Polaris Industries Inc., which manufactures snowmobiles and motorcycles, plans to sell or close a Wisconsin parts plant as it “realigns” its operations to “refocus on its core strategic manufacturing processes.” This will include establishing a new plant in Mexico.

Two other Polaris plants, in Roseau, Minnesota, and Spirit Lake, Iowa, will be redefined as “manufacturing centers of excellence.”
 
Polaris expects its realignment will be complete early in 2012. It said the changes will allow it to dedicate capital for strategic investments in painting, welding, and assembly by outsourcing “certain non-strategic component manufacturing processes.”

In addition, Polaris said it will be able to manufacture off-road vehicles (both ATVs and side-by-side vehicles), which represent more than two-thirds of its sales, in multiple locations depending on customer demand.

“While this was a difficult decision for us, given the impact on our employees at the Osceola (Wis.) facility, we believe the creation of these manufacturing centers of excellence will strengthen our company over the long-term and enable us to maintain our lead in a competitive market,” stated Polaris CEO Scott Wine. “Pursuing opportunities in new markets outside the United States, while concurrently evaluating our cost structure to improve our long-term competitive positioning, are key components to our growth strategy. This decision was based on a thorough review of our worldwide operations and will allow us to improve our ability to meet the quality, delivery and cost standards desired by our dealers and customers.”

The Minnesota plant will remain Polaris’ location for assembling snowmobiles, and the Iowa plant will continue to assemble Victory motorcycles. Parts manufacturing at the Wisconsin location will be moved to those two plants as well as to the planned Mexico plant, which Polaris expects to have running in the first half of 2011.

“In addition,” the company said in its statement, “certain manufacturing processes and equipment are intended to be sold to suppliers whom will continue to supply components to Polaris. Other non-strategic component manufacturing operations currently performed in the Osceola facility will be outsourced.”

Negotiations over the sale have begun with certain suppliers, the company reported. Polaris said it intends for the suppliers continue manufacturing these components at the Osceola plant, and it will operate the facilities during the transition period.

Polaris did not specify which manufacturing operations will be sold off or outsourced, nor which ones would be relocated.

The realignment process is to begin immediately, and for the new plant a site search is underway in Monterrey and Saltillo, Mexico. Polaris said it expects the new plant to maintain its product quality standards and improve its on-time delivery to customers in the southern U.S. and overseas markets, with “significant savings in logistical and production costs.”

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