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Husqvarna: The Strange Aftermath of the Sale to KTM’s Pierer

Less than three months after BMW sold Husqvarna to KTM’s Stefan Pierer, workers took to the street today in the community of Biandronno, Varese, Italy to protest the loss of more than 200 factory jobs.  Pierer is moving the manufacture of Husqvarna motorcycles to a KTM facility in Austria.  Roughly 211 Italian workers have been laid off in the process.

This only adds to the economic misery in Italy today where unemployment is the highest it has been in 21 years.  Biandronno also suffered the closure of a Whirlpool plant, which resulted in even more job losses recently.

It turns out that BMW’s relatively brief ownership of Husqvarna was a massive economic failure with losses in the past three years amounting to roughly 192 million Euro (approximately $250 million).  Despite recent product introductions, including the Nuda 900 that was very well received (you can see our test here), BMW saw fit to unload the company. In addition to the financial losses in recent years, we now know that BMW was stuck with thousands of unsold units stored in warehouses near the Varese production facility. Pierer has kept only the marketing staff, apparently planning to sell off the remaining inventory while production is moved to Austria.

Italian workers and their unions are livid. They claim BMW, and now Pierer’s company, have sucked large consulting fees out of Husqvarna as it spiraled down, at the expense of workers. One worker was quoted recently in an Italian newspaper stating succinctly “The Germans gave us the Austrians and they fired us.”

Of course, motorcycle industry observers are more interested at this point in the future of the Husqvarna brand. Pierer is known for being shrewd and successful. He is moving KTM aggressively into the exploding Indian market through joint ventures, for instance. He undoubtedly has a plan for Husqvarna, which certainly still has value as a brand.

The current question might be whether dealers and customers can maintain their confidence in Husqvarna during this upheaval. In particular, can they trust that products and parts will continue to flow to the retail marketplace in a reliable fashion. Otherwise, the brand can be damaged rather quickly.

58 Comments

  1. TheBaron says:

    This may seem pedantic, but Husqvarna Motorcycles was NOT bought by KTM. It was bought by Pierer Industrie AG, which in turn is owned by Cross Industries. This conglomerate owns many companies, including piston and connecting rod manufacturer Pankl. Pankl con-rods have been used by Ducati for years. Oh, and by the way, Pankl owns that famous American company, Carillo.

    • moonbandito says:

      It wasn’t bought by KTM because of some anti-trust rules the European market has in place. This is simply a fire sale of a brand from one corp. to another. KTM is 47% owned by Bajaj of India. Guess who’s calling the shots at KTM.

  2. Jim says:

    Pierer didn’t get where he is today by being a nice guy. I met him years ago. Shrewd is putting it lightly.

  3. Jeremy in TX says:

    “He undoubtedly has a plan for Husqvarna, which certainly still has value as a brand.”

    I’d have to respectfully disagree. I don’t think the Husqvarna name has had much value anywhere for quite a while outside of the lawn and garden section of your local home improvement store. Not even in Europe. I think the shrewdest move Mr. Pierer could make would be to kill the Husky brand leaving KTM as the sole premium/performance-oriented player in the street-thumper and dirt markets. And I think that is exactly what will happen.

  4. Provologna says:

    What the hay happened to this website? The number of posts/replies to articles seems to lately grow exponentially?

  5. mulvaney says:

    Sorry to read this. Wondering about “thousands of unsold units stored in warehouses” and yet the marketing people are the only ones keeping their jobs. Fire the people who made the bikes and keep the people who couldn’t sell the bikes. Makes sense to someone, I’m sure.

    I’m pretty sure Huskys will soon all be made in India which means I can cross them off the list of possible next bikes.

    • Gary says:

      Then I guess you will be crossing off the new 390 Duke, the Honda CBR250 and other bikes that are also now made in India. Many of the major manufacturers are also using engines, and parts from Chinese suppliers. World economy.

    • stinkywheels says:

      I’m trying to buy from people that are passionate about their product. Shipping your manufacturing to the lowest bidder no matter the cost isn’t showing passion. On the other hand, the Italians have been making Swedish bikes for a while now. I don’t begrudge the Indians anything, they’re just a new China, they don’t seem to innovate just copy.

