HOT NEWS – April 19, 2004

S&S Cycle plans major expansion
Engine manufacturer S&S Cycle, Inc., says it plans to expand its operation from Viola, Wisc., to include a 165,000 sq. ft. two-building facility in nearby Lacrosse, Wisc.
Brett Smith, S&S Cycle president, told Powersports Business the move into a larger facility was necessitated by “untapped potential and opportunity” in the powersports industry that S&S has not been able to pursue in its present location.
“With our present facility,” said Smith, “our growth philosophy has been to build to accommodate immediate future growth. This time, I wanted to be sure we had the freedom and flexibility to move forward without having to worry about having enough space.”
Obtained through a lease-to-buy deal, the Lacrosse site consists of a 145,000 sq. ft. building that will house distribution and purchasing, and a 20,000 sq. ft. building intended for warranty and rebuild work.
Responding to what he called a strategic commitment from S&S to focus on dealer development, Smith said he also plans to place special emphasis on a dealer training and certification department.
The company employs 295 full-time workers in Viola; the Lacrosse site is expected to employ approximately 60 people, including a number of Viola employees who agreed to transfer to Lacrosse.
“We’re going to move purchasing and distribution, which is receiving, inventory control and shipping, as soon as we get into the building,” Smith said. “The people in those departments that choose not to move to Lacrosse will back-fill job openings we expect to have in the core manufacturing of primary engine components.
“Over time, our plan is to also move assembly, packaging and finish manufacturing, billet and exhaust components, to Lacrosse so we can expand our crankcase, flywheel, cylinder head and rod manufacturing in Viola.”
S&S expects to begin expanding into its new facility in the middle of May or early June.

Harley Case Dismissed
Wisconsin’s Supreme Court dismissed a lawsuit against Harley-Davidson, Inc., March 26, saying the manufacturer could not be found liable for a proposed class action lawsuit to be filed on behalf of all owners of 1999 or early 2000 Harley models with the Twin Cam 88 or Twin Cam 88B engines.
Steven Tietsworth, of California, sued the manufacturer in 2001, claiming it knew or should have known the engine design for motorcycles made in 1999 and early 2000 was inherently defective. He also claimed the design flaw diminished the value of his motorcycle for resale. The lawsuit previously was dismissed by a Milwaukee County judge but reinstated by an appeals court last year.
Tietsworth did not claim in his suit to have any problems with his Harley, but he hoped to transform the claim into a class action suit. The court ruled 5-1 that Tietsworth had stated no real damage other than his belief his motorcycle lost value because of the potential for it to have engine problems. The court also ruled Harley had not misled customers by failing to warn them of the design problem.
While Justice Diane Sykes, writing for the majority, said the claim the engine was “premium quality” and “a masterpiece” was “classic advertising puffery,” she wrote that Wisconsin’s Deceptive Practices Act does not impose a duty to disclose on manufacturers but, “prohibits only affirmative assertions, representations, or statements of fact that are false, deceptive, or misleading.”
Harley sent letters to customers informing them in early 2001 that the rear cam in a small number of the company’s motorcycles had failed. The company extended its warranty for the part and separately developed a $495 kit for dealers and service departments to repair the original cams.

ORBA Irked at BLM
Roy Denner, president and CEO of the Off-Road Business Association (ORBA), says he is upset that nearly $1 million of fees collected from campers by the Bureau of Land Management (BLM) at the Imperial Sand Dunes Recreation Area (ISDRA) has been diverted from park improvements to conduct a four-month monitoring program to evaluate the status of the Peirson’s milk-vetch plant and other noteworthy species.
Denner said the ISDRA had been receiving approximately $1 million annually from California’s off-highway motor vehicle recreation fund for the operation and maintenance of the facility, supplementing the $200,000 it has been receiving from the federal government.
Now, with the majority of the state off-highway vehicle commissioners being environmental advocates, no state money has been allocated for operation and maintenance, he said.
“We are outraged that the bureau would take our camping fee dollars and use the money for projects that should be funded by the federal government,” Denner said.
Denner said a new Recreation Area Management Plan (RAMP) for the ISDRA is being held up pending a biological decision on the milk-vetch plant.
“The Bureau is not proceeding with the construction of camping pads and toilet facilities called for in the RAMP,” says Denner. “However, they are moving forward with the biological monitoring which is also included in the RAMP.”

