When will
Indian "Really" start again ?
Quarterly updates by John Rudolph
Articles written about Indian Motorcycle
since the doors were closed on Friday 9/19/03
In reverse
chronological order
September 13, 2006 -
Press Release - Indian® Motorcycle Announces $30 million Capital Increase
July 20, 2006 - Press
Release - Indian® Motorcycle Company Announces New Home
Posted on Wed, May. 26, 2004
Indian Motorcycle to auction off name, logo
The last chapter of the Gilroy era of Indian Motorcycle will be written next
month. The legendary company's name and logo will be auctioned June 29.
The minimum bid is $2.5 million, said Mike Joncich, estate manager for CMA
Business Credit Services of Burbank.
Indian Motorcycle, a rival of Harley-Davidson in the first half of the last
century, got a new life when it was revived in Gilroy in 1999. The 380-employee
company built several thousand motorcycles until September of 2003 when it
abruptly closed when it couldn't get new financing.
Once a buyer couldn't be found to take over Indian, the remnants of the company
-- first its building, then its machinery, parts and leftover apparel -- were
sold to private buyers or through public auctions.
But, despite repeated negotiations, no buyer could be found for the Indian name.
At least not one willing to pay the price.
June 24 is the deadline for bids for the company's intellectual property -- its
trademarks, its motorcycle and accessory designs and its product licensing
agreements. Those interested must submit a $2 million deposit, Joncich said.
Details are available at
www.anscers.com/indian.
Then, on June 29, if more than one bidder materializes, an auction will take
place in the office of CMA's lawyers in Newport Beach.
Tuesday, March 09, 2004
Indian Motorcycles abandoned
By Peter Crowley
GILROY - Michigan motorcycle collector Bill Melvin, who expressed excitement a
month ago to restart production of Indian bikes, said Monday he has changed his
mind and is no longer interested in buying “America’s first motorcycle.” “I’ve,
at this point, given up any extensive effort to go forward with that,” Melvin
said. “Considering the amount of time that has lapsed, our interest has
chilled.” Melvin added that Gilroy resident Rey Sotelo told him a week ago that
he, too, has more or less given up on buying the Indian brand. Neither Sotelo
nor his partner, David Huntington of the Matrix Capital investment group,
returned repeated phone calls for this story. Both men may have actually changed
their minds months ago, according to Chuck Klaus, an estate manager for Indian’s
liquidation broker, Credit Managers Association of California. Klaus is handling
the sale of Indian’s trademarks and logos, collectively known as the brand or
“intellectual property.” He said neither Melvin nor Sotelo has shown signs of
interest recently, and his firm is now pursuing a deal with other bidders. “I
haven’t heard from those guys in a long time, ... and I’m the point person,”
Klaus said Monday. He said neither Sotelo nor Huntington had contacted him in
two to three months. He also said hadn’t talked to Melvin about the intellectual
property since mid-January, when Melvin’s Grand Rapids, Mich.-based
retail-liquidation business bought the entire inventory remaining in Indian’s
factory/headquarters at 200 E. Tenth St. “We have some serious contenders for
the intellectual property,” both from the U.S. and from overseas, Klaus said.
“We have one in particular we have been looking at.” An Indian asset sale began
in October - Indian folded on Sept. 19 - and has now dragged on for four and a
half months. Indian and CMA officials originally planned to sell the brand, real
estate and inventory to a single buyer who would restart production but not all
of the original seven bids went for the package deal. Those that did were too
low, Klaus said. So, CMA sold the inventory to Melvin and auctioned the factory
buildings and lot to Ken Gimelli, a developer and vineyard owner from Hollister.
Gimelli plans to rent the property and has said he would be open to doing so to
a new Indian Motorcycle Company. On Monday, CMA and Indian officials were in the
midst of deciding what to do next with the brand. “There are a number of offers
that are on the table, and we will decide whether we will accept one of those
offers or whether we will open it up for another auction,” Klaus said. “We
tentatively set up March 15th as a drop-dead date to decide on what procedure we
will take.” Melvin said he let go of his dream of building new Indians after the
company’s majority owner, the Boston-based Audax Group, was unresponsive to his
offer for the brand. Melvin said he could only assume Audax officials wanted
more money, but he said they never told him so outright. “They haven’t been very
open,” Melvin said. “We can’t wait forever for them to make up their mind. ...
There comes a time when you have to move on.” Sotelo’s situation is more
unclear. On Feb. 19, he excitedly told The Dispatch that he and his partners
were not only still trying to purchase the Indian brand, but they were hoping to
merge with a “very well known” U.S. motorcycle company. He would not identify
this company, although he did say it was not Harley-Davidson or Polaris. Sotelo
said he and representatives of this company hoped to meet with Gov. Arnold
Schwarzenegger to discuss tax breaks to keep the business in California -
specifically, in Gilroy. “California is almost the worst place on the planet to
do business,” Sotelo said at the time, voicing a popular belief. Schwarzenegger
alluded to this in his State of the State speech in January and vowed to go out
of his way to “sell California” to businesses. Sotelo did not return calls from
The Dispatch to follow up on these alleged developments. A spokesperson for the
governor said she could not confirm or deny with whom the governor met. Bill
Lindsteadt, executive director of the Gilroy Economic Development Corporation,
said, “There wasn’t really much anyone could do” to keep Indian in Gilroy after
it closed. “On the face of it,” Lindsteadt said, the governor’s promise “sounds
really good,” but it means little unless the inherent “anti-business” obstacles
are removed from state law. “The toughest thing right now is the workmen’s
compensation law,” Lindsteadt said. “It’s killing small business.” As mandated
by the state, businesses in California pay more for workers’ compensation
insurance than in any other state. Locally, Lindsteadt said this city has no
monetary incentive to offer a manufacturer. Neighboring cities have
redevelopment funds to pull from, and other states offer tax abatement, but “We
don’t have some pot of money to give them,” he said. In the meantime, Lindsteadt
said he hopes and believes Sotelo will build motorcycles again in his hometown.
“If he can’t get the Indian brand, (he could) go back and build the California
Motorcycle brand,” Lindsteadt said. Sotelo still owns the Railroad Avenue
buildings his California Motorcycle Company used in the mid-1990s, when
Lindsteadt said he employed roughly 60 people. Sotelo used CMC’s reputation as a
custom bike-maker for movie and sports stars to lure Indian here in 1998 and
become its first president and CEO. At its peak, Indian employed about 600
people in Gilroy. When it shut its doors, it laid off a staff of about 380.
Peter Crowley covers crime and other public safety matters for The Dispatch. You
can reach him at
peterc@gilroydispatch.com.
Indian’s bones picked clean
Liquidator sells the last of the motorcycle company’s assets
By JESSE DUCKER Pinnacle Staff Writer
The dream to revive a venerable line of American-made motorcycles ended in
Gilroy this week when Indian Motorcycles was dismantled for parts and sold, a
turn of events that mirrors the company’s original demise a half century ago.
