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.