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Old 12-13-2012, 04:04 PM   #76
SnowMule
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I don't even have an armchair.
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Old 12-13-2012, 04:13 PM   #77
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Been working in M&As for a longer while and in finance... I have seen NO deals that left smaller companies fairly independent in the long run. It may stay OK for 5 years (if business is good overall), but not for 10 years... And American companies are particularly impatient

Well, businesses need to make money. And lots of us here clearly think that investors give their monies to play good daddy. ROI is the king in the long run, otherwise your own shareholders get you out of CEO seat or others buy you out.
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Old 12-13-2012, 04:21 PM   #78
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klim/polaris

a couple of things.........

Margin

from what I understand Klim's is right in the middle w/some higher & some lower. Margin itself comes from the formula that each company comes up with to stay profitable. Nobody wants to work for free. It includes R&D, insurance, payroll, bldg/whse costs, advertising, etc. In a perfect world a company would sell everything they produced at full price and everyone who purchased from that company paid their bills on time. As we all know there is no such thing as a perfect world. A company has people that purchased but don't pay their bills/go out of business. They have inventory surplus that they have to discount at the end of the model run, a bad economy & other unforseen issues. All of that drops the margin levels the company makes - so a company has to have a higher beginning margin to hopefully end up somewhere around where they really have to be.

A dealer direct company like Klim for example designs, builds & sells a product to a dealer/online retailer, say they feel they need to double their money to pay for everything and put some money in the bank. Then they sell it to a dealer who needs to make say 40% to cover their overhead - there is only 2 markups. But say a chain mfg builds a chain for $21 - they double their money and a distributor like Parts U/TR/WPS buys it for $42 - they double their money and sell it to a dealer for $84 - the dealer needs 40% so the retail cost ends up being $140 to the consumer. There are 3 markups when someting goes thru a distributor.

All the fuss about things being built overseas

That is where all of the machines/technology/training is. It is not here in the US. We don't have a labor force trained to build these types of products. With the costs of building machines here & the cost of American labor the retail price of riding gear would be.......... just think about it for a sec.

a helmet mold overseas costs about $250,000 to make - each model has at least 2 different sized shells to cover all of the sizes- some have 3-4. that means a half million to 3 qrtrs of a million just for the molds. Then you have the raw materials, labor, boxes, mfg plant, etc. on top of that. You have to sell a LOT of helmets just to break even.
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Old 12-13-2012, 04:51 PM   #79
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Quote:
Originally Posted by Lonestar JR View Post
a couple of things.........

Margin

from what I understand Klim's is right in the middle w/some higher & some lower. Margin itself comes from the formula that each company comes up with to stay profitable. Nobody wants to work for free. It includes R&D, insurance, payroll, bldg/whse costs, advertising, etc. In a perfect world a company would sell everything they produced at full price and everyone who purchased from that company paid their bills on time. As we all know there is no such thing as a perfect world. A company has people that purchased but don't pay their bills/go out of business. They have inventory surplus that they have to discount at the end of the model run, a bad economy & other unforseen issues. All of that drops the margin levels the company makes - so a company has to have a higher beginning margin to hopefully end up somewhere around where they really have to be.

A dealer direct company like Klim for example designs, builds & sells a product to a dealer/online retailer, say they feel they need to double their money to pay for everything and put some money in the bank. Then they sell it to a dealer who needs to make say 40% to cover their overhead - there is only 2 markups. But say a chain mfg builds a chain for $21 - they double their money and a distributor like Parts U/TR/WPS buys it for $42 - they double their money and sell it to a dealer for $84 - the dealer needs 40% so the retail cost ends up being $140 to the consumer. There are 3 markups when someting goes thru a distributor.