      • Jeremy in TX says:

        Just because the Indians are the lowest bidder (I doubt they are – China or Thailand usually both come in lower than India) doesn’t mean they are inherently lower quality. My experience with Indian and Italian manufacturing operations certainly wouldn’t support the notion that the Italians would build better Huskies than the Indians. They have some first-rate manufacturing facilities in India that rival anything available in the western economies. They also have some cut-rate facilities as well which I would hope a company like KTM would not court.

  6. Norm G. says:

    re: “It turns out that BMW’s relatively brief ownership of Husqvarna was a massive economic failure with losses in the past three years amounting to roughly 192 million Euro (approximately $250 million). ”

    behold, evidence that motorcycling costs more than a nickel. and this is just off-road kit…! :-O

  7. yety61 says:

    You guy’s all realise that 2014 Husky models will more than likely be just rebadged KTM’s don’t you, as per Husaberg.

  8. Peter Wylie says:

    Raced Husky 2-strokes(250, 390, and400cc) thru the ’70’s in the NW in motocross, enduro, and the desert(Mattawa 100), and they were fast and tough. Made in Sweden in that era. I was impressed with the reliability so much that I bought a Volvo. Tha Volvo was not as tough as the Husky’s, sadly. I wish the new Austrian owner success.

  9. Loren says:

    I say good riddance, I had one and it was the worst motorcycle experience ever. Dropped a valve and blew the motor after 2 months, they refused to cover under warranty and it was a year and half before I got parts to fix it!

  10. TheBaron says:

    Husqvarna was very successful in the US market for many years through the 1970s and into the 1980s. They won Baja several times, outdoor motocross and desert races by the score. The bikes were good handling and pretty reliable. Then the Castiglioni family bought it and completely messed up its US marketing. The put a Ducati guy at the head of distribution and took the brand away from the old, loyal dealers. Market share slumped and the Castiglionis got into dire straights several times, each with Husqvarna production slowing to a stop as parts suppliers refused to give any more credit. Then BMW bought it at the peak of the market, and instead of spending money on those two-strokes the eco-fascists hate so much, they took off on another tangent – Husky road bikes – at a time they needed to seriously invest in the dirt range. Let’s face it, the Japanese have handed KTM a huge chunk of the off-road market by killing off two-strokes. Husky in Pierer’s hands will be rejuvenated. He hasn’t bought it to dick around withy it like the Castiglionis and BMW have!

  11. Al says:

    The whole BMW/Husquvarna deal was another masterpiece of Claudio Castiglioni – the master in selling his brands for $$$ and buying it back a couple of years later for 1 Euro – à la MV Agusta/Proton and MV Agusta/Harley Davidson.

    Problem #1 with “BMW Husqvarna” – with a lot of the models you were basically buying a BMW Bike with different cosmetics.

    Problem #2 – some of the Husky models (Strada for ex) were cheaper to buy, better equipped and were beating their BMW conterpart in reviews.

    Problem #3 for the italian workers in Varese – KTM/Pierer ain’t Castiglioni.

  12. mickey says:

    I raced Moto-X for 10 years from 73- 83. Always love the red and chrome tanked open class Husky’s,, but I raced 125 class and the Husky 125’s were uber expensive and not very competitive so I raced Yamaha’s. still love the look of the 70 ‘s Huskys, but I’m way too old to ride in the dirt anymore, and their street bike (the Nuda) does nothing for me.

    Cycle World just sent out an online survey from Husqvarna and I started to fill it out, but all the questions were dirt oriented, so I deleted it.

    As close as I ‘d come to riding in the dirt these days would be a fire road on that Crf 250 Honda.

  13. SmokinRZ says:

    At some point it is just a name with no real lineage being passed around the globe. I don’t even know why KTM purchased them. They should have bought the Maico name since it was at least German.

  14. Sam says:

    I also remember Husky’s from the 70’s and it was a major miracle to be able to actually finish a race on them. Beautiful design and nice when new but very fragile and expensive.

