November 15, 2010

Polaris Exec Defends Plan To Shift Some Manufacturing To Mexico

By Susan Feyder

Star Tribune


After Polaris Industries announced it was closing a plant in Osceola, Wis., and building a new one in Mexico, Bill Meis says his customers didn't hold back.


"There were people who told me they'd never buy a Polaris again," said Meis, sales manager of Frontier Powersports in Fergus Falls, Minn.


Most calmed down, Meis said, when he asked them to consider that Polaris isn't the only recreational vehicle company that manufactures outside the United States.


"It's just the way things are," Meis said.


That air of inevitability surfaces when executives of Polaris talk about the plan to close the Osceola plant, whose 500 workers make it a major employer in the town of 2,600. A combination of geography, changing manufacturing methods and the lure of Mexico's low-cost labor market dictated the decision, executives have said in recent months.


It's a choice that comes with some risks, beyond just potential consumer backlash for exporting jobs when nearly one in 10 Americans are unemployed. Medina-based Polaris recently disclosed that it will spend about $2 million more than initially planned this year to make the move to Monterrey, Mexico. The higher upfront costs, part of $25 million to be spent on the transition, are for security to protect the new plant and its workforce from a flare-up in violence in Monterrey by drug traffickers.


But Polaris expects the extra costs—plus another $35 million in capital expenditures—to be quickly recouped by the $30 million it will save annually after the Mexico plant is done next year.


In an interview, CEO Scott Wine said Polaris will pay its Mexican workforce one-third of what it now pays workers at its plants -- all nonunion -- in Osceola, Roseau, Minn., and Spirit Lake, Iowa.


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