This week prospective buyers circled like vultures at the company’s Tenth Street
headquarters looking for the best pieces, among them 46 2004-model Indian
Chiefs, the signature model. The buyers stood in contrast to downcast former
employees who came one last time to see the company they helped to build. “It’s
kind of disheartening,” said Bill Johnson, a former plant employee hired to
watch the grounds during the sale. “It’s kind of like watching your livelihood
go away.” Perhaps someone will revive the line again, but resuming operations in
Gilroy is a long shot. Originally, the company’s assets were to be auctioned off
Wednesday, but the auction was cancelled when a motorcycle liquidator bought
everything. In turn he’s selling it all. The “negotiated sale” includes
everything on the floor, from the industrial fans to the drills to the spare lug
nuts. “It’s just kind of surreal to me,” said Dawn Monighetti, the former
manufacturing supervisor from Hollister. She choked back tears as she walked
around the quiet floor where she once supervised the bustle of assembly
activity. “All the blood, sweat and tears. When it was 105-degrees in here
during the summer, our team never gave up, and now it’s over. I should say it’s
over for now, because I don’t think the Indian name will ever go away.” With her
was Matt Crabtree of Salinas, a former material specialist, who sifted through
the plastic boxes of nuts, bolts and motorcycle parts that he organized. “These
are all my babies, these are what I took care of,” Crabtree said. The
Gilroy-based corporate headquarters closed its doors on Sept. 19, leaving 360
factory workers unemployed and countless dealerships in the lurch. The destiny
of the company is now under the control of a man who makes his living selling
the remains of dead companies. Last week, Bill Melvin of National Retail
Equipment Liquidators bought all of Indian’s assets. Though Melvin said he has
liquidated the assets of 40 motorcycle companies during his career, he says
Indian Motorcycle is different. The heritage of Indian Motorcycle is very
important to me,” Melvin said. “I’d like very, very much to contribute to
bringing the brand back to life.” There are rumblings that Melvin might want to
buy the 154,000 square foot factory building and 274,000 square foot property,
as well as the intellectual property for the name “Indian Motorcycles.” This had
lead to speculation that there could be an Indian Motorcycle revival in Gilroy.
Indian Motorcycle was founded in 1901 to compete with Harley Davidson. It folded
in 1953, but in 1999, Gilroy businessman and motorcycle aficionado Rey Sotello
reopened the company after lengthy legal wrangling to buy the naming rights. Two
years later, Audax, a Boston-based private equity firm, invested $45 million
into the company and brought in new executives. The company sputtered and died
two years later. Many blame the investment company who, they say, didn’t
understand the motorcycle business. “The most appropriate metaphor I can think
of is that if you need a heart transplant, you don’t go to a mechanic,” Sotello
said. Sotello is hoping Melvin has a better understanding of motorcycle culture.
Melvin is a lifelong bike enthusiast; he said has raced motorcycles for 40 years
and has an 80-bike piece collection of his own. Sotello said Melvin contacted
him soon after the liquidation company bought Indian’s assets. They are now in
negotiations to work out a role for Sotello should Indian go back into business.
Sotello is cautiously optimistic. “Bill is trying his best to do something,”
Sotello said. “I’ve been asked to participate. We’re trying to keep Indian here
in Gilroy. Bill is making every effort to do so. But if it’s not going to be
here, then I’m not interested.” Melvin said the future for Indian is still very
unclear. “We might produce new motorcycles under a separate name than Indian,
but stay here in Gilroy,” Melvin said. “There’s all kinds of legal issues with
bringing the company Indian back. It is impossible to go directly back into
business. We’re hoping to keep the company in Gilroy, but it will take weeks or
months to make that decision. But our first choice is to remain here.” Melvin
would not say what he paid for the company’s assets. When he bought the bikes,
spare parts and manufacturing equipment Wednesday’s auction was already set. He
put together the negotiated sale. It will continue “until its all gone,” Melvin
said. Despite the talk of trying to sell as much of the equipment as possible,
Sotello hopes that the rebirth of Indian will become a reality. He owned Indian
for 4½ years, helped the company grow from 60 to 700 employees, and saw sales of
the bikes triple.
After Audax came in, Sotello remained with the company for nine months, which he
calls “the worst nine months of my life.” “I felt like I was an obstacle, so I
bowed out,” he said. Fourteen months later, the company folded; he doesn’t think
it was a coincidence. Now he’s trying to make up for Audax’s mistakes.
“I feel like I have a duty to the community to try do what I can to bring Indian
back,” Sotello said. “I have an obligation to at least listen to Bill and try to
make this work.”
Some people very close to Indian don’t know if the resurrection is worth the
trouble. “The name’s been dragged through the mud so much, I don’t know if it’s
worth much anymore,” said Donald Nofrey, owner of the Indian Motorcycle dealer
in Gilroy. Nofrey started selling Champion motorcycles to go along with his
remaining Indians a few months ago; he plans to change the name of the
dealership soon. He said most of the other Indian dealers he knows have moved on
and are selling other bikes.
Some believe the company needs serious retooling if they’re going to relaunch.
“They can’t compete with a company like Harley Davidson, which sells 200,000
bikes a year worldwide at one third of the price,” said Bernard Beisinger, who
worked on importing Indian Motorcycles to Europe. He came to the warehouse
looking for engines to buy. “The quality wasn’t there; the workmanship was
lacking. They would’ve been better off making a few bikes a year, with good
quality and good workmanship.”
Indian enthusiasts roamed the warehouse this week looking for parts for their
workshops, manufacturing machinery or maybe a souvenir. “It’s the end of era,”
said Michael Helms of Santa Clara as he shopped for parts. Mechanic Andy Blanco
drove from Colton, near Riverside, to buy spare buy parts for the motorcycles he
services. Blanco, 67, said his first motorcycle was an Indian. Sotello’s first
revival of the Indian motorcycle in 1999 evolved from his original company,
called California Motorcycles. Purists criticized his attempt, saying most of
the bike could be assembled from a catalogue. “It was an ugly bike in 1945, what
makes them think it would sell now?” said San Martin resident Don Moore, who
also came looking for parts. “When they put a brand new seat and accessories on
[the 2004 model Indian], it was like putting a brand new saddle on a jackass.”
Joel Turner contributed to this story.
Thursday, January
22, 2004
Selling off a legend
By Peter Crowley
GILROY - It was “Going once, going twice,” and the Indian Motorcycle factory on
Tenth Street was sold to a Hollister developer and vineyard owner for $3.35
million.
After signing the papers to seal the deal, Ken Gimelli told reporters he planned
to rent the building to anyone who is interested. He had no particular tenants
in mind, he said, and none had approached him. Gimelli said he would be open to
a new Indian Motorcycle owner occupying the space, but he would not play a role
in encouraging a new owner to build bikes in Gilroy. Gimelli entered the only
bid from the floor in an auction for the single piece of real estate Wednesday
afternoon at the Historic Strand Theater, in downtown Gilroy. “I think it’s a
buy,” was Gimelli’s only comment afterward. The only other bid was a written
submission for $3.3 million - the “absolute minimum” the auctioneers were
willing to accept to clear liens on the property, according to Fred Havens, vice
president of marketing for auctioneer Mario Piatelli’s Beverly Hills-based firm.
On top of Gimelli’s bid offer, he paid a 6 percent “buyer’s premium” for the
auctioneer’s commission and expenses, bringing his total payment to $3,551,000.
Gimelli is an industrial developer in Hollister and owns a portion of the
Hollister Business Park. He also owns Gimelli Vineyards in the Hollister area,
which sells grapes to large-scale wine maker Kendall-Jackson, according to
Havens, who said he knows this from recently selling a Kendall-Jackson winery in
King City. ‘Everything must go’ Meanwhile on Wednesday, at the 200 E. Tenth St.
factory Gimelli bought, Michigan retail liquidator Bill Melvin opened a
piecemeal sale of the building’s contents, which he now owns: from gaskets to
gas tanks, computers to clothing. Crowds greeted Melvin and his staff, starting
more than an hour and a half before the sale’s 9:30 a.m. opening. “I got here at
8, and there were already quite a few people (waiting outside the door),” said
Kim Forest Barbosa, of Gilroy, a receptionist at Indian for four years whom
Melvin hired temporarily to welcome customers. By noon, people were still
waiting in lines for more than a half-hour to negotiate prices and pay for the
things they wanted. Some pushed racks of fenders and wheels. Others bought tools
or industrial equipment. Some carried cases of Indian brand motor oil. Jesse
Cruz, of Salinas, was buying a stack of Indian-labeled coveralls and work
shirts, like those he used to wear when he worked in the company’s paint shop.
