American IronHorse Says Whoa

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American IronHorse has temporarily halted production and laid off employees in an attempt prevent dealers from being overloaded with bikes and stave off overproduction at the factory, says the company's CEO.

Hendrickson says the company is still in business and is moving out on-hand inventory.

"Things are little slow right now so I'm not going to add to my dealers' problems by having them take more bikes. I'm not going to spend money I don't need to spend to build bikes that are gonna sit in inventory for a while," Hendrickson says. "We just took a couple of weeks down."

He also acknowledged that the company has made temporary lay-offs in the face of the production stoppage.

"We're looking at trying to be open back up some time in the middle or the third week of February," he told Dealernews. A letter sent by Hendrickson to dealers shortly after a story regarding the closure was posted on custom builder Cyril Huze's popular industry insider blog, www.cyrilhuzeblog.com, states that the company is not in bankruptcy, nor has it abandoned its dealers.

A check of Texas' bankruptcy court records revealed no filings from the company.

Citing problems of overproduction and excess dealer inventory industrywide, the letter says "As a manufacturer, if we do not take action to prevent a repeat of a problem, we are committing a huge injustice to each of you, and to ourselves."

In response to a question about pending financial restructuring deals, Hendrickson's conversation with Dealernews, the CEO says company is always looking for ways to bring in cash to help the business grow and advance. He wouldn't go into detail about any such pending deals, but a source close to the company says there is a Dallas-based group seriously considering buying American IronHorse.

In fact, the source says, the group is vetting the OE's operations and could announce a sale as early as March. For now, the company is working to reduce its building and material costs and is working with various financial institutions to come up with financing plans to replace those lost to the subprime lending collapse. On the manufacturing side, he Hendrickson says the custom production builders have relied too long on using high-dollar aftermarket parts to assemble their bikes. Citing an automotive industry example, the custom business needs to start looking for alternative sources and suppliers.

The cost of doing business and the dearth of financing, along with a glut of used Harley-Davidsons for sale are putting a hurt on the custom V-twin market in general, Hendrickson says.

"I think it's going to take a while for this market to swing back around," he says.