Last August, the Minnesota-based powersports company Polaris Industries muscled into the No. 1 spot on the IndustryWeek 50 Best list of American manufacturers over Apple Inc. The 61-year-old organization that pioneered the snowmobile had double-digit growth for two-years running. Strategic acquisitions —including Indian Motorcycle and Chrysler’s Global Electric Motorcars business in 2011—and an R&D department staffed with 500 engineers have helped the company expand the notion of what constitutes a vehicle that’s not a car, truck or piece of heavy equipment.
CEO Scott Wine, who grew up riding off-road vehicles and uses adjectives like “liquid cool” and “drop-dead gorgeous” to describe his company’s rides, has been the driving force behind Polaris’ growth. He took charge in 2008, after a short stint at UTC Fire & Security and before that, four years as president of Danaher’s Jacobs Vehicle Systems. After beginning his career as a supply officer on a missile frigate in the Navy, he had his first taste of management running the chairman's dining room at the Pentagon, where his boss was Gen. Colin Powell.
Wine arrived at Polaris two weeks before Lehman Bros. failed, “so it wasn’t a honeymoon at all, and guiding us through a recession gave me the opportunity to really learn the company in depth and help shape our future as it grew out of the recession," he says.
Today, after a long stretch of growth, Wine says he expects Polaris’ powersports niche to slow down a bit. “You caught us at a good time,” he jokes of the IW nod.
“The consumer’s not as strong as people think right now,” he says of the economy writ large. “We’ve seen traffic in our dealerships lighten up a little bit, and some of the industry’s numbers that I see are lower than I would have expected them to be.”
“But we have a mantra here,” he adds. “We call it making growth happen. We don’t let external factors become an excuse for us not to grow, and that’s part of the reason we’ve become moderately successful."
Asking vs. Telling
Key to the company’s success in recent years, says Wine, has been maximizing productivity. “Our lean strategy is really quite simple,” he says. “It’s all about eliminating waste in everything we do and adding value for customers. And last time I checked, there’s an opportunity to do that in almost every part of the business.”
On the ATV product line, which has produced more than a million Sportsman ATVs over the years, upper management meets in small groups with hourly employees on the shop floor “so they can literally show us in real time about how we can be better,” says Wine. “It’s more about asking them to be productive rather than telling them to be productive." Hourly workers "have a lot of really good ideas, and part of it is we want them to have more value-added time. It’s frustrating for them when they have to wait or walk somewhere to get a part or tear apart a carton because it wasn’t delivered in the right format.”
With the feedback, “We’ve shortened our lead times considerably. We’ve improved the quality, we’ve improved the profitability, and we’ve reduced our inventory levels. It’s been a team effort in every respect, not just within the factory but within the entire supply chain.”
A large Employee Stock Options Program—the employee group is the company’s second largest shareholder—and a significant profit-sharing program also help drive continuous improvement.
In addition, the company has devoted considerable resources to logistics, which it spends more on than labor, “and we’ve used value-stream mapping and Kaizen to find new opportunities to be able to serve our customers better and do it properly.”
Polaris is applying lessons learned to its new $150 million factory in Huntsville, Ala.--from small things like improvements in how work instructions are presented, to big things like the order in which vehicles are assembled. The plant, which comes online in April, will employ 1,700 people, who will primarily be building its Ranger side-by-side utility vehicle. The goal is to make it “the most lean factory we’ve ever built,” says Wine.
Polaris also has a large plant in Monterrey, Mexico, and engineering, manufacturing and distribution facilities in Minnesota, Iowa, South Dakota and Wisconsin. With the high logistics overhead, keeping manufacturing close to home is cost-effective: 85% of Polaris' customer base is in the U.S. and Canada.
Polaris’ expanding motorcycle business includes a Batmobile-like three-wheeler called the Slingshot (Is it a bike? Is it a car?) that retails for $20,000, an electric Victory motorcycle and the $9,000 Indian Scout bike.
The new Scout costs less than half as much as the other Indian offerings. Wine says the Indian brand’s association with risk-taking and innovation allowed some room for attracting a younger audience with a lower-priced bike. “You get a really low monthly payment, and you can get in the brand and see the value that we bring,” he says.
Wine sees a lot of growth potential in Polaris’ motorcycle lineup and lithium-powered vehicles with its core audience of “multi-acre homeowners”—people with 2 to 200 acres of land who have a place and a reason to store, ride and use them.
“There are tens of millions of people that we’re trying to reach that don’t frequent our dealerships,” he says. “They live in areas with riding trails—they may hunt, they may fish, they may have a farm to work on.”
But there’s growth beyond that in acreage-challenged areas, too, with the acquisitions of quadricycle maker Aixam (sort of like the car version of a moped in Europe in that it’s diminutive yet street legal) and GEM’s low-powered electric vehicles (golf carts' outsized cousins) for retirement homes and college campuses.
In a given year, “north of 75%” of Polaris’ products are new within the past three years. (“We call that our ‘Vitality Index,” says Wine.) Thanks to the recent acquisition of an Idaho company, another new offering is the Timbersled, a kit that converts a dirt bike into a snow machine. “We’re doing things like that to bring more people into the industry,” says Wine, who likes to ride, and ride often—snowmobiles especially. And he’s not alone.
“You walk into our R&D facility, and nearly every single person will have a helmet on their desk. Because they’ll find the time during the day, during the week to actually go ride the vehicles. We hire people who have a shared passion for this.”
"Actually," confesses Wine, “riding is one of the best parts of my job.”