He called them “souvenirs.” “It’s kind of sad to see (the factory) in this
state,” Cruz said, looking around as he waited in the long line. Cruz and
Barbosa were among about 380 employees laid off when Indian closed its doors
Sept. 19 due to a lack of capital. Melvin wandered the factory floor Wednesday,
negotiating with one customer after another. He said he was satisfied with the
sale thus far, although he hadn’t known what to expect. He made a point of
apologizing to his customers for the disorganization. He said he was “really
happy that so many people showed up” but sorry they had to wait in such long
lines. “We really didn’t have a lot of time to prepare,” Melvin said. Melvin
pulled many items from the sale between Monday’s viewing and Wednesday,
including nearly 60 motorcycles and any equipment he thought might be needed if
someone tries to restart Indian motorcycle production in Gilroy. Melvin is one
of several parties trying to do this. First, he would have to buy Indian’s
collections of trademarks and logos. Officials at Indian and its liquidation
broker, the Credit Managers Association of California, say they expect to sell
the trademarks sometime in February. In front of the factory Wednesday, large
signs read, “Cheap!” “Make offers” and “Everything must go.” All four shoppers
The Dispatch spoke to, however, said that while discounts could be had, the
inventory in general was not at bargain prices. For example, a price list showed
that all motorcycle parts valued at less than $2,000 would be sold at original
wholesale prices, with 10 and 20 percent discounts coming in as the value rose.
Among the clothing, a T-shirt had been reduced to $15, a leather jacket to $450
- less than a motorcycle dealer might sell them for but not drastically
cut-rate. “Some of the stuff is pretty high (-priced),” Cruz said. “But some of
it doesn’t have a price (tag), so you can just make an offer.” The sale will
continue until Melvin sells all the items he wants to sell, he said. A quick
auction
About a dozen people were present at the Strand Theater for the auction.
Conspicuously absent were Melvin and Rey Sotelo, who are leading investment
groups committed to buying the Indian brand and restarting motorcycle production
in Gilroy. Piatelli advertised on his Web site that this property was worth $10
million. But he opened the auction by saying, “We think the property is worth $5
million.” He opened the bidding at that amount but got no takers. Hands stayed
down as Piatelli dropped the price by $100,000 increments. When Piatelli got as
low as $3.3 million, he announced the written bid and asked for a raise. Gimelli
immediately made his offer, which was uncontested. The auction lasted about 15
minutes.
The 200 E. Tenth St. property consists of a 154,000-square-foot factory on a
274,000-square-foot lot. Gimelli bought it from the Credit Managers Association
of California, to which the motorcycle maker assigned the property. CMA will use
Gimelli’s $3.35 million to pay Indian’s many creditors, including Manabi
Hirasaki, the deed holder for the property, to whom Indian had stopped making
mortgage payments. Hirasaki was present at the auction Wednesday but declined
comment.
The amount Melvin paid for Indian’s inventory, which neither he nor CMA
officials would name, also will go to pay Indian’s creditors.
Thursday, January 15, 2004
Hopes fade for Indian
By Peter Crowley
GILROY - It’s unlikely whoever buys Indian Motorcycle’s trademarks will build
bikes in this town, a liquidation official hired by the company said Tuesday.
Meanwhile, after 12 weeks of negotiations with little to show for them, Indian
Motorcycle’s asset sale is heating up. Bill Melvin, a motorcycle collector who
owns a retail liquidation firm in Grand Rapids, Mich., announced this morning he
has reached a deal to purchase all Indian’s equipment. He is still negotiating
to buy the company’s real estate and trademarks, he said, but he now effectively
owns all the contents of Indian’s buildings. “We’re not sure what we’re going to
do with it yet,” Melvin said of the equipment. Melvin does, however, plan to
pick up a piecemeal property auction that the Credit Managers Association of
California - which Indian hired to broker the sale of its assets to pay off its
massive debt load - is expected to cancel today, Melvin said. “It’s out
intention to sell any of the assets that aren’t necessary to a manufacturing
operation,” Melvin said. A showing for the auction items will still be on Jan.
19 and 20, and the auction will still begin on Jan. 21.
Meanwhile, discussions today are expected to determine whether the Matrix
Capital investment group will drop out of the bidding or further engage in
pursuing the trademarks of the oldest American motorcycle company, one of
Matrix’s partners said Wednesday. Matrix has vowed repeatedly to build new
Indian motorcycles in Gilroy. Since Oct. 24, CMA estate manager Chuck Klaus has
been negotiating with parties interested in buying Indian’s trademarks and its
physical property in Gilroy. Indian hired CMA to sell its assets in order to pay
off its massive debt. Asked Tuesday if there is any chance of Indian’s third
incarnation basing itself in Gilroy, as the second Indian did for the past five
years, Klaus said, “I don’t think so. “I rather doubt it,” Klaus said. “That
could change, but ... it doesn’t look like it right now.” Although CMA is still
negotiating with several potential buyers, one - which Klaus would not name -
now stands out as the front-runner. “We are working toward closing with a
particular buyer,” Klaus said. “Right now we plan on closing some time in
February.” Nevertheless, Klaus said, there is no commitment yet. “I’ll talk to
anybody until the day we say ‘sold,’ ” Klaus said. Klaus’ statements indicate
that Matrix Capital has fallen out of favor, since Matrix’s spokesmen continue
to say that they would restart production in Gilroy. Gilroy resident Rey Sotelo
is fronting the Matrix group, which takes its name from one of its partners, an
Orange County venture capital firm. The owner of that firm, David Huntington,
said his group is still very much in the running. “Chuck is responding to (the
offers) he has in front of him at the moment,” Huntington said Wednesday, in
response to Klaus’ statement about Indian’s chances in Gilroy fading.
Huntington would not clarify this statement except to say that he expected to
know by this afternoon whether Matrix will stay in the bidding or drop out.
The 12-week-old Indian asset sale could wrap up equally soon, Huntington said.
“Everything is very close to consummation here,” Huntington said. “We’re within
a couple days here of saying whether, ‘Yeah, we’re ready to open here on a
certain date,’ or, ‘We’re not.’ ” Klaus declined comment on who the leading
bidder is. Sotelo expressed confidence two weeks ago that Matrix was the
front-runner at that time. Sotelo also said at that time that Matrix can begin
building motorcycles within 30 days if it buys both the physical property and
the trademarks or within 90 days if it buys only the trademarks. Several
potential buyers are still interested in Indian’s intellectual property - that
is, its trademarks and logos - but they are no longer interested in buying a
package deal of these and the physical property, Klaus said. Huntington said his
group may pursue some of Indian’s physical property as well as the trademarks -
“whatever’s necessary to get it into production,” he said. Conceivably, he said,
this could pre-empt the Jan. 21 auction. Susan Valenta, director of the Gilroy
Chamber of Commerce, was saddened to hear Klaus’ statement that a Gilroy
reopening is unlikely for Indian. “If that is the case, it would be a
disappointment,” Valenta said. “We really embraced the company. They provided a
lot of nice jobs for people. ... Indian Motorcycle was very highly regarded and
a very highly valued business in Gilroy. “I have an emotional attachment because
I really like the company,” she added. Many of Indian’s 380 former employees
have been out of work since then-President/CEO Lou Terhar gathered them together
at lunchtime on Sept. 19 to tell them that the factory was shutting down,
effective immediately. The workers had no prior warning. Frances Poling, of
Gilroy, is one of the few former Indian workers who has since gotten a full-time
job working with motorcycles - Indians, no less. She now sells bikes at the
Indian dealership in Gilroy, and she’d rather keep working there than go back to
work in the factory. However, she’d like to see Indian restart locally on behalf
of its other former employees who really want their old jobs back.
