Feb. 11, 2008 – Back to the beginning

By Steve Bauer
Managing Editor
LACROSSE, Wis. — S&S Cycle is known for its cutting-edge, chrome-finished V-twin engines, but few people realize the resiliency the company’s leaders have faced in designing and developing such powerplants.
From founder George J. Smith’s difficult beginnings that eventually landed his fledgling business in the basement of his house, to his son’s struggles to keep the business afloat after his father’s unexpected death, to his grandson’s determination to grow a company with strong ties to a troubled industry segment.
Through it all, each Smith has sustained and built upon the previous generation’s work to eventually become one of the dominant presences of the V-twin industry.
So as the company nears its 50th anniversary celebration, it’s not surprising to see the third-generation incorporate the past when looking toward the future.
“A lot of people see us now emphasizing our parts and accessories, but many forget that’s where S&S originated,” said S&S President Brett Smith, surrounded by tokens of his family’s achievements in his office in the company’s LaCrosse, Wis., headquarters. “We didn’t start building engines, we started building aluminum push rods. I made it a priority for us not to forget the fact that we are a performance parts company first, and we can’t keep the blinders on and not capitalize on opportunities before us.”
Growth opportunities like developing a new apparel line, supplying parts for metric bikes, expanding its racing heritage and becoming a leader in the production of EPA- and CARB-certified engines.
Growing those business opportunities plus remaining dominant player in the V-twin engine market might seem like a lot to handle, but it’s no different than the challenges the company has tackled since its inception in 1958.
“Wherever there is adversity,” Brett Smith says, “there’s opportunity.”
And the three generations behind S&S Cycle have seen and experienced plenty of both.

From airplanes to engines
Although George J. Smith loved to work on engines and had a passion for wanting to make his motorcycles go faster, it was never his intention to start a company that specialized in engine performance.
“Dad loved motorcycles practically since the day he could walk,” said George B. Smith, former president of S&S Cycle and current chairman of the private company’s board of directors.
In the early 1940s, George J. enlisted in the Army with hopes of becoming a pilot, and in doing so not only learned about airplanes, but expanded his knowledge of engines as well. When WWII ended, George J returned to his home in Blue Island, a suburb of Chicago, and began tinkering with his Harley-Davidson’s engine. It wasn’t long before George’s friends and others took notice of his unique skills, and asked him to customize their bikes, as well.
As George J. customized more bikes, he developed a reputation throughout the southwest side of Chicago as a master of engine components, not only for bikes but cars as well. Because of the increasing demand, in 1958 he decided to start a business.
S&S can trace its beginnings to the machine shop of George J.’s friend, Stanley Stankos, who ran an upholstery auto trim service. Stankos allowed Smith to use his machine shop for a workspace and the company was called S&S Cycle Equipment, with S&S standing for Smith and Stankos.
“That lasted for a few months and then Stan found it to be more of a hobby and didn’t want to commit the time to it,” George B. said. “So he dropped out and Dad moved it into the basement of our house.”
Smith bought out Stankos in 1959, and S&S was renamed for George J. and his wife, Marjorie. The business didn’t really take off, however, until Marjorie came up with a unique advertising idea to attract Harley dealers.
“Ma paid $35 for what they called an advertising tape, and that was a list of all the Harley dealers in the U.S.,” George B. said. “So you could pay a certain fee and get this list with all the addresses and contact info on it. So they sent out this literature for solid lift push rods and adjusting units for getting the old junky hydraulics out. And Ma typed up a letter and sent it out to the 1,300 dealers on the list.”
Soon after, orders started to trickle in, and from there George J. expanded even faster with more products, and gained even more fame for learning how to increase engine power by increasing displacement, which led to the development of the stroker flywheels.
“You can say that Dad was the father of the Harley stroker motor, which was the easiest way to make horsepower and torque for years,” George B. said.
In 1969, George J. moved the business to Viola, Wis.
“At that point the company truly became a one-man show,” said George B. “My brother Kenneth was more involved in the business through the 1960s and ’70s than I was, as I was pursuing a career in another industry, and even with Ken there Dad pretty much ran the business on his own.”
Meanwhile, George B. had become a manager at a large printing company in Chicago, but in 1970, he attempted to join S&S on a permanent basis and work side-by-side with his dad. But it quickly became apparent that the timing wasn’t right.
“We weren’t ready for each other,” he said. “We worked together for a couple weeks and we had a disagreement and decided it was premature. It was his way or the highway and I’m a lot like he is. He hadn’t mellowed enough and I hadn’t matured enough.”
Smith’s relationship with his father remained strong, however, and he’d visit for a few weeks every year to help the business. In 1975 — the year George J. invented the Super B carburetor — it became obvious S&S was moving to a new level of success. George J. followed up the Super B by creating big bore cylinders for shovelhead motors, and in 1979 he asked his son to permanently join the company.