All the fuss about things being built overseas

That is where all of the machines/technology/training is. It is not here in the US. We don't have a labor force trained to build these types of products. With the costs of building machines here & the cost of American labor the retail price of riding gear would be.......... just think about it for a sec.

a helmet mold overseas costs about $250,000 to make - each model has at least 2 different sized shells to cover all of the sizes- some have 3-4. that means a half million to 3 qrtrs of a million just for the molds. Then you have the raw materials, labor, boxes, mfg plant, etc. on top of that. You have to sell a LOT of helmets just to break even.
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Old 12-13-2012, 04:59 PM   #80
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A lot of this noise reminds me of my old Victory days. When Polaris came out and said they were going to be making a cruiser, people hooted and hollered "What? The ATV snowmobile guys are making a cruiser? Hahahahahahaha" Yep, and look who got the last laugh on that one - Victory took off.

Same thing with Klim, I don't see it as being a bad thing as I always found Polaris to be a stand up company. Their stuff may be more than I can spend, but I don't see this hurting them in the long run
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Old 12-13-2012, 05:21 PM   #81
zenjen
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Originally Posted by SnowMule View Post
Ever heard of "Motorfist"?
Motorfist, huh?

That just ain't right.
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Old 12-13-2012, 06:17 PM   #82
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Motorfist ... looks like they do have some interesting ideas and they aren't afraid to go outside the box.

http://www.motorfist.com/ca/product.php?p=80&c=
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Old 12-13-2012, 08:06 PM   #83
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I still feel like I'm reading Yelp reviews from the experts.

Quote:
Originally Posted by GB View Post
How many of the naysayer armchair CEO's in this thread actually run a company the size of Klim, or know the details for the purchase agreement with Polaris, where the parent company will be looking for them to cut corners and go with cheaper materials and still charge a premium for their products to pad the bottom line?

If you look at the Klim line, they have riding jackets from $300 to $1400.. Price wise, they are competitive with a whole range of riding apparel companies. There's an outfit for every budget.

FOR ME, it is less expensive to buy quality gear that fits my needs and buy it once. I wear an Aerostich Roadcrafter 1 piece suit to commute to work every day. The suit is worn day in day out.. and it holds up very well to daily use, with very little if any signs of wear. I did try an outfit from another riding apparel vendor who shall remain nameless, and, after a few weeks, the black cordura started to fade, the inner liner started to go fuzzy, the neck area was pilly... You get what you pay and it's always cheaper to buy a quality item the first time. I am highly impressed with the build quality, attention to detail and design features of the Badlands Pro jacket. Dear Santa...

I see good things coming from this, and I'm not even an armchair CEO.
Yeah. This thread is hilarious.

It's incredible how many experts there are here. Not a single one of them has a clue what is really going on behind closed doors. Not one. Lets say just for fun that Klim is in serious financial trouble, and Polaris came along to keep them afloat? That might be considered a good thing. Right? I mean, jeez, no one knows anything about anything, but they're all experts on this subject.
Unbelievable.
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levain screwed with this post 12-13-2012 at 08:15 PM
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Old 12-14-2012, 04:39 AM   #84
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Quote:
Originally Posted by levain View Post
Lets say just for fun that Klim is in serious financial trouble, and Polaris came along to keep them afloat?
That would be even worse in this respect...

We're not discussing Klim situation from company's perspective here. They're most probably better off business-wise in any of both situations (at least shot-term). Otherwise they wouldnt enter into this agreement. If Polaris came for the rescue, Klim would gain financial backing, if Polaris came for development, Klim would gain dealership access and potential new market.

From customers perspective if Polaris came for the financial rescue, there will be immediate restructurings, cost cuttings etc. But to me it doesnt look so (If that would be the case, I wouldn't keep current board in place).

I presume there will be no co-branding but Polaris snowmobile wear new brand will be designed and supervised by Klim (a bit lower quality but still good). Klim's own brand will stay as premium segment. Thats what stays for the next say 5 years, unless new economic slowdown comes. What happens then - we will see.

For pure speculation - future of Klim motorcycling gear depends on Polaris decision to develop motogear brand for Vector or other business. If Polaris decides they want it - Klim motogear itself is safe. If not - when hard times come, Klim will be told to concentrate on snowmobile (both brands) and motogear line will be most probably sold to 3rd party.

