Minneapolis office to close, while production added to two other Minnesota facilities
Just two months after finalizing its acquisition of Arctic Cat, Textron Specialized Vehicles (TSV) announced three big moves the company is making to improve efficiency.
On May 9, the company revealed it would be closing the former Minneapolis headquarters for Arctic Cat, moving engine production from Germany to St. Cloud, Minnesota, and moving Stampede side-by-side vehicle production from Augusta, Georgia, to Thief River Falls, Minnesota.
“A big piece of the puzzle remaining was how to really optimize our operational footprint so that we can operate more efficiently and better serve our customers. The changes that we announced [May 9] were really to achieve those goals,” Brandon Haddock, director of Communications for TSV told Powersports Business. “We took a long time deliberating the decisions, and they were difficult decisions to make, but we really needed to make some changes to make sure we were using the facilities at our disposal as efficiently as we could in order to design and build product faster and get it to our customers more quickly.”
The closure of the Minneapolis office was somewhat expected. Arctic Cat had moved into the 55,000-square-foot facility in Minneapolis’ North Loop warehouse district in August. Arctic Cat leased the building because the staff size had grown too large for the former 11,000-square-foot space in nearby Plymouth, Minnesota, and Christopher Metz, who was CEO at Arctic Cat of the time, expected the new location to attract fresh talent. The space had room for the Arctic Cat headquarters to grow to 150-200 employees, but only about 60 are currently working there.
“We looked at a lot of scenarios regarding our facility in Minneapolis, whether it made sense to remain as-is, whether it made sense to downsize the physical footprint of that facility or find another facility, but ultimately we just determined that the best case is to really consolidate our operations in St. Cloud,” Haddock reported. “There were financial factors at play, but it also allows us to really co-locate a lot of employees across our engineering teams, our marketing teams, our product management and development teams, so that those folks work closely together and in close proximity to one another and can collaborate much more efficiently.”
Haddock reported that very few jobs in Minneapolis were affected, as a majority of those employees have chosen to take their positions to St. Cloud.
“The vast majority of employees in Minneapolis will have the opportunity to continue their careers with the company in St. Cloud, and we hope that they do. There’s a lot of talented people that come to work in that facility every day, and we want to keep them on board,” he said.
In addition to gaining the former Minneapolis employees, TSV’s St. Cloud facility will also be adding more engine production. TSV announced that it is closing its engine manufacturing plant in Bernau bei Berlin, Germany, and moving that engine production to St. Cloud, Minnesota.
“That was really a decision driven by sort of the economic realities and operational efficiencies of not really needing two individual engine production plants. There’s plenty of operational capacity for St. Cloud to produce those engines, and it just really doesn’t make a lot of sense to maintain two separate engine production facilities when we have one very, very strong, very high-tech and capable facility in St. Cloud that is very, very close to where the vehicles will be produced, so we’re getting those engines that much closer to the units that they’re going to be installed in from an efficiency standpoint,” Haddock said.
Currently the 56,000-square-foot St. Cloud facility manufactures and assembles two- and four-stroke snowmobile engines, as well as ATV engines. Arctic Cat in 2015 invested $400,000 to expand the assembly capability in St. Cloud.
The move by TSV will add 50-100 jobs in St. Cloud, though an undisclosed number of jobs were lost in Bernau bei Berlin, Germany.
TSV acquired the Germany facility when it acquired Weber Motor in 2014 and renamed the division Textron Motors. While the Bernau bei Berlin factory will close, engine design and engineering will remain in Markdorf, Germany.
The move to add engine production in St. Cloud coincides with a decision to move production of all Stampede models to Thief River Falls, Minnesota.
“There’s plenty of capacity in Thief River Falls to take on that volume, and it allows us to drive some more production demand through that plant on a year-round basis, so we can operate more efficiently and effectively,” Haddock said.
TSV can also take advantage of the new paint line and other facility improvements that came as part of a $26 million investment into the Thief River Falls facility that Arctic Cat made in 2015.
While adding Stampede production in Thief River Falls won’t open any additional job opportunities, it will allow for year-round production.
“One of the cool things from the employee standpoint in Thief River and St. Cloud is they are very excited for that production move to those areas because it extends their work season,” said Kale Wainer, TSV marketing communications manager and 13-year Arctic Cat veteran. “We’ve been, call it somewhat seasonal. Snowmobile production usually ends by roughly Thanksgiving, and the ATV lines, side-by-side lines start up and down at various times of the year, so now with that added production, they’ll be able to work a steady schedule throughout the year, which those employees are really excited about. So I think it’s a great thing, moving that to those areas.”
Production of all side-by-sides and ATVs under the Textron Off Road brand, as well as the Arctic Cat snowmobiles, will also remain in Thief River Falls.
“We will invest pretty substantially in Thief River Falls to expand its production capabilities and continue to grow our business there,” Haddock said. “Thief River Falls is a big part of who we are, and it’s going to continue to be a big part of who we are.”
In Augusta, fewer than 10 people were laid off as a result of moving Stampede production from that facility to Minnesota.
“Many of the production workers who built the Stampede every day will be transferred to other production lines to help us produce Jacobsen turf care equipment and some of the other vehicle and equipment models that are built here in Augusta, so we were able to minimize the impact and job losses from that move,” Haddock explained.
When TSV launched the Stampede in May 2016, the company also announced it had acquired a 240-acre, 600,000-plus-square-foot facility near its Augusta headquarters. While the Stampede has been produced out of that new building, TSV already has plans for products that will move to the current Stampede production line.
“Although the Stampede production is moving away from that facility expansion, we are already producing a number of other models in that facility. The Jacobsen professional turf care equipment, production of those models has moved from Charlotte (North Carolina) to Augusta and continues to be relocated from Charlotte to Augusta over the course of the year. We have moved some of our legacy production lines from our legacy campus to that facility, so that we can free up room here in Augusta to really expand our fabrication capabilities to serve all of our different product lines. And we have a substantial aftermarket and service parts warehouse operation there in that facility. There’s plenty of work going into that new facility, even though we’re moving the Stampede to Thief River Falls,” Haddock said.
All three of the newly announced changes are expected to be completed by the end of 2017. Haddock said dealers should see no change in the delivery of their units.