A CONVERSATION WITH KEVIN ALSOP about motorcycle manufacturing tends to stray from the familiar terms of design and horsepower into his take on international financial markets and the domestic real estate mess.
The discussion then moves from talk about commodities or the fall of the American auto industry to the particulars of lean manufacturing and its effect on running an efficient corporation.
His is a cold, pragmatic view on the current state of the custom motorcycle market. He knows that as long as the economy is in the tank, the custom business is going nowhere. Just take a look at what happened with American IronHorse for an extreme example. And Big Dog doesn't look too healthy either.
Until things turn around — something he's betting will happen in spring 2009 — what's a company like Big Bear Choppers to do?
Alsop has an answer for that one, and he was happy to share it with the selection of dealers attending the custom OE's second annual Dealer Summit in July. A collection of dealers gathered in Big Bear Lake, Calif., to test-ride three new models, get the company lowdown and for a behind-the-scenes look at Big Bear's manufacturing operation.
When we last left Alsop and his wife Mona after the 2007 dealer meeting, they were deep into a strategic restructuring that leaned out its manufacturing work and tightened up its production times. The industry at the time was tight, and they needed to run tighter.
Things today are no different. Alsop told dealers that BBC was using this slow time to reinvest in the company, establish new dealer programs, hire top-notch employees, launch aggressive marketing programs, delve deep into new outrageous designs and focus on staying strong so that when the economy turns around, Big Bear will be one of the first ones out of the gate.
"What we are doing and what we started doing a year ago is make it so that our corporation is profitable whether we sell one bike or 8,000 bikes," Alsop says. As of last year, the company was on an upward trajectory but had to turn on a dime when the economy took a dump. What saved him, he says, is the decision Big Bear Choppers made to only build to order. This would assure that there was no inventory clogging up his pipeline or sitting on a dealer's floor racking up flooring costs.
It's all part of the lean manufacturing process he implemented. It means that of the 700 2007 models Big Bear built, there are only about 50 spread out among 65 dealers.
It has also enabled the company to trim its production timeline so dealers can make drop-in orders. The company's order and lead time has been cut to four to six weeks, from the previous eight to 12, says David Ryan, Big Bear's new general manager.
Alsop says that things are so much more efficient that a year ago he was building 50 to 60 bikes a month with 35 employees, and now he's doing the same number with 13 workers. Next he plans to thin out his materials inventory by using a just-in-time system, cutting down from the $700,000 he has in stock to a load that runs around $200,000. "It's the only way to fly. Otherwise you'll just bury yourself," Alsop says.
This makes sense, being that Big Bear manufactures most of the parts it uses for its bikes. The remaining components like the motor, transmission and electronics come from such vendors as S&S Cycle, Baker Drivetrain, Brembo and Wire-plus.
LET'S MAKE A DEALER
Just as the company has evolved, so has its dealer network. At a time when dealer profitability is rough, Big Bear is giving its dealers some tools for the coming year — programs that look like they came out of the playbook of the big OEMs.
One of the major issues facing the custom market is consumer financing. Big Bear has expanded the number of retail financing resources it uses to include Western Funding, American General, Merrick Bank and Xpress credit, says dealer development director Rick Urban.
At the heart of the new dealer programs, however, is a new CRM system that will drive sales leads to dealership's Web site from the corporate site. The program will also generate thank-you letters and a follow-up survey upon warranty registration.
The factory is launching a national print campaign featuring a vanity phone number that automatically routes calls to local dealerships. The calls can be recorded for training purposes and will be used to gauge the ad's effectiveness.
Additional dealer incentives include an advertising co-op program, floorplan assistance in Q4, rebates on lingering 2007 models, a dealer inventory exchange program and future dealer sales contests.
"Either you close or you get better in tough times," Urban says. "The last thing you do when times are tough is crawl into a hole."
The company also wants to expand its dealer network in the U.S. and internationally. But why do such a thing when times are tough? Because more dealers mean more dollars to invest in advertising and product development, and helps bolster retail and flooring costs. Worldwide, BBC is already in countries from Germany to Dubai and Alsop says there's interest from many Eastern European markets.