“I would have hoped it would have happened because there are a lot of people out
there who want it to happen,” Poling said, “but I wouldn’t have gone back there.
Been there, done that.”
Friday, January 02, 2004
Indian sale could go in pieces
By Peter Crowley
GILROY - If the defunct Indian Motorcycle isn’t sold as a “turnkey” business by
Jan. 21, its liquidation broker will auction off the company one building, one
robotic welder, one pneumatic drill at a time.
Chuck Klaus of Credit Managers Association of California, which is handling
Indian’s asset auction, told Indian dealers about this piecemeal sale nearly two
weeks ago, but he revealed it publicly on Wednesday. The Jan. 21 auction, if it
takes place, would not include Indian’s intellectual property - namely, its
collection of trademarks and logos - in which potential buyers are more actively
interested. Rather, Klaus said, CMA and Indian would probably close a deal for
the trademarks sometime in February. “We cannot sit on this indefinitely,” Klaus
said. “If we are unable to move forward with what I’ll call a turnkey sale, then
we would move forward with the piece sale.” The piecemeal plan B could well be a
more likely outcome than CMA’s plan A, which has been to sell Indian’s
trademarks, real estate and equipment as a package to a single buyer. No deal
has been reached for this asset package in the 10 weeks since Oct. 24, when
seven companies made offers. Also on Wednesday, Gilroyan Rey Sotelo said his
Matrix Capital investment group’s offer to buy Indian is lower than it was on
Oct. 24. “The more we got into this thing, the less value we found,” Sotelo
said. “(For instance), they say they’ve got $4 million worth of machinery, but
then you find it’s all leased.” This casts doubt on repeated claims by Klaus and
Indian Chairman Frank O’Connell over the past two months that offers for the
company have risen. Bill Melvin, a Michigan businessman and motorcycle
collector, said last week that his offer remains the same as it was in October
and that he was still in the running and in close contact with CMA. Melvin and
the Matrix group are the only two of the seven original bidders to reveal their
identities. Yet Sotelo thinks Matrix is now the auction’s front-runner and that
it’s only a matter of time before his group buys Indian - or at least the
trademarks. He’s confident that if someone had a better offer, CMA would have
accepted it long ago. “We’re hoping by the 15th of January we can cut some kind
of deal,” Sotelo said. “I don’t know that anyone is pursuing it as hard as we
are.” “We are strictly pursuing the intellectual property at this point,” Sotelo
added. “We think all the value is in the intellectual property. ... We don’t
want to be burdened with five or six or 10 million dollars worth of stuff that
we’ll never use. ... If we have to start clean (with only the trademarks), we’ll
start clean. ... We did it once (in 1998); we can do it again.” But Sotelo’s
diffidence about buying Indian’s Gilroy factory doesn’t mean he’s any less
committed to building bikes in this city than he has been. “If I’m involved,
it’s in Gilroy,” Sotelo said. “You’ve got to understand, they (Matrix Capital’s
investors) contacted me. I didn’t contact them.” If the Matrix group buys both
the physical and intellectual property, Sotelo figured it could restart
production of motorcycles in 30 days. With Indian’s trademarks alone, he
estimated it would take 90 days. In a new gambit to drive up the price in the
sluggish auction, CMA has allowed new bidders to enter the competition. Parties
that hadn’t entered bids by the Oct. 24 deadline are now involved, Klaus said,
and more continue to emerge. Why the reluctance to accept one of the offers on
the table? It could be, as Klaus said, that the interested buyers are having
trouble coming up with the capital they say they’re offering. Personal gripes
could even be involved, possibly related to Sotelo’s 2002 resignation from
Indian, of which he had once been president and CEO. “Rey Sotelo and Frank
O’Connell were not the best of friends, and in my opinion, Frank O’Connell
doesn’t want Rey Sotelo to get it,” said Albert Morales, of Gilroy, who
assembled bikes on Indian’s factory floor until he was laid off on Sept. 19 with
the company’s 380 or so other employees. Morales had already heard about the
piecemeal sale through the local rumor mill, and he had a negative view of it.
“I’d rather see it open back up,” Morales said of the factory. He wants to get
back to work building motorcycles.
According to Sotelo, the reason the sale is dragging on is that buyers are
trying to figure how liable they would be against lawsuits directed at Indian
over the last five years. Klaus said this concern is unnecessary - that in an
asset-only sale like this one, all liabilities are retained by the old owners,
and all legitimate creditors will get a portion of what they are owed from the
proceeds of the asset sale. Klaus added that, in the hundreds of asset sales
he’s brokered over the years, he’s never heard of a successful lawsuit against a
buyer for something the old company did. Sotelo, however, said attorneys have
advised him that the Indian trademarks come with serious lawsuits attached, both
past and future. “We know that we can’t shake the liabilities,” Sotelo said. “We
don’t know if the liability is $5 million or $50 million, and that’s the
problem. ... That’s what’s muddying the waters.” Even if Matrix isn’t required
to take on liabilities, Sotelo said he’s feeling some pressure from Indian’s
majority owner to take on at least some of them.
“I think Audax is trying to shake the liabilities any way they can,” Sotelo
said.
“I think we have some moral and ethical dilemmas as well,” he added - namely,
responsibility to Indian riders and dealers to whom Indian owes money for
warranty- and part-recall-related complaints.
“The hardest thing to do is put a cap on it,” Sotelo said.
Tuesday, November 11, 2003
Second-round bids jump for Indian Motorcycle
By Peter Crowley
GILROY - It’s been two-and-a-half weeks since the deadline to bid on Indian
Motorcycle’s trademarks and factory, and still no winner.
Indian probably won’t have a new owner before the end of this week, company
Chairman Frank O’Connell said Monday. Some or all seven bidders are now upping
their offers in a second round of the auction. O’Connell wouldn’t say how many
bidders there are. “It’s pretty active,” O’Connell said. “The bids are
definitely up ... substantially.” As for the delay, O’Connell said Indian
and its liquid-ation agent, Credit Managers Association of California, wanted to
give the bidders enough time to carefully review their and Indian’s finances and
arrive at a final offer. “We’re making it very clear that this is it,”
O’Connell said.
One of the reasons the auction has taken so long is that the seven original bids
were not all for the same package of assets. Some bids were for the Gilroy
factory only, some were for the trademarks only, and some were for both. For the
second round, Indian is not requiring companies to bid on the same thing. If it
makes more money to accept one bid for the factory and another for the
trademarks, CMA would do that, O’Connell said. “CMA’s job is to best
represent the creditors,” O’Connell said.
As well as being Indian’s chairman, O’Connell is also its second-leading
stockholder, after the Boston-based investment firm Audax Group. Stockholders
will get no money from the auction unless the sale amount is enough to pay off
Indian’s massive debts with money left over.
On Nov. 1, O’Connell and his wife organized and bankrolled a media event and a
series of nationwide rides to “galvanize grassroots support” for the Indian
brand.
