures for use in his products. He also sells the engine to other manufacturers, basically using the Briggs & Stratton marketing model.
The most popular HowHit engine is the four-stroke, 149.6cc model. It has a single cylinder, is air-cooled, and is CARB compliant. Last year, Tomberlin was producing 1,000 HowHits each week.
Tomberlin hasn’t restricted himself to working in Asia; he’s formed a joint venture with Sachs, a German manufacturer of riding equipment under which they’ll develop and distribute products in North America and Europe, and he’s exploring additional opportunities in South America, as well. He also has dealers in Australia.

TOMBERLIN PRODUCT GROUP
The HowHit engine has helped Tomberlin get inside big box retailers, such as Wal-Mart, which he began supplying last year. His products that can be found in Wal-Mart stores include CrossFire go-karts, Montana Classic toys such as tricycles and wagons, and Bear River strollers.

OUTDOOR GROUP IS KEY
But Tomberlin’s most important operation is his Outdoor Group, the one that supplies machines to his network of some 500 dealers in six countries. “Clearly,” says Tomberlin, “the Outdoor Group is the horse we are riding, and the one that brought us to the table. It’s the one that will grow significantly in the next four or five years.”
Like his other operations, Tomberlin has a simple, clearly stated goal for the Outdoor Group: Capturing the first time user with a quality product insures that the customer returns to the dealership for higher end vehicles. Provide good value, outstanding dealer support, high margins, and convenient dealer relations.
While Tomberlin believes in a strong product, he also believes standing behind that product for dealers and customers. That’s why he’s developed a national chain of more than 1,100 customer service centers. “We believe in the product lifecycle,” he says simply.
Clark Vitulli, head of America’s PowerSports, likes Tomberlin’s approach. “We believe these folks will be long-term players, not a flash in the pan,” he says.
Why has Tomberlin grown so rapidly with such a relatively low public image: “We pipe dream,” says Tomberlin, “but we do a significant amount of due diligence when it comes to execution.” Free thinking with plenty of attention to detail. Perhaps that says it all. psb

– Joe Delmont