| Author | Message | ||
     Sprintst |
http://m.jsonline.com/business/with-his-motorcycle -company-up-for-auction-erik-buell-craves-another- comeback-b99535394z1-317329291.html His business is scheduled to be sold at auction Tuesday, but that hasn't extinguished Erik Buell's enthusiasm for making yet another comeback in the motorcycle industry. Buell is the founder of Erik Buell Racing, an East Troy manufacturer of bikes focused on speed and performance until it shut down suddenly in April, leaving about 130 employees out of work and the company seeking court protection from creditors. It was the sequel to Buell Motorcycle Co., which Harley-Davidson Inc. owned for more than a decade before dropping the brand in 2009 and leaving Erik Buell to start over on his own. Now, the 65-year-old entrepreneur is without a business again as he awaits the results of the auction of the assets of Erik Buell Racing, under a state statute that's similar to federal bankruptcy law. Related Photos Buell ramps up motorcycle production At his home in Mukwonago, Buell works on metal sculptures in his garage and answers questions from the court-appointed receiver who's handling the auction. What he really wants, however, is to get back into the motorcycle business, where he's known for product innovation and a competitive spirit that has resulted in racetrack victories against some of the world's largest bike manufacturers. If he had his way, Buell said, his company would be building motorcycles and racing on a world stage again tomorrow. "We could literally be shipping motorcycles, probably within a couple of days, as soon as we brought back an assembly team. The bikes are just sitting there, covered in plastic, waiting to be finished," he said. In its six-year lifetime, Erik Buell Racing hand-built $40,000 motorcycles for racing enthusiasts, developed a mass-production version of those bikes that sold for about $18,000 each, and cultivated dealerships in the United States and Europe. In 2014, Buell was worried about not having enough space in his small factory as he ramped up production and put his engineering efforts into overdrive. He invested his own money into the venture and received help from Hero MotoCorp., a motorcycle manufacturer in India that acquired a 49% stake in Erik Buell Racing for $25 million. The company hired dozens of people, including engineers, and was doing extensive product development work for Hero. Erik Buell Racing bikes were winning accolades from motorcyclist magazines and were doing well in world-class races in the U.S., Europe and Asia. So what sent the company tumbling into virtual bankruptcy? It grew too fast, Buell said, and the costs got ahead of his financing. "We thought that we could balance it all...but we just couldn't. That's what took us out," he said. Court records show that Erik Buell Racing has $20.8 million in assets and $20.4 million in liabilities. Former employees are owed $202,000 in paid time off, and some of the largest amounts owed to creditors include $733,000 to Mito Tech Co., a Japanese engine design firm, and $390,000 to Porsche Engineering Group. Former employees will be at the head of the line when it comes to getting what they're owed, according to attorneys, while unsecured creditors could be forced to share what's left after employees, secured creditors, the court-appointed receiver, consultants and lawyers are paid from the proceeds of the asset sale. Buell hopes the business will be sold in one piece, so the buyer could start producing motorcycles, and he hopes he would have a role in the new venture. "Given the right situation, and the right people on board, it's what I would like to do. I still have lots of energy for it," he said. Some have said that Polaris Industries, the Medina, Minn., maker of Victory and Indian motorcycles, could be a buyer. That would give Polaris a sport bike it doesn't have now, along with access to Buell's other product designs. But the business also could be sold in pieces, with some buyers acquiring things like the factory machines, tooling, EBR-owned motorcycles, bike parts and office equipment, while others might acquire the company's intellectual property. The assets owned by Hero are not included in the auction, nor are things such as leased equipment and employee-owned tools and personal property. The auction will be held at the Milwaukee Athletic Club in downtown Milwaukee, and only qualified bidders will be allowed to attend. The court-appointed receiver, Milwaukee attorney Michael Polsky, will review the bids and determine what's in the best interest of creditors. Then Thursday, there will be a hearing in Walworth County Circuit Court to approve the results of the auction. In a court document, Polsky said he believes the "going-concern value of the assets" is greater than their liquidation value. Buell hasn't said whether he will be among the bidders, but he said some people have shown interest in buying all of the assets in one piece. Business grew too fast In hindsight, Buell said, it would have been better to run the business at a more measured pace. "It demanded more cash than we had access to. We thought that we had the cash to cover the gap, but when it fell through at the last minute, there was nothing we could do," he said. Competing in world-class racing was expensive, but Hero and other sponsors covered those costs, so they didn't cut deeply into Erik Buell Racing's revenue, according to Buell. "It was good promotion for us, but it wasn't anything that came out of our marketing budget," he said. If the company is restarted, Buell said he's sure some of the employees would return. "We had a bunch of fantastic products. We really proved that American engineering is absolutely world class," he said. Some dealerships, however, said they would be cautious about carrying the brand again. They spend a lot of their own money to market products and support them with customer service. If bikes don't sell, or the manufacturer doesn't honor its commitments, a dealer could be forced out of business. "There's a lot of risk for the potential reward," said Kirk Topel, president of Hal's Harley-Davidson, in New Berlin, which carried Erik Buell Racing motorcycles. Buell's most recent bike, the 1190RX, was gaining traction in the marketplace before the company closed. In a 45-day period this year, Hal's sold more 1190RX bikes than it sold in all of 2014, according to Topel. The dealership had some customers coming in looking specifically for Buell motorcycles rather than Harleys, he said. Dealers had hoped that some of Buell's designs would surface in smaller, less-expensive motorcycles. They also hoped to be able to carry the Hero brand, but that never happened. Some dealers said they greatly admired Buell for his design talents but not his ability to run a company. "The guy has made some really cool bikes. He's definitely got talent," said Joseph Tortora, a dealer in St. James, N.Y. Tortora said he was disappointed when Erik Buell Racing closed, but he wasn't totally surprised because the company was struggling with retail bonuses and warranty reimbursements at his dealership. "I was very cautious in the number of bikes I took....I would like to consider myself a seasoned veteran of this industry, and I have seen more than one brand go out of business," he said. Originally a racer on tight budget In racing circles, Buell has always been an underdog on a tight budget. In the 1970s, as a rider, he recorded the fastest qualifying time for a rookie in the history of the Daytona 200. It was significant for a guy who traveled from race to race in a van with two motorcycles in the back, sleeping between the bikes while an occasional hitchhiker shared the driving on his long-distance trips. When a race in California was canceled because of rain, Buell borrowed money from other racers to pay for his trip home to Pennsylvania. He had counted on doing well in the race, and his winnings would have covered his expenses. Now he wants to remain in the competition as a bike designer. "I am an engineer at heart," Buell said, "and I want to show that technology coming from the U.S. can compete with the best stuff in the world." |