In the Bay Area, there wasn’t much response. About 18 riders, including four
from Gilroy, crossed the Golden Gate Bridge without the news coverage they were
hoping for, according to Gilroy Indian dealer Don Nofrey, who did not attend.
Nationwide, attendance was “great, ... everything we expected,” but media
coverage was hard to come by, according to event spokesperson Stephanie Blank.
Gov. elect Arnold Schwarzenegger, who rode an Indian in the third “Terminator”
movie, was invited to the press conference in Los Angeles but did not attend.
Indian closed its Gilroy factory without warning on Sept. 19, laying off about
380 employees. Of these, about 100 had Gilroy addresses, according to Bill
Lindsteadt, executive director of the Gilroy Economic Development Corporation.
The two known bidders for Indian’s assets are Bill Melvin, a retail liquidator
and motorcycle collector from Michigan, and Matrix Capital. Matrix’s front man,
Rey Sotelo, was a bike builder in Gilroy who became Indian’s first president and
CEO when it came back to life in 1998. He resigned in 2001.
Talk Radio information: 10-30-3
Here are the links, to listen to Rey
Sotelo's interview on American Cycle... from Monday 10-6-3
segment #1
http://boss.streamos.com/wmedia/wsradio/americancycletalk/100603/segment1.asx
segment #2
http://boss.streamos.com/wmedia/wsradio/americancycletalk/100603/segment2.asx
segment #3
http://boss.streamos.com/wmedia/wsradio/americancycletalk/100603/segment3.asx
Basically what you will hear in the
"exclusive " is a "very clear & concise" interview with Rey Sotelo (the founder
of Indian)
who talks frankly about how Indian screwed up, why he left the company last
year...and more importantly, why "HE" and a group of
investors are seriously looking at taking the company back from the old
investors and creditors.
Monday,
October 27th
Indian asset sale stalled
Monday, October 27, 2003
By Peter Crowley
GILROY - Seven companies entered bids in an auction for the Indian Motorcycle
Company that ended Friday. Of these, two are known: one a retail liquidation CEO
and motorcycle collector from Michigan and the other a local motorcycle designer
who was Indian’s first president/CEO when the company was resurrected in 1998.
But it’s not that simple. Each of the seven bids was for a different selection
of assets, a fact that is complicating the process of figuring which bidder
takes the prize. Indian Chairman Frank O’Connell, Credit Managers Association
executive Chuck Klaus and several CMA lawyers reviewed the bids over the weekend
but provided no updates Monday morning.
And what is the prize? The trademarks and factory of America’s first motorcycle
company, begun in 1901 in Springfield, Mass., and a popular icon despite 45
years of nonexistence (1953 to 1998). After five years of building high-end
cruisers in Gilroy, Indian shut its doors without warning Sept. 19, leaving
about 380 employees out of work. Despite rising sales, the company wasn’t making
money and didn’t expect to any time soon.
CMA of California has guaranteed bidders confidentiality, but two - Bill Melvin,
of Grand Rapids, Mich., and Rey Sotelo, of the Gilroy area - opted to reveal
themselves. Indian hired CMA to handle its liquidation process instead of going
through bankruptcy court. CMA Estate Manager Michael Joncich described the
bid discrepancies as “a problem” Friday after the 5 p.m. deadline. “None
of them are for the same thing,” Joncich said of the bids. “Some include the
real property in Gilroy, and some don’t. ... Some of this is for equipment
only.” Indian and CMA officials had expected (publicly, at least)
companies to bid on a package deal of its factory and trademarks. Some of the
seven bidders did this, Joncich said, although he did not say how many.
CMA’s plan had been to take the five highest offers (if they got five on both
trademarks and factory) and invite them to bid against each other in a second
round of auction, Joncich said. The focus, Joncich said, will be on the
bottom line - whatever maximizes the sale price of all Indian’s assets so that
total can be passed on to Indian’s long list of creditors. Unless the company
goes for far more than expected, however, CMA officials don’t expect the
revenues to fully pay off Indian’s enormous debts. In that case, creditors would
get a percentage of what they’re owed, depending on how much money there is to
distribute.
Indian was one of three large-scale American motorcycle makers. The biggest and
best-known, Harley-Davidson, did not return weeks’ worth of phone calls by The
Dispatch inquiring whether it would bid on Indian. The other, Victory
Motorcycles, had no plans to bid on its West-Coast competitor, Polaris
Industries spokesman Pat Bourgeois said Tuesday. Victory is a product of
Minnesota-based Polaris, which is better known for snowmobiles, all-terrain
vehicles and personal watercraft. CMA and Indian gave tours of the Gilroy
plant to at least 10 interested companies in recent weeks, Joncich said. CMA
signed 47 confidentiality agreements with companies to discuss Indian’s finances
(although some were with agents acting on behalf of bidders, not bidders
themselves) and sent out 90 auction information packages (although some were
unsolicited, to parties CMA guessed might have an interest).
Bill Melvin’s ‘quest’ ...In his extensive personal collection of motorcycles old
and new, Melvin has many antique Indians. Now he’s jumping at the chance to
return the brand to its pre-World War I glory days. “I want to return
Indian Motorcycle to its top position in the industry,” Melvin said in a press
release Friday. “I envision a line of revamped and revitalized Indian
motorcycles built for riders by riders - and to very exacting standards.”
Melvin said he wants “to reopen the factory and continue production” in Gilroy,
although not without changes to the Tenth Street factory, designed to build
30,000 bikes a year. (In 2002, Indian built less than 4,000.) “We’d love more
than anything to see this company continue on in Gilroy,” Melvin told The
Dispatch this morning. Despite the fact that Melvin’s announcement was
titled, “One man’s quest to keep the legend alive,” he is joined by several
financial partners, including the Great American Group, a name matching a
national asset-management corporation. Based in Grand Rapids, Mich.,
Melvin is CEO of National Retail Equipment Liquidators and has become successful
through 25 years in the liquidation business. NREL also makes shopping carts.
“Bill Melvin appreciates the irony of a liquidator like himself trying to
rebuild and renew a company - instead of cleaning out and dispersing its
assets,” the announcement read.
Rey Sotelo’s Matrix group ...Sotelo’s group of investors now has a name - Matrix
Capital - and an ambition to restart motorcycle production within 30 days of
being chosen as the winning bid. Both of these Sotelo announced on the American
Cycle Talk Web site Oct. 17. “We figure if anyone can make it happen, we
have the management team to do it,” Sotelo told The Dispatch Oct. 7.
Sotelo has said Gilroy is his first choice for an Indian headquarters and
factory, and he’d like to rehire at least part of the recently laid-off
workforce. Sotelo’s stated plan for Indian is to not spend much on
advertising in lifestyle magazines and product placements. As with his
pre-Indian custom brand, California Motorcycle Company, he just wants to build
motorcycles that motorcycle people want to buy and rely on word of mouth to do
the rest. He also wants to cut costs by having a less top-heavy management
structure. In a separate CMA auction, Indian dealers bought all of the
company’s remaining 2003 inventory of about 150 bikes, O’Connell said. For
now, the company is withholding the dozen or so 2004 bikes that made it through
production and testing before the plant closed. These might be very valuable to
Indian’s new owner, O’Connell said.
Indian support ride set ...In an unusual move, O’Connell announced Friday a ride
and media event Nov. 1 in support of the Indian Motorcycle brand.
O’Connell, an avid motorcycle rider and collector, and his wife, Barbara, are
personally funding the “Indian ... Ride On!” event. They intend it to “galvanize
grassroots support” for the faltering, but iconic, company.