Tragedy strikes
Sales and product development were booming in 1980, when family members began worrying about George J.’s health. He ignored their concerns and died suddenly of a heart attack during a cruise with his wife in 1980.
“We all thought Dad had a heart problem, but he self-diagnosed it as a gall bladder issue, but of course we were right,” George B. said.
With S&S’s founder and only true designer suddenly gone, questions arose as to what would become of the company.
“Ma put me in charge because I was the oldest, and so now the struggle began,” George B. said. “We were wondering what to do next, as I had only been up here a year, and now I had to figure out how to design stuff. It was a pretty heavy burden on all of us.”
George B. admits that although he had some training in engineering and design, his father’s advanced blueprints and design ideas meant there was a steep learning curve for the entire staff.
“To just sit down and design something is one thing, but what was happening in the V-twin industry and what my dad was doing was not coming up with revolutionary concepts, but taking existing stuff and making it better,” George B. said. “For whatever reason, with the help of some talented individuals who were with Dad before he died along with support from several family members, we did OK. I looked at the prints that Dad had drawn, and we took what Harley was doing and figured out what they weren’t doing and found ways to do it better.”
During that transition period, George B. admits there was a time he thought the company would come to an end.
“We had a pension and profit sharing plan where we paid the maximum every year,” he said. “There was one year where we didn’t make any money, it was either ’83 or ’84, where we thought this might be the end.”
The new management staff wasn’t able to design and produce more innovative products until 1985. George admits he was banking on the new products being successful to help dig the company out of a steep hole.
To his relief the products were a hit, and the rest of the decade was one of steady growth and innovation, culminating with George B. designing the Super EG carburetor. The company also developed crank cases and the super stock cylinder heads, laying the groundwork for S&S to do complete engines.
Although the company was on the verge of its biggest triumph yet, the burden of carrying the responsibility for the success for S&S had caught up to George H., and he turned the company over to Sam Scaletta, his brother and other family members in 1993.
“The decade after my dad died had eaten me up and I was burned out,” he said. “My drinking had gotten kind of worse during the 1980s, and I quit drinking in 1990 and a year later I quit smoking, which was the hardest thing I’ve ever done. So those things, along with the stress of the job, had caught up with me, and I had to take a breather.”

A new visionary in a changing industry
S&S enjoyed growing profits in the 1990s, selling engines to OEMs and dealers. It reached a new milestone in 2003 when Brett was named president, making him the third generation to manage the company.
After growing sales through 2005, however, the V-twin market began a steady decline. According to one Powersports Business survey, 2007 sales dropped nearly 30 percent compared to the previous year. As a result, several V-twin manufacturers, including S&S, were forced to reduce their workforce in response to the slowdown.
Even in the face of hard times, however, Brett believes there’s only one strategy that’s right for S&S: stay the course.
“The motorcycle side of the business is seeing a big hit, but that doesn’t change the industry dynamics,” he said. “We still have regulatory requirements to meet, we still need to continue to develop new and innovative products, we still need to understand and read the pulse of the consumer, and those are all things that you’ve got to continue doing to stay the course.”
Brett views the industry downturn as a positive for S&S, as it will eliminate competition and allow for more growth opportunities in the long run.
“What you need to do in a downturn like this is be fiscally responsible, continue doing what you’re doing and weather the storm,” he said. “Because if S&S or other major players in the industry are weakened by this downturn, what do you think is happening to those companies that are on the bubble? They’re suffering. So by staying the course, when you come out of the downturn and start seeing an uptick, you’re going to be in a better position to capitalize on that than anyone else.”

Growth opportunities
S&S has several plans in the works for branching out its business, which Brett believes is essential to ensure the company can have a balance regardless of what part of the industry is experiencing hard times.
Brett believes one area that has tremendous growth opportunities is an apparel line designed for independent dealers who don’t have access to Harley-licensed apparel.
In fact, S&S recently signed an exclusive marketing agreement with Jesse James of West Coast Choppers to develop a mainstream apparel line.
“We believe this collaboration is something we’ll be able to capitalize on and take advantage of and provide a product that there’s a demand for in the market,” Brett said. “The planned release date is going to coincide with our re-release to the consumers of our Flathead product line, and that more than likely will be in Sturgis in August.”
Brett notes the apparel line is only one of several ventures the company is working on to diversify itself.
“We don’t see ourselves as an apparel company, we’re a performance company,” he said. “And we are not looking for apparel to be our salvation, it’s a mere fraction of our overall sales and profitability. We just believe there’s an opportunity there that further leverages our brand.”
Other areas that S&S is looking to expand to is the car side of NHRA drag racing, and Brett even hinted of S&S’s participation in car racing in other areas.
“I would say you’ll see us get involved beyond the side of motorcycle drag racing, as we will be in automobiles at some point,” he said. “We’ve been approached not only by NHRA teams but by NASCAR as well. It’s going to take some time, but we’re going to pursue that.”
Brett also says the company is reviewing opportunities in the metric side of motorcycling.
“That is a high priority for us, but we will never abandon or neglect our heritage of classic American V-twin performance,” he said. “And if we suspect we are jeopardizing that, we will abandon those efforts. But I don’t think that will be a major hurdle for us.”

A V-twin recovery?
Even though times have been tough in the V-twin market, Brett believes there is reason to be optimistic of a turnaround, but not for 2008.
“Possibly in the summer or fall of 2009 we might see some things rebounding, he said. “And how that looks for each individual company depends on how they’re impacted by their product in the distribution channel. And we’re definitely feeling what our OEMs are experiencing.”
But much like his grandfather did, Brett will continue to ensure S&S takes advantage of the opportunities the industry presents, and believes another 50 years isn’t out of the question.
“We have a lot of unique opportunities before us, and I truly believe that we can take advantage of many of them,” he said. “But because of the down state of the industry, we’ve got to be strategic in how we choose which products we’re going to pursue.
“A lot of times it’s easy to just stick with what you know, but we’re trying very hard not to do that, and to take advantage of the adversity that’s out there. I think you’re going to see a lot more success from S&S, not just in the short term but in the years to come as well.”