Bad Kitty

Uh oh https://www.startribune.com/arctic-cat-suspends-production-thief-river-falls-layoffs/601181237

Arctic Cat lays off workers, suspends snowmobile production in Thief River Falls
The company told its dealers that workforce reductions began Wednesday because of the downturn in the powersports sector.

By Patrick Kennedy

The Minnesota Star Tribune
November 15, 2024 at 10:27AM

Arctic Cat has permanently laid off 65 workers in Thief River Falls and furloughed other hourly workers at the snowmobile plant there.

Textron, Arctic Cat’s owner, will shut down the plant after the 2025 snowmobile models are completed, the company said. It expects to reopen the facility sometime before the end of March.

The permanent layoffs are part of a companywide restructuring, a spokesman said. The plant when it reopens will employ about 530 workers.

“These actions were tough but necessary given the current conditions in the industry,” Philip Jhant, vice president of powersports for Textron, wrote in a letter to Arctic Cat dealers. “We are offering severance benefits to affected employees, including outplacement services to help them find new opportunities.”

The recreational vehicle vehicle industry is in a slump. Polaris talked about slowing production during its last earnings call. Winnebago talked about finding efficiencies in production.

Textron, a large industrial conglomerate, has been restructuring companywide, with the goal of a workforce reduction of 4%, or about 1,500 total workers, according to documents filed with the Securities and Exchange Commission.

Company officials said in the documents that the cuts in the industrial division, which includes Arctic Cat, would have to be deeper than originally intended.

“I think the end markets, and particularly in a couple of segments of the business, are continuing to be soft, and I think they’re going to be soft for a little while,” CEO Scott Donnelly said during the company’s earning call last month. “So we’ll continue to do what we think is appropriate to restructure and maximize our performance in each of those business segments.”

High interest rates and uncertainty around the economy had hurt the powersports industry throughout the year. Coupled with a poor snow season last year and dealers have excess snowmobile inventory.

The largest motorsports company, Medina-based Polaris, announced last month it planned to reduce dealer inventory by 15% to 20% by the end of the year to help support its dealers during the downturn in the industry.

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That sport is in bad shape. They have increased the cost of the machines to the point the masses wont/cant buy them. Im glad I lived in the hey day of sledding.

I agree with that suzuki.. daughter and her husband and their kids all run sleds yet.. no one else in the family has one..

Hmmm, didn’t see anything in that article where office or corporate staff where cut???

One of my cousins got laid off at Polaris earlier this year, and another is at Arctic Cat. I’m afraid to even ask him what’s up, he’s currently on paternity leave. Really tough stuff.

I have a senior in high school that’s headed to either UMN or UW, was interested in mechanical engineering but is considering some other options now. It’s a volatile market.

Zuki— people are willing to pay for toys but not if there’s no snow.

When it comes to powersports the analysts say a lack of snow kills the snowmobile sales and a lack of cheap financing kills the off-road vehicle and boat sales.

The storm has been brewing for quite a while. BRP and Polaris have also had cutbacks and profitability has severely declined. We’ve had 14 years of a great economy by historical standards. Unemployment has been near zero for over a decade. The problem with economic cycles is they are predictable only in hindsight.

It’s a shame because the new Catalyst chassis that Cat introduced 2 years ago is supposed to be really good. I have to say that with Yamaha exiting the market really cheering for Cat because otherwise we’re down to two makers of snow machines.

Dirtywater Mechanical Engineering is still a great career don’t let power sports keep him down.

This really isnt new news. What is unique is that they are broadcasting it. They typically dont. These manufacturers do this alot this time of year its almost routine as they wind down from sled production and prior to ramping up for offroad stuff. The concerning part for me with AC at least is that they have gone to a business model of “only building what is sold”, so where is this excess inventory coming from? I realize production planning and forecasts come into play far ahead of when orders may come in, but there shouldnt be a huge surplus of sleds because they should have all been sold already. Unless some knucklehead WAY over estimated projections for sales and planned components accordingly only to fall way short on actual sales and they had to produce what they had materials for. I can buy that, but that is not the bill of goods they have been telling shareholders and customers for the last 5 or so years. Hopefully the person responsible was let go and the manufacturing staff who dutifully do their jobs are spared.

