Polaris believes change in leadership can spur sales – May 15, 2006

Polaris Industries Inc., Medina, Minn., has named Scott Swenson as its new general manager for its snowmobile division.
Swenson, who’s worked for Polaris since 1998, took over the division on April 18.
“As we looked at the state of the snowmobile business and where we needed to go, we thought a change of leadership would provide a better opportunity for the snowmobile team, the dealer network and the shareholders to go where we need for the next couple of years,” said Bennett Morgan, Polaris’ president and chief operating officer.
Swenson comes to the snowmobile group from the Pure Polaris division of parts, garments and accessories (PG&A) division, where he was also general manager. He will continue to act as general manager for this division until his replacement is hired. He would not comment for this story.
“Scott has a proven track record within Polaris running a large business of scale. PG&A has been in some difficult situations,”?Morgan said, noting that his problem-solving ability will help in a down snowmobile market. Morgan said that the leader of the snowmobile division will need focus, clarity and leadership skills; the ability to drive a team to successful results.
Swenson “understands dealers, understands the industry and he understands the snowmobile business,” Morgan said. “He will drive for better results in a relatively rapid timeframe.”
Snow Transition
This is the second general manager for the division in two years. Eric Lindquist, who was the snowmobile general manager since December 2004, no longer works for Polaris. Prior to Lindquist, Bob Nygaard ran the division for many years. Morgan doesn’t see the rapid personnel changes as a liability.
“I don’t think [the change] dramatically affects the vision of where we’re going,” he said. “There were a number of good things accomplished with Eric’s tenure. Many of the things that affect the snowmobile group won’t change.”
Still, Morgan does expect changes within the group.
“There are different operating styles and different skill sets, differences in how teams operate and how we accomplish those goals,”?he said. “From a standpoint for consumers, dealers and shareholders, performance and results should improve. What I expect to be the greatest change is the level of execution.”
Morgan agrees that Lindquist came to the job during a tough climate. “It would have been a challenge for anyone,” he said. “It was a difficult time for the industry and Polaris.”?He called Lindquist “a very dealer-oriented guy.”
Swenson came to Polaris after working for General Electric and Shell Oil Co. He has a bachelor’s of science in accounting from the University of Wisconsin in LaCrosse, and has a CPA designation.
His first job at Polaris was as assistant treasurer, and was promoted to treasurer in 2000. He became general manager of Pure Polaris in 2001. Under Swenson’s five-year tenure, the PG&A business has increased by more than 30 percent, from $210 million to $275 million.
State Of The Snowmobile Group
Swenson comes into a division that has seen recent hard times.
The company lost its decade-plus marketshare leader position to rival Ski-Doo in model year 2003. The industry has suffered diminished sales, and Polaris has had inventory and quality problems.
“In general, the state of the snowmobile group is similar to the state of the industry,” Morgan said. “The industry has really atrophied with no snow years and the industry carryover is challenging for our dealers and as a result, it’s more and more difficult for the OEMs and dealers to make a fair return. That’s the fundamental challenger for the industry, the company and dealers going forward.”
Swenson does have some hard work ahead of him. For Polaris’ first quarter, ending March 31, snowmobile sales totaled $2.5 million, compared to $7.2 million for the same period in 2005. Shipments were down, which Polaris blamed on low snowfalls and warranty issues on certain new products. Gross profit decreased 18 percent.
“There are a number of challenges currently affecting our snowmobile business; including declining overall market demand, poor snowfall this past riding season, higher warranty costs resulting from some of our past new product introductions and the resulting decline in dealer confidence,” said Polaris CEO Tom Tiller in an April 13 statement. “Collectively, these issues have resulted in slower retail sales, increased inventories, and weaker new order demand for snowmobiles.”
Plans are taking shape for a snowmobile group turn-around.
“From a corporate standpoint, our objectives are really two things. [The first is] making the best snowmobile in the world for the snowmobile-consuming public. That’s short and long term. The second is to make a fair return for Polaris and the dealer network. Those are the short and long term goals in a more general view. Scott will give more detail on strategy and tactics as we deliver on goals.”
Morgan said that “fundamentals” is the arching theme for the group, as was stressed at its March dealer meeting. This means a commitment to quality product, finding the right supply and demand balance, overall management and working with the dealer network, he said.
Regaining top marketshare, which seemed to be a priority for Lindquist when he became general manager, is less of an immediate goal.
“In all honesty, we still aspire to be the industry leader in snowmobiles and we think we’re capable,” Morgan said. “We expect to get back there at some point; it’s still our long-term focus. Right now, on medium term, we’re more grounded in making sure that we build the highest quality snowmobiles in the world, get our supply and demand right and work through the inventory.
“We think that marketshare leadership will be an outcome of doing things right,”?he said. “People think that come hell or high water, our goal is to get back to No. 1. But really, we’re doing the things we’ve talked about. Consumers will decide whether we’re No 1. It’s similar, but we’re being a lot more clear that [top marketshare] is not just a divine right. It’s about executing [our product] better than anyone else.”
The PG&A Track
The PG&A group seems a training ground for Polaris top management. Lindquist spent time in PG&A, as did Morgan.
“PG&A is a wonderful place to develop and train leaders,” Morgan said. “It’s perhaps the broadest group. It deals with all the different businesses, the supply base, consumers, dealers and some product development. It has very broad responsibilities.”
Morgan said other people were considered for the job, but he declined to say whether they were internal or external candidates.
The general manager duties will not change from Lindquist to Swenson. The job includes determining short- and long-term operations, full profit and loss responsibility, determining and developing dealer and consumer goals, and long-term strategy. psb

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