California Gov.-elect Arnold Schwarzenegger, who rode an Indian in the third
“Terminator” movie, will receive a special invitation to attend a celebrity
press conference and ride in Los Angeles. O’Connell also is pushing Indian
dealers to organize rides that day in their areas, especially to “national
landmarks, symbolic of American values.”
Saturday, October 25th
Indian Motorcycle fans await bid results
By Matt Nauman
Mercury News
The fate of Indian Motorcycle could be determined next week. Bidders had until 5
p.m. Friday to submit proposals for the assets of the Gilroy company that closed
unexpectedly last month. A winning bid will be selected or, perhaps, another
round of bidding could be staged between the top bidders, said Mike Joncich,
estates manager of CMA Business Credit Services in Burbank. Indian Motorcycle's
management turned its assets over to CMA after shutting down in late September
rather than put the company into bankruptcy. Joncich said he expects multiple
bids for Indian and hasn't set a minimum price. And, while ``everybody has a
common interest in a new entity resuming operation as soon as possible,''
Joncich said buying Indian in bulk and resurrecting the company for a third time
was not a condition of the bidding process. Joncich said he expects to announce
the results late next week. Meanwhile, Indian's chairman said Friday that he'll
personally pay for a Nov. 1 riding event designed ``as a show of force, to show
how much passion there is among riders and dealers to see this great brand go
forward.'' Frank O'Connell said he and his wife, Barbara, will finance Indian
Ride On, which will feature rides and activities at various Indian dealerships
around the country. It'll include a major event in Los Angeles, although no
specific details were available. O'Connell wouldn't say how much he would spend
staging Indian Ride On. ``I'm trying not to go bankrupt,'' he said, laughing. He
said others were volunteering their time, dealers will contribute money and he'd
underwrite the main event in Los Angeles. ``I've been very close to the riders
and the dealers,'' he said. ``I thought, we could really do something here.'' As
far as the future of Indian, O'Connell said the ``best-case scenario'' would be
a well-financed individual or group that would buy the entire company and
restart the factory in Gilroy. But, he said, ``this process is very hard to
predict.'' In a news release Friday, a group fronted by Bill Melvin, chief
executive of National Retail Equipment Liquidators of Grand Rapids, Mich., said
it was among the bidders and that it would ``return Indian Motorcycle to its top
position in the industry'' if it is successful. O'Connell said he is not bidding
for the company's assets, is not a part of any group doing so and that he has no
``real expectations'' that he'll continue with the company if it is revived.
Indian, once a rival to Harley-Davidson, was in business from 1901 to 1953. It
was reborn in Gilroy in 1998, and sold several thousand bikes in five years
through about 200 U.S. dealers until last month. That's when the company closed,
saying it didn't have enough cash and couldn't get financing to continue. Its
380 employees were terminated. The closing surprised employees, dealers and city
leaders in Gilroy.
Wednesday, October
08, 2003
Local bid for Indian
By Peter Crowley (The Dispatch)
GILROY
- Indian Motorcycle is selling off its assets. Local resident Rey Sotelo - along
with some of the same investors who helped him bring Indian roaring back to life
in 1998 - is leading a plan to buy it and once again build bikes in Gilroy. “We
are preparing a bid, and we are actively trying to purchase the company,” Sotelo
told The Dispatch Tuesday. “We figure if anyone can make it happen, we have the
management team to do it.” Indian has set a deadline of Oct. 17 on which to bid
on its trademark and physical assets, Sotelo said. He said he doesn’t know who
else will place bids, but he thinks his will be competitive. “I think we have as
good a shot as anybody,” Sotelo said.
Indian Motorcycle was a top-five Gilroy employer until it laid off its 380
employees and closed its factory doors on Sept. 19. The lack of advance notice
has prompted a class-action lawsuit by an employee, and the lack of severance
pay has prompted others to lay claims with the state Department of Industrial
Relations. “With some phone calls, I’d like to get that workforce back,”
Sotelo said Monday afternoon as he broke the news on Internet radio show
American Cycle Talk (www.americancycletalk.com), in an interview with Easy Rider
Magazine Managing Editor Scott McCool. Sotelo was speaking about his personal
history with Indian, which was rocky at times; Sotelo resigned in 2002.
Indian Chairman Frank O’Connell, Indian’s second-largest stockholder behind
Audax Group, is also reportedly putting together a bid, according to American
Cycle Talk Executive Producer Jeffrey Najar, who says O’Connell told him so
while discussing a possible appearance on the show. Neither O’Connell nor
officials from Audax Group - a Boston-based investment firm that owns most of
Indian’s stock - returned phone calls for this story. Sotelo said Indian’s
current headquarters on Tenth Street in Gilroy is his group’s first choice for
where to build motorcycles if they get the sale, but they wouldn’t necessarily
use it as-is. The large plant is designed to build Indian’s original five-year
estimate of 30,000 bikes a year, but Indian was actually scraping to sell 4,000
in its fifth year. Sotelo said his group will take a hard, realistic look at how
much space would make economic sense for them.
Bill Lindsteadt, the executive director of Gilroy’s public Economic Development
Corp., hadn’t heard of Sotelo’s plan. “I think that’s terrific news,”
Lindsteadt said. “After all, he was the brains behind it the first time.”
Lindsteadt said he didn’t expect Sotelo to ask him about possible state
business-startup grants. “Rey’s pretty self-supporting,” Lindstead said.
“I don’t know if he even needs it.”
Indian’s sales were on the rise at the time it closed, but costs were rising as
fast or faster, O’Connell said in an earlier interview. In the end, Audax pulled
out because it didn’t look like Indian was going to break even anytime soon,
according to O’Connell. Sotelo’s plan for Indian is to not spend money on
advertising in lifestyle magazines and product placement in movies and other
companies’ commercials. He wants to just build motorcycles that motorcycle
people want to buy and rely on word of mouth to do the rest - “guerilla
marketing,” he called it. Sotelo said he also wants to cut costs by having
a less top-heavy management structure. “I think they had something like 11
vice presidents,” Sotelo told The Dispatch. “I knew the salaries these guys were
making, and there was absolutely no way that they could support that company
paying those salaries. ... Having too many chiefs was definitely a problem
there.”
This venture reunites Sotelo with many old friends and business partners,
including original Indian CEO Murray Smith, a successful Toronto businessman who
started selling Indian Motorcycle clothing in Canada in the mid-1980s and
founded the Indian Motorcycle Café in Toronto in 1999. Sotelo described Smith as
a “visionary.” “We both had a common thought pattern, which was to build a
great motorcycle to live up to the brand,” Sotelo said, “(Later investors)
focused on building up the brand to live up to the old motorcycles. ... It
wasn’t what I signed up for.”
Unlike Sotelo, Smith didn’t stick it out. He resigned in 1999 after about four
months and now owns the trademark to American Motorcycle Company, another
defunct early-20th-century motorcycle company. On American Cycle Talk,
Sotelo said Audax Group went back on the promises it gave him when it bought a
majority of Indian’s stock in 2001.
“Battling these guys just got to be an everyday chore with me,” Sotelo said.
The last straws, Sotelo said, were a “quagmire” of repeated part recalls and an
influx of executives from the car industry.
“They did not understand the personal relationship motorcycle people have with
their motorcycles,” Sotelo said. “The car guys just didn’t get it. ... When they
started bringing the car guys in, 90 percent of them didn’t know how to ride a
motorcycle.” Sotelo described the Indian investors he’d worked with
originally as “real motorcycle enthusiasts.”