Kawasaki Settles suit with Moto Tassinari
Kawasaki Motors Corp., USA, will stop using the “V-Force” brand name on its KFX700 next year under terms of a settlement agreement recently reached with Moto Tassinari, Inc, of West Lebanon, N.H.
KMC has marketed on-road accessories using the V-Force mark since 1987 and, in late 2002, began using it in connection with its KFX700 ATV. Moto Tassinari, however, is the owner of a federal trademark which grants the company the V-Force mark covering reed valves.
Under the terms of the agreement, KMC will discontinue use of the V-Force mark at the end of the 2004 model year, but continue to market on-road motorcycle accessories with the name.

Big Dog Builds 10,000 Units
Big Dog Motorcycles, Wichita, Kan., produced its 10,000th motorcycle last month.
“It took over eight years to make 5,000 bikes and a little more than just under two years to make 5,000 more,” said Nick Messer, president, Big Dog Motorcycles.
Big Dog Motorcycles, LLC, has 90 dealers nationwide, seven of which are Big Dog Motorcycles branded, and employs 305. For more information, visit www.bigdogmotorcycles.com.

Harley develops College level programs
Harley-Davidson Motor Company has formed partnerships with two colleges in Kansas, Fort Scott Community College and Pittsburgh State University, to design a curriculum offering associate, bachelor and masters degree programs in applied science and motorcycle service technology.
In addition to holding classrooms, labs and computers, the facility will be modeled after a large Harley-Davidson dealership featuring a service area, parts area and counter, a paint area, a dyno room, tire service area, service manager’s area, break room and a showroom complete with accessories and checkout.
The three entities designed the new curriculum for the degree programs to complement traditional technical courses. All programs include traditional and non-technical college courses and offer internship programs with participating Harley-Davidson dealerships.
These partnerships allow Harley-Davidson to offer a two-year/five semester Associates Degree in Applied Science and a four-year Bachelor of Applied Science degree in Motorcycle Service Technology. Classes are scheduled to begin August 2004.

Suzuki Signs Carmichael
American Suzuki Motor Corporation (ASMC) says it has signed all-time SX/MX combined champion Ricky Carmichael to a multi-year agreement. Carmichael will join Team Suzuki effective Nov. 1, 2004.
With 10 AMA championships, including the past seven consecutive national titles under his belt, the 24-year-old Floridian will ride a Suzuki RM250 beginning with the 2005 AMA Supercross season.
Carmichael said in a prepared statement that the agreement is multi-faceted and “Suzuki will be extremely supportive of me from a racing, marketing and business standpoint.”

Investor group buys MSD
Gryphon Investors, a San Francisco-based private equity firm, has purchased Autotronic Controls Corporation, better known as MSD Ignition, a branded, consumer products company that manufactures and sells high-performance automotive ignition components to aftermarket suppliers. Terms were not disclosed.
MSD, based in El Paso, Texas, is the largest aftermarket performance ignition manufacturer in North America, dominating both the professional and enthusiast markets with a 70% market share of ignition product sales. MSD’s products include ignition controls, distributors, ignition coils, spark plug wires, and magnetos for automotive applications and powersports applications, including ATVs, personal watercraft, power boats, and motorcycles.
MSD was founded in 1970 by Jack Priegel and a group of engineers from the White Sands, N.M., Missile Range. Priegel is retiring as CEO, and Daniel R. Gresham will join MSD as president and CEO.
Gresham, 57, has more than 25 years of management and investment experience. He was most recently CEO of Dynojet Research, Inc., a company that develops diagnostic performance testing equipment for the motorcycle aftermarket performance parts industry.
Gryphon Investors focuses on leveraged acquisitions and growth investments in middle market companies in partnership with experienced management. With more than $500 million of committed equity capital under management, Gryphon typically seeks to invest $25 to $75 million of its own capital in companies with sales ranging from $25 to $250 million. The firm is completing the investment of its second fund, Gryphon Partners II, LP.

UTI to Expand in California
Universal Technical Institute, Inc. (NYSE: UTI), one of the nation’s leading providers of technical education training, has entered into a long-term lease agreement to build a new campus in Rancho Cucamonga, Calif.
The new campus will cover approximately 190,000 sq. ft., and is being designed to accommodate approximately 2,000 students, 800 more than the current Rancho Cucamonga campus. UTI expects the new campus to open this fall; it will replace the Rancho Cucamonga facility and other manufacturer-sponsored training facilities.
The UTI-Rancho Cucamonga campus initially will offer programs in automotive technology. UTI offers undergraduate degree, diploma and certificate programs at seven campuses across the United States, and manufacturer-sponsored advanced programs at 22 training centers through brands such as UTI, Motorcycle Mechanics Institute and Marine Mechanics Institute (MMI) and NASCAR Technical Institute (NTI). For more information, visit www.uticorp.com. psb