Trouble Broods for Husqvarna as Austrians Come to Varese

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Only a couple of months after Husqvarna?s sale by BMW to Austria?s Pierer Industries, the storied motocross brand is once again making headlines, unfortunately of the wrong sort.

Reports from the La Provincia di Varese website, Varese News, as well as motorcycling’s GPOne are saying that the acquisition of Husqvarna has revealed significant problems with massive unsold inventory, labor, and the existing business plan.

As of Monday the 22nd of April, Pierer Industries announced that the factory will be closed until further notice, and let go all of the 211 factory workers employed by Husqvarna. The only staff remaining are in the sales and marketing departments, about 30 people.

Representatives of Husqvarna have not specified if there is a tentative date for resumption of production, despite having publicly stated that “The company expressly confirms the ongoing production, sale and service of the entire range, including the recently introduced models Terra and Strada 650 and the new Nuda 900 ABS.”

Speaking to newspapers, representatives from FIM-CISL and Fiom-Cgil, the two trade unions most affected by the layoffs, made clear that their view of the owners is not positive, nor the prognosis for Husqvarna good.

“There is a structural problem,” says Flavio Cervellino from FIM-CISL. “In the warehouses there are 12,000 unsold motorbikes, and it is clear that the problem is connected to the product, but the owners are not interested in investing in research and development, and so they don’t consider alternative solutions than sales activity.”

That staggering inventory figure exceeds the total sales that Husqvarna enjoyed in all of 2012, and more disturbingly, does not include the roughly 3,000 to 4,000 additional units that were manufactured in 2013.

The Austrians arrived only on March 11. In five weeks, they assessed the situation of the company, which they said was worse compared with the description given by the previous owners, BMW.

“It is a case of industrial looting,” says Nino Cartosio from Fiom-Cigl. “The aim is to empty this company. There is nothing left for the owner but the real estate and, above all, a prestigious brand.” Cartosio underlines, “In this company, we spent double on consulting advice than the whole payroll for the factory.”

As has been pointed out in previous analysis here at Asphalt & Rubber, Husquarna has been a difficult brand to maintain. Losses since 2010 total €182 million, and sales have declined sharply overall, despite signs of an uptick last year.

With the exception of the Nuda 900, the new 650cc road models were not well received by fans or dealers, being largely warmed over low-end BMW products with many components sourced from outside Italy.

“With the introduction of the street models, suppliers moved outside Italy, favouring especially German and Austrian companies,” says purchasing manager Fabio Murazzi.

“Buying even simple screws abroad became an extra cost, and so it was for every component. Also, BMW forced us to assemble Kymco engines here.” Rationalizing manufacturing activities are commonplace in all conglomerates, so much of this is unsurprising. BMW and Kymco already collaborate on engine design and manufacturing for both motorcycles and car projects.

Global off-road motorcycle sales have been stagnant to negative for decades, which is why KTM and BMW have focused new product development on road motorcycles instead. It’s been speculated by many observers, including this author, that Pierer Industries owner, KTM CEO Stefan Pierer, bought Husqvarna with the intension of splicing parts of it onto the KTM portfolio and selling off others.

This news, combined with the catastrophic economic situation in Italy suggests that reopening of the Husqvarna plant in Varese is highly unlikely.

Source: La Provincia di VareseVarese News, & GPOne

Michael Uhlarik is an international award winning motorcycle designer and industry analyst with 14 years of experience with major OEMs in Asia, Europe and North America. He is also, together with partner Kevin O’Neil, behind the Amarok Racing team, and the P1 electric motorcycle experiment. He lives with his family in Halifax, Nova Scotia, which is about as far away from the centre of the motorcycle universe as one can get. This may or may not be a coincidence.