Since resigning, Sotelo said he has done prototype work for Japanese motorcycle
makers and became chairman of Revolution Motorcycles in Los Angeles, which is
expected to have prototypes ready in about a year. If his group wins the Indian
bid, he’s not sure what Revolution’s relationship would be with Indian -
likewise for Smith’s American Motorcycle Company.
On board with Sotelo and Smith is Branscombe Richmond, a Native American whom
Sotelo said would be “the face of the company.” This could be a savvy move, as
Indian has had trademark problems in the past with Native American groups. In
March 1999, the Cow Creek Band of Umpqua Tribe in Oregon filed a lawsuit against
Indian Motorcycle for allegedly violating the Indian Arts and Crafts Act of
1990, according to which it is illegal to sell or display a product that would
falsely suggest it is made by Native people.
Sotelo declined to name his biggest investors, but he said they have been
calling him since the day Indian closed up shop.
“I think I got my first call Friday (Sept. 19) at about 3 o’clock” - 45 minutes
after Indian President/CEO Lou Terhar broke the shutdown news to employees,
Sotelo said - “and I was on the phone until at least midnight.”
Thursday, September 25, 2003
Letter from the Chairman of the Board at Indian...to Dealers
To All Indian Motorcycle Dealers:
I realize that all of you are going through a difficult time and need to know the status of Indian Motorcycle Corporation (IMC) in order to run your business and keep your customers informed. Here are the facts:
1. Based on suspension of further funding of IMC, the Board made the difficult decision last Friday, September 19, 2003, to close the manufacturing facility and layoff nearly all employees.
2. Currently, IMC remains active, operating with a small team working diligently in Gilroy.
3. Motorcycles that were paid for but not yet received will be shipped upon verification that IMC has received the cash.
4. It is our present intention that certain motorcycles currently in inventory will be offered to all dealers as is, where is (with no warranty coverage) through an auction process that will be defined within the next 48 hours.
5. It is expected that certain parts, accessories and apparel will also be offered for sale to dealers in the following weeks.
6. Chick Ramsey (408-846-7232), is serving as the liaison with dealers to coordinate the above efforts.
We appreciate your incredible patience as we continue to try and serve you with a small team of people.
The Board and the management team have talked with many of you. I cannot express how much we appreciate your continued support. We are dedicated to serve you as best we can and are evaluating all possible alternatives to put a plan together to allow IMC to survive. There are no guarantees we will be successful.
I know this still leaves many unanswered questions, but we will continue keep you posted through regular updates as we make further decisions. There is no way to express my gratitude for the effort you have put into reviving IMC and in serving your customers.
Sincerely,
Frank O’Connell
Chairman of the Board
Wednesday, September 24, 2003
Indian job losses hit home
By Peter Crowley
James M. Mohs/Chief Photographer
John Pe'a discusses his family's future from his Gilroy home with wife, Vanessa,
and 7-week-old baby, Johnny Jr., in the background.
James M. Mohs/Chief Photographer
Following her husband losing his job when Indian Motorcycle closed its doors
Friday, Vanessa Pe'a will go back to working full-time, despite having a
7-week-old baby, Johnny Jr., and a 1-year-old daughter.
GILROY - Johnny and Vanessa Pe'a have a 21-month-old daughter, a 7-week old son,
a rented house, two cars with monthly payments and fees for weekend college
classes.
Financially, that’s a lot to support, but they got by on Johnny’s paycheck from
Indian Motorcycle Company.
But Indian closed shop in Gilroy on Friday without any notice or severance pay
for its 380 employees. Now the Pe'as and hundreds of other area families are
scurrying to radically adjust their lives.
Before Indian shut down operations, the Pe'as were living “pretty much
paycheck-to-paycheck,” according to Johnny. They have a small fund for
emergencies, taken from Johnny’s overtime pay, but it’s not enough to last long.
On Monday, therefore, Vanessa will go back to work on a full-time schedule, the
first time she’s done so in two years. She’s lucky to get her old job back -
she’s a phlebotomist, someone who draws blood - but her pay will be
significantly less than Johnny’s was and without benefits. With Johnny’s
unemployment checks, however, she expects their income should be “about the
same, maybe a little bit less” than before, after they pay out-of-pocket for
health insurance. Johnny’s job at Indian came with a health plan.
They’ll have to live under a tighter budget, they said. Eating out is no longer
an option, Johnny said, and they’ll be more frugal with their house’s air
conditioning.
It could be worse - and is worse - for some of Johnny’s former coworkers, the
Pe'as said. One may have to return a new car he just bought, they said; another
recently purchased a house.
Johnny said he feels bitter about the suddenness of the announcement and the
lack of severance pay. Employees had proven their commitment to the company by
going above and beyond the call of duty in the past, he said, and severance pay
would have been a way to return the favor.
Recently, for example, Johnny said Indian had to recall many of its motorcycles’
gas tanks. To fix them, the company asked employees to voluntarily work
overtime. The workers agreed. Johnny said he and many others worked
12-to-16-hour days, seven days a week, for about four months.
“When they asked us to bend over backwards for them, the employees did it to fix
their messes,” Johnny said. “Now that we’re in a bind from losing our jobs, they
don’t seem to be bending over slightly.”
Until Friday afternoon, Johnny worked at Indian’s paint shop on Railroad Street.
He had worked four-and-a-half years for Indian and before that for California
Motorcycle Company, a custom bike maker that merged into Indian. He was in the
middle of a job when he was called away - only to be told he didn’t have a job
after all.
“I was getting ready to paint when they told me they were calling an emergency
work meeting,” Johnny said.
He and the other Railroad Street workers quickly locked the shop, intending to
return shortly. When they arrived at the corporate headquarters on Tenth Street,
they found the entire staff assembled in the employee parking lot with Lou
Terhar, Indian’s president and chief executive officer, standing in the middle.
Acccording to Johnny and several other former Indian workers, Terhar told the
employees their jobs were finished and that Indian had ceased its manufacturing
as far as Gilroy was concerned. Terhar said Indian had been negotiating with a
large investor for months and that the deal had fallen through earlier that
week.
Pe'a said he was shocked. He was still thinking about his work back at the paint
shop.
“I asked my boss, ‘Hey, can I go back and finish those pieces?’ ” Johnny said.
“I didn’t want to leave this stuff half-painted.”
No more work was done that day, however, and Indian employees were only allowed
to return to the building in small, escorted groups to quickly collect their
belongings.
“I asked him why he was home early, and he said, ‘I don’t have a job,’ ” Vanessa
said. “I said, ‘You’re kidding.’ I didn’t believe him. He said, ‘No, really.
Look, here are the pictures from my locker.’ ”
The impact of the situation didn’t hit Johnny until that night, he said. It was
hard to deal with.
“I’ve been working full-time jobs since I was 15,” he said.
He didn’t plan on working in a factory his whole life. On Aug. 4, he started
classes on weekends at Monterey Peninsula City College. He didn’t plan to leave
his industrial job so soon, though, he said. Now more than ever he’s pinning his
future on that education.
“This was why I went to school, in case something like this happened,” Johnny
said. “This was my back-up plan.”
One good thing about all this, the Pe'as said, is that Johnny will get to spend
more time with the children. He’ll be staying home with them on weekdays while
Vanessa works.
While Johnny Pe'a is bitter about the layoffs, his response is mellow compared
to that of his father, 55-year-old Rudy Pe'a. Rudy angrily said on Tuesday that
he considers his time working for Indian “wasted.”