TheFamousGrouse wrote:

It’s a shame because the new Catalyst chassis that Cat introduced 2 years ago is supposed to be really good. I have to say that with Yamaha exiting the market really cheering for Cat because otherwise we’re down to two makers of snow machines.

I have ridden the new chassis and one with the new 858 in it and it is everything they say it is and more! I am seeing sleds for by todays standards cheap prices right now. The new 858 going for 16k. THat is still a ton of money, but many are well over 20k. You just cannot justify that with uncertainty of snow. Snowmobilers almost need something like crop insurance that farmers have. If there is no snow they can collect a bounty LOL.

bigcrappie wrote:

Dirtywater Mechanical Engineering is still a great career don’t let power sports keep him down.

I know that’s true but he wants to stay in MN and it’s a troubling trend. There are only so many engineering positions in this region. My cousin has been outta work since July because he’s limited to this area by family situation and there aren’t jobs available for him.

In contrast I have one of those stupid useless humanities degrees and I have never been laid off.

He is still looking at engineering just maybe not mech. The bioproducts/biosystems program at UMN looks pretty appealing.

Does anyone know how this relates to pre-covid levels? Many outdoor sports companies expanded during that time. Just wondering if this is kind of back to normal or more of a poor economy thing.

I used to always have top of the line sleds but those days are over. I spend my wad on wheelers now given the guaranteed longer season. I still love sledding and have a fine running 800 and 600 waiting for snow but not sure what I will do after them. I sure aint buying something slow/cheap.

CaptainMusky wrote:

This really isnt new news. What is unique is that they are broadcasting it. They typically dont. These manufacturers do this alot this time of year its almost routine as they wind down from sled production and prior to ramping up for offroad stuff. The concerning part for me with AC at least is that they have gone to a business model of “only building what is sold”, so where is this excess inventory coming from? I realize production planning and forecasts come into play far ahead of when orders may come in, but there shouldnt be a huge surplus of sleds because they should have all been sold already. Unless some knucklehead WAY over estimated projections for sales and planned components accordingly only to fall way short on actual sales and they had to produce what they had materials for. I can buy that, but that is not the bill of goods they have been telling shareholders and customers for the last 5 or so years. Hopefully the person responsible was let go and the manufacturing staff who dutifully do their jobs are spared.

Agree they lay off people every year during down time. Not sure if this is more than usual but yes things are normalizing from Covid times either way.

[Ignoring the whole snowmobiles and shortening of winter]… imagine increasing base prices of SXSs to $25-30k and then wonder why they aren’t selling like hotcakes… Jiminy Christmas the audacity of these companies is something else.

Also, just because banks will finance just about anything these days doesn’t equate to “people are still buying them”.

THe powersports industry is going to have a reckoning for sure VERY soon. THe prices are outrageous. You could buy a jeep for the price of a side by side and it would be street legal everywhere.

CaptainMusky wrote:

THe powersports industry is going to have a reckoning for sure VERY soon. THe prices are outrageous. You could buy a jeep for the price of a side by side and it would be street legal everywhere.

X2. Said this same thing 5 years ago.

Saw an ad for a decked out Polaris Ranger CC—-only 49k!!

The Covid boom really created a historic surge for power sports sales. My buddy sells for a company in Red Wing and said he had a quarter in 2021 that topped any YEAR he had ever done in the last 16 years there.

A lot of this has already been mentioned, but there’s some regression back towards the normal quantities demanded post covid. You also have higher interest rates + absurd new base model prices that simply keep people on the sidelines. The boom of Covid also saturated the market. Lots of 2020-2023 machines are out there in use with no major need to upgrade at inflated prices. Snowmobiling and sales has yet another factor working against them in variable snowfall and climate. People can hammer me all they want (I’m no the sky is falling blah blah guy), but Winters in the Upper Midwest are nothing like what they were years ago. We still get storm systems and snow but the length of the season is what’s really changing. It will be 60 here tomorrow in SE MN. The week before Christmas in 2021 we had a tornado warning here and significant storm damage to some sheds. The ground here never actually froze more than a few inches ALL of last Winter. Snow will come still but it’s not as long of a window for it as there once was.

