On Wednesday, we told you about Yamaha’s struggling sales in the US market for its large displacement machines, with several bikes from several categories showing lackluster results over the last 12 months. We told this story first, because it frames a series of future stories about Yamaha Motor USA, and today is a continuation of that narrative.
As such, Asphalt & Rubber has learned that Yamaha plans to move its corporate headquarters out of Cypress, California – the epicenter of the motorcycle industry – and relocate to the other side of the country, setting up shop just outside of Atlanta, Georgia. The primary driver for this move? Costs.
It should be an obvious statement that California is an expensive place to operate a business. The state isn’t known as being a tax haven for corporations, the property values are high, which means buildings are expensive, and the standard of living for Los Angeles is one of the highest in America, which means that employees have to be paid a premium as well.
This makes conducting business in California a tough proposition for a company like Yamaha Motor USA, but the Los Angeles / Orange County area is where the bulk of the motorcycle industry resides, so most companies in the motorcycle industry bite the bullet, and call it the price of doing business.
Seeing the financial realities on the wall, however, Yamaha has made the decision to move away from the rest of the motorcycle industry, primarily to reduce its payroll and facility expenses, and to keep the company profitable.
This decision comes at a crucial time for Yamaha, as the company has seen its top-line revenue drop considerably, as a result of the company’s diminished sales. The only way to counter that trend is to reduce expenses, with location and payroll being two big areas where Yamaha can make significant improvements
As you can imagine though, the move out of California isn’t going over well with those employees who want to make Southern California their forever-home, especially those who are resistant to the alternative, the Atlanta metropolitan area.
While the move will mean that Yamaha will lose the ability to siphon talent from the other motorcycle OEMs located in California, the upside to Georgia is the proximity to several automotive players, as well as motorcycle companies like Triumph and Pirelli.
Meanwhile, a small cadre of Yamaha employees will stay behind in California, primarily working in the testing and racing departments – this is a story for another day, however.
We imagine it will take quite a duration for Yamaha to move fully from California to Georgia (a year or two), and it will be interesting to see how the Japanese brand copes with being so far removed from the big players in the US motorcycle industry.
Clearly other brands have made it work, but then again, those brands aren’t losing sales at a rate like Yamaha’s.
Source: Bothan Spies