“The worst thing that happened was not getting severance pay,” Rudy said.
The next most offensive thing to him was getting no advance notice about the
closure. He said Indian officials could and should have explained the company’s
financial crisis before it reached this point. They could have given workers
options, like voluntary pay cuts or opportunities to invest in the company. Rudy
said he would have taken up to a $2-an-hour pay cut to keep working for Indian
and thinks other workers would have, too.
“The thing is, they didn’t come to us and be honest with us,” Rudy said. “We’re
not little kids. ... If (employees) give you respect by being there every day
and building quality bikes, you ought to give them respect back.
“We’re human beings; we’re not robots.”
Indian Motorcycle has halted production, but that won’t stop the Reno showroom from business as usual for the annual Street Vibrations event, which revs up today.
“Full steam ahead,” Buzz Hunt, manager of Indian Motorcycle Reno, said on Tuesday. “We’ve got too many commitments and obligations to worry about what the factory’s doing.”
On Monday, company chairman Frank O’Connell closed the Gilroy, Calif., plant south of San Jose and laid off the 380 workers because a deal with a major investor fell through.
O’Connell said he had received calls from dozens of other potential investors and still hopes the pioneer in motorized bikes would resume operations.
Hunt said he intends to remain open for now, as he has at least 15 bikes and a staff of five in his showroom on Market Street near the U.S. 395 freeway, where the franchise moved from downtown Reno in June.
Indian Motorcycle is also a sponsor of the five-day Street Vibrations event, including the Indian Riders charity ride on Friday, which Hunt said will go on as planned.
“There will be a lot of insecurity from Indian owners and a lot of snickering from Harley Davidson owners,” he said, referring to Indian’s much larger rival.
“But I’m still expecting a huge contingent of Indian owners from San Jose, Portland, Redding. I’m telling them, ‘Full speed ahead. Let’s show them some Indian pride.’”
There is one Street Vibrations casualty from Indian’s financial troubles: A 44-foot trailer housing a retail shop and a museum of Indian’s past will not come to Reno after all.
But Hunt’s not going to close his doors — yet.
“I’m hearing from some confused customers,” he said. “There’s a skeleton crew shipping out warranty claims. We’ve seen ups and downs before. We’re not panicked. We’re still fixing motors.
“It’s our anticipation we’ll see some form of a new Indian company in short order.”
Indian has a history of revival. Begun a century ago in Springfield, Mass., it was the largest motorcycle maker in the world before World War I, introducing the first model with an electric starter in 1913 and assembling more than 20,000 bikes a year.
The company went out of business in 1953, a year before Marlon Brando, astride an Indian, starred in the early biker film “The Wild One.”
But the name was brought back to life in 1999. Within four years, the new company had drawn thousands of fans, more than 200 dealers nationwide and a soaring brand image pegged to its signature Indian head ornament on the front fender.
It was on track to sell 4,500 bikes this year, a company record, with the list price for the top-end Chief exceeding $23,000, and was on the verge of profitability.
But O’Connell said the company’s board of directors decided last week they couldn’t afford to continue manufacturing given the steep fixed costs of its assembly line and design studio.
“The company needs to go down a different path with a different cost structure,” he said on Monday.
Amid the uncertainty, Reno-area Indian owners on Tuesday affirmed their loyalty to their bikes.
“I’ve never had a lick of trouble with it,” said Frank Rosa, 48, who puts 80 miles a day on his 2000 Indian Chief Roadmaster between Jacks Valley in Douglas County and his business in Reno.
He said he is hopeful the company can remain solvent. He regularly gets his motorcycle serviced at the Reno shop but could do the work himself if needed, he said.
Roza also owns a 1984 Harley Davidson, but bought the Indian “just because I’ve always been an underdog fan.”
Chris Koch of Reno, who bought his bike five weeks ago, said he wanted something not everyone else was riding.
“I love the bike,” he said as he perused Indian-branded clothing and other items in Hunt’s shop. “The company’s large enough. They might come back.”
With Associated Press reports
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INDUSTRY - Indian Motorcycles Calls It Quits By Blake Conner  |
| 380 Employees Laid Off | 9/22/2003 |
The Indian Motorcycle Corporation has closed its doors and is no longer in business as of Saturday, September 20.
The decision to close the doors was a huge surprise to everyone involved at the company, including Indian's Executive Vice President Fran O'Hagan, who had just returned from the Milan Motorcycle Show in Italy when he was told on Friday that the company would cease to exist as of Saturday.
"We were finally getting all of the bits and pieces together," O'Hagan told Cycle News. "We were finally going to have a motorcycle [the 2004 model line] that you could line up next to the BMWs and the Harley-Davidsons, and not have to apologize for."
The Indian Motorcycle Corporation set new monthly sales records this past year. In May, the company sold 563 motorcycles, a 39-percent increase compared to the same period last year. While the rest of the industry experienced declines in sales that same month, Indian enjoyed the single largest percentage gain of all the major motorcycle manufacturers, while monthly unit sales were ahead of other manufacturers such as Triumph, Ducati, Victory and Aprilia. According to O'Hagan, summer sales had remained very good, and the company was expecting to report record sales again for the month of September, which it projected would be its second best month since the company's revival in 1999.
According to O'Hagan, the 2004 model line had been extensively changed. The bikes had received extensive upgrades in every area, from the motors to the braking system, and the chassis, the bikes had taken a significant step forward.
So where did it all go wrong? Apparently most of the new parts that Indian was sourcing from outside vendors had recently been ordered so that production of the 2004 bikes could begin. Everything was going to plan until Indian's primary investor Audax, a private equity firm based in Boston, Massachusetts, decided to pull the plug. The company had invested $45 million in The Indian Motorcycle Corporation.
According to O'Hagan, who formerly had worked for BMW, Jaguar and Mercedes-Benz, "The motor-vehicle industry, and I don't just mean the motorcycle industry, requires huge amounts of investments and a lot of planning. We had a large investor lined up, but that deal was at least four months away from closing at minimum."
O'Hagan joined the Indian Motorcycle Corporation in 2001, and was promoted to Executive Vice President in July of 2003 from his position as Senior Vice President of Sales, Service, Marketing and Product Management. He brought many of the company's employees with him to Indian.
"My primary goal right now is to help the 20-30 people I brought to this company find new jobs," O'Hagan said.
As for the other 380 employees at the Gilroy factory, they were informed of their demise on Friday. The Indian Motorcycle dealer show was supposed to take place on Sunday, September 21 in Las Vegas to unveil the 2004 model line, followed by a tour of the factory in Gilroy this Wednesday. The dealers were reportedly not informed of the news until most were in transit to the show.
The future of the company is now in the hands of the courts.
"I don't know if Audax plans on filing for bankruptcy or if they will file for an Assessment for the Benefit of Creditors (ABC) which is possible in California," O'Hagan said.
The same goes for the Indian name, which now rests in the hands of the
courts. With Indian's past history, O'Hagan said he wouldn't be surprised if
the company surfaces once again. Stay tuned.
Quote from
well know dealer & friend:
It has been reported that IMC closed their doors today at
3:00PM. Fired all the employees and stopped production. The Indian Motorcycle
website is offline. Apparently, Audax hit their $100 million limit and IMC was
still losing money so they shut it down. The Indian dealers meeting that was
scheduled in Gilroy has also been cancelled. No warranty work will be paid by
IMC so no warranty work will be provided by any existing Indian dealer - since
they won't get paid for it. Any bikes left in inventory will have to be sold
without a warranty unless the dealer is going to eat the cost.
