April 23, 2007 – Industry Leader: Brett Smith, S&S Cycle

Under the guidance of its president, Brett Smith, S&S Cycle has been a leader in not only providing the V-twin industry engines that meet increasingly stringent air and noise emissions standards, but also the necessary training to its dealer network.
The LaCrosse, Wis., company recently unveiled a new engine, called the X-Wedge, that’s designed to not only meet 2008 ARB standards, but also the 2010 EPA regulations.
Smith, the grandson of S&S founders George and Marjorie Smith, has kept on top of such regulations by working on the Motorcycle Industry Council’s V-Twin Committee.
With the support of S&S’ board of directors, Smith also built a training facility in late 2005 that now serves as a unique V-twin educational center for the industry.
“Those commitments we’ve made to the industry have made it very clear to the (S&S Cycle) dealer network globally that we’re serious about being there for them and supporting them,” Smith said.

What’s the biggest challenge for the industry and what should be done about it?

I believe regulatory air and noise emission requirements are the most significant issues we’re faced with today. The reason I say that is any time you’re trying to increase the performance of a vehicle, whether it be a watercraft or a motorcycle, it has an impact on air and noise emissions. And there’s such demand from the populace to go faster and have more torque and more horsepower in any of the vehicles that they’re using. It’s quite a challenge. What I think needs to be done is first and foremost the manufacturers of vehicles and aftermarket parts must commit themselves to working agreeably with the EPA and the ARB in a responsible fashion. That doesn’t mean we should just roll over and die as it pertains to standards that are wildly unresponsible. But when responsible standards are established — and I believe the majority of the standards that have been established recently are reasonable — we should make every effort to comply with those quickly. The area where the V-twin industry has struggled is we have not been very good at communicating with and to the EPA and the ARB. We have not been proactive and collaborative with respect to what makes sense for the industry and its objectives. I think it’s achievable for us to have objectives that are in alignment with one another, meaning we want to continue to provide aftermarket components that consumers would desire to have to improve the performance of their vehicles. The EPA wants to reduce air and noise emissions and the ARB wants to reduce air emissions. I think those two objectives can be achieved jointly.
Education and training are another critical component. In line with all these emissions issues, you also have a vast dealer network out there that needs the support, especially the independent dealers because they don’t have immediate access to the training that the Motor Company provides. They need to have access to the quality training that helps them gain a better understanding of what’s available to them. A lot of the dealers that come into our training program are discovering that they actually have a lot more freedom, latitudes and opportunities than they thought they did.

What’s been the biggest challenge in your current position and how have you dealt with it?

My biggest challenge has been ramping up for extremely rapid growth from 2002-’05 and now dealing with what I would consider to be a major downturn in the V-twin industry that has been primarily predicated on two or three different things. The first issue, I believe, is that for a long period of time Harley-Davidson was not able to meet the demand of their product and that created an opportunity for the custom performance aftermarket motorcycles like Big Dog, American IronHorse and others — and we supply all of their engines. Harley now has really, really ramped up. And I think they’ve overproduced. They have fully saturated the market and that has an impact on the demand for all complete motorcycles, including their own. If you look at the sell-through at Harley dealers worldwide right now, the numbers are what I would call attractive. We’re also impacted by that. So the OEM business has been down, and that has hurt our business. Another challenge I’ve faced has been the enforcement of the EPA and ARB emissions requirements, particularly when it comes to the small custom bike builders, the guy who does 10-15 a year, they haven’t been building bikes because of the confusion regarding what they can and can do, misunderstanding of the emissions regulation, violations of the emissions regulations. That has had a significant impact on our market. I would say the third thing is the housing market is way down, home equity lines of credit have been fully saturated and disposal income is diminishing. And when you make a product like S&S does, which people don’t need to have, you’re going to suffer when disposal income becomes a problem. The challenge is ramping up for rapid growth, having a board of directors support all the capital investments and infrastructure investments in that growth and then having the bottom drop out of the market very quickly. And that challenge is the one I’m faced with today.

What’s the best advice you can give to others in the industry?

Provide the very best products and services you can to your customer base and invest in the infrastructure necessary in order to achieve providing the best products and services to your customers. And always make the commitment to follow through meeting and achieving regulatory standards. If you do that, you’ll succeed in this industry. But you’ll also have to be prepared to stay the course when there’s a downturn in the industry, like there is now. You can’t be reactionary and say, ‘Oh my gosh, the bottom is dropping out of the market. What are we going to do?’ There’s case after case of people who get reactionary and get nervous and they make decisions based on fear, rather than having a long-term approach and confidence that what they’re doing is right and will stand the test of time. And when the market responds more favorably, they’ll be in a position to benefit from the decisions they made. If you allow the market to continually dictate your policies, your decisions and the efforts you put forth, you’re putting your company at great risk.