I'm not a universal expert, but I've really done and seen this dozens of times. Thats my scenario and might not happen but its quite probable.
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Old 12-14-2012, 05:01 AM   #85
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Quote:
Originally Posted by levain View Post
Yeah. This thread is hilarious.

It's incredible how many experts there are here. Not a single one of them has a clue what is really going on behind closed doors. Not one. Lets say just for fun that Klim is in serious financial trouble, and Polaris came along to keep them afloat? That might be considered a good thing. Right? I mean, jeez, no one knows anything about anything, but they're all experts on this subject.
Unbelievable.
Well, let me put it this way. I've been through this exact situation three times in two completely different industries. Twice from the "acquired" side and once from the "acquiring" side. The new management creep that I've described happened every time. When I was on the acquiring side, I was involved in the planning stages before and after the acquisition. So, while what I'm describing is partially "armchair CEO-ing", I'm pulling what I described from the actual playbook that we used.

So, do I know exactly what's going on behind these closed doors? No. Have I been in that room before? Yes.

As I said before, I hope to heaven I'm completely and totally wrong, but my experience has taught me to at least expect what I've described.
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Old 12-14-2012, 08:23 AM   #86
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Quote:
Originally Posted by Dan Alexander View Post
So everyone is already tossing the last shovel full of earth on the casket of Klim quality gear, writing them off on pure specualtion and prejudice. Does that crystal ball show you winning Power Ball #'s too ... didn't think so
Please don't misunderstand what I said. I like KLIM and I am no CEO but I have been around long enough to see that when a company is bought up by a larger company. The passion that started KLIM will be sucked out and the innovation will take a back seat to profits. Just sayin'...... we shall see.

But I am interested to see what small company develops to put out quality innovative riding gear. I like the small guy. These big companies get boring....
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Old 12-14-2012, 08:56 AM   #87
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Quote:
Originally Posted by GB View Post
How many of the naysayer armchair CEO's in this thread actually run a company the size of Klim, or know the details for the purchase agreement with Polaris, where the parent company will be looking for them to cut corners and go with cheaper materials and still charge a premium for their products to pad the bottom line?

If you look at the Klim line, they have riding jackets from $300 to $1400.. Price wise, they are competitive with a whole range of riding apparel companies. There's an outfit for every budget.

FOR ME, it is less expensive to buy quality gear that fits my needs and buy it once. I wear an Aerostich Roadcrafter 1 piece suit to commute to work every day. The suit is worn day in day out.. and it holds up very well to daily use, with very little if any signs of wear. I did try an outfit from another riding apparel vendor who shall remain nameless, and, after a few weeks, the black cordura started to fade, the inner liner started to go fuzzy, the neck area was pilly... You get what you pay and it's always cheaper to buy a quality item the first time. I am highly impressed with the build quality, attention to detail and design features of the Badlands Pro jacket. Dear Santa...

I see good things coming from this, and I'm not even an armchair CEO.
Oh, and by the way, I have worked with polaris on the inside not for polaris but I know their MO. They are in it for the money.
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Old 12-14-2012, 09:04 AM   #88
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Originally Posted by xr400r View Post
Oh, and by the way, I have worked with polaris on the inside not for polaris but I know their MO. They are in it for the money.

One would hope so. They are a public company....

Why the hand wringing anyway? Klim makes good stuff, but it's not an iconic cottage industry like Aerostich. I don't see a culture change from being a subdivision of another American company that is already part of the recreational vehicle industry. They weren't sold to Walmart.
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Old 12-14-2012, 09:20 AM   #89
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KLIM had talks with other companies long before this deal with Polaris. The company I'm familar in the talks was much smaller the Polaris Industries.
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Old 12-14-2012, 10:32 AM   #90
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"The new Victory/Klim Freedom line (designed by bikers for bikers) will include new Gortex leather Chaps and a new Gortex leather jacket with studs and fringes styled to look like the one Marlon Brando wore in The Wild Ones. Klim will also apply their Gortex technology to a line of fingerless gloves."
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