My wife has wanted a side by side for a few years now and we’ve passively looked. I also have told her we could buy a nice used wheeler AND a 15 year old Jeep Wrangler and take the doors/top off and have two machines for less than a new side by side.

And winter of 2022/2023 was a top ten snowiest winters so there is that.
It started October 14th and last snow fall was mid March.
Just two short years ago.

Who wants to spend 16k plus on a sled. Unless you go west and ride the mountains a Minnesota sled life starting at 16 plus is completely ridiculous and it’s showing. I guess when you burn your customers by cranking prices up then sales will drop.

The suspicious part of this whole thing is they reference excess inventory of unsold sleds. They switched to snow check only sales many years ago so if they only build what someone ordered that sled is sold

I seem to remember something like that Captain, they lied..

Mike Schulz wrote:

I seem to remember something like that Captain, they lied..

Corporate America lying? Who would of guessed.

CaptainMusky wrote:

THe powersports industry is going to have a reckoning for sure VERY soon. THe prices are outrageous. You could buy a jeep for the price of a side by side and it would be street legal everywhere.

Would this be the same reckoning that some have been predicting for the boat market for about the past 10 years? When can I expect new boat prices to go down and by how much?

If the manufacturers have overshot the range consumers are willing to pay, where are all those overpriced UTVs disappearing to? It’s like nobody’s buying them because they’re all sold out.

Ripjiggen wrote:

Agree they lay off people every year during down time. Not sure if this is more than usual but yes things are normalizing from Covid times either way.

Agree, the problem is that when some say the market is “down” it has to be asked, down from what? Down from the 10-year average? Or down from the ape-sh!t crazy COVID years? I think the problem is people baselining off of the COVID years to “prove” the economy is “bad”.

All I know is that any forum member who is willing to let me have a test drive on any Catalyst sled, please get in touch!

CaptainMusky wrote:

The suspicious part of this whole thing is they reference excess inventory of unsold sleds. They switched to snow check only sales many years ago so if they only build what someone ordered that sled is sold

I work right next door, there’s a pile of crates in their lot at the moment.

Not sure how old any of you guys are, but this isn’t the first time the snowmobile manufacturers struggled, remember back in the early 70’s there were around 100 manufacturers that all overbuilt and then the fuel crisis finished them off in 1973. Then the early 80’s with 20% plus interest hit, and Arctic went out of business for the first time only to rise from the ashes. Now that same dollar is spread amongst atvs, fish houses and many other outdoor pursuits, all of them insanely expensive (who needs a $50k fish house or $40k sidexside?). I work in the marine industry and yes we are seeing the same thing, rising costs (including labor and overhead), supply chain issues, high interest rates (gee, after reading all these forums I was under the impression everyone bought all this stuff with cash, guess I misunderstood). Its just business.

Not sure how old any of you guys are, but this isn’t the first time the snowmobile manufacturers struggled, remember back in the early 70’s there were around 100 manufacturers that all overbuilt and then the fuel crisis finished them off in 1973. Then the early 80’s with 20% plus interest hit, and Arctic went out of business for the first time only to rise from the ashes. Now that same dollar is spread amongst atvs, fish houses and many other outdoor pursuits, all of them insanely expensive (who needs a $50k fish house or $40k sidexside?). I work in the marine industry and yes we are seeing the same thing, rising costs (including labor and overhead), supply chain issues, high interest rates (gee, after reading all these forums I was under the impression everyone bought all this stuff with cash, guess I misunderstood). Its just business.

I work right next door, there’s a pile of crates in their lot at the moment.
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no surprise there.. that’s how I bought a cat years ago from the dealer there..

and very sad too…

They might turn it around after bidenomics is over. Inflation is a killer. Boat market took a big dip when Obama got in. Credit and 2nd mortgages dried up. Not that I think 2nd mortgages and refi’s to buy a toy on home equity is a good idea.

Charlie W wrote:

<div class=”d4p-bbt-quote-title”>CaptainMusky wrote:</div>
The suspicious part of this whole thing is they reference excess inventory of unsold sleds. They switched to snow check only sales many years ago so if they only build what someone ordered that sled is sold

I work right next door, there’s a pile of crates in their lot at the moment.

Is the same at Polaris in Roseau, stacked up high!