    At the time, I race CZ’s and Bultaco’s and only saw a Husky at the starting line.

    Sam:)

  15. Vrooom says:

    So what you’re saying is we might be able to find a really good price on a Husky in the interim?

  16. RichBinAZ says:

    It’s probably too late, but companies need to put “poison pills” in their articles of incorporation to guard against these “consulting fees”. It’s called asset stripping and was done full on back in the 80’s and 90’s.
    If I remember right, there was some guy running for president of some large North American democracy, who made his millions buying and stripping companies in the same way.

    • George Krpan says:

      That was Milt Romley.

      • moonbandito says:

        This is the route U.S. robber barons have taken since the early 80s. Leverage, sell, understaff, and then resell. Goldman Sachs, Texas Pacific (remember Ducati?), The Carlyle Group, Blackstone, Bain…it’s a long list. It’s one of the reasons the U.S. economy doesn’t produce jobs – only debt.

  17. todd says:

    It’s not like the workers will be out of a job very long. I’m sure being employed by Husqvarna looks really good on your résumé. They should all be snatched up pretty quick.

    I’ve found that moving jobs is the fastest and best way to gain experience and value. Typically each new job offers at least 10% more than the previous. That’s much better than sticking it out with a company and hoping you’ll finally get that 3% raise this year.

    • para says:

      Mate, no offense, but you are out of touch with the economical situation in Italy (and large parts of Europe). Industry hiring is nearly nonexistant at he moment. If you lose your job thats it. Most of them likely will have to switch industries or work in a supermarket, where their qualifications matter nil and they will certainly not gain any income in doing so.

    • David says:

      I doubt it. With the collapsing job market in Italy (I’m Italian and I had to mover overseas for a decent job) it will take months or years or forever to get another job like that. Nobody is hiring these days (the new Pope was elected quickly but the new government is still a mess)

    • MGNorge says:

      Interesting that you made a point out of job hopping. Some 15 or so years ago it was deemed that things were going that way, that the average worker stayed with a firm, or changed jobs, at no more than every 2 years!! Unthinkable to those of us brought up on the value of loyalty and that a company would take care of you. It’s all about numbers today and if you’re in a job for more time than I mentioned you were deemed stagnant. Up and comers and go getters let nothing stand in their way and weren’t afraid to jettison a job and company in search for more money and power, etc. “That’s the kind of person we want on our team!” was heard everywhere.

    • Gary says:

      Snatched up pretty quick by who? Most others that are still in that area already have most if not all of those jobs filled. They might have to move to get the same job, and that is only if one is available.

      • todd says:

        People quit, retire, get fired all the time. Plus a good company is a company that knows how to grow and add new employees. Besides, if you’re good at what you do, word gets out and you won’t be unemployed for long.

        • Gary says:

          Tell that to all the people in this country that are well qualified, but still cannot find a comparable job to what they had.

  18. Auphliam says:

    It sounds insensitive, but its simple economics, really.

    If the Italian venture was hugely successful, the marque would not have been sold off by BMW to begin with. Why should KTM keep a marginally successful plant open when they already have an existing facility that can handle the extra production needs? Fairness? Its the right thing to do? Hardly. It’s about overhead and profitability.

    As a wise man once told me…”A corporation has no obligation to be ethical…their only obligation is to be profitable”.

    • Craig Jackman says:

      If the marque had been hugely successful it wouldn’t have been sold by Cagiva, or even the Swedes to begin with. It is at best a boutique niche brand, and has been for decades.

    • Gary says:

      Actually, your wise man is not so wise. There are a number of laws on the books that require corporations to be ethical. Antitrust regulations come immediately to mind. You may not agree with the laws, but they are there.

      • Montana says:

        There should also be a law that corporations exist not to make a profit,
        but to cater to workers and unions, just like Solyndra.

        • Gary says:

          I’m pretty sure Solyndra failed for reasons other than only catering to unions and workers.

  19. DorsoDoug says:

    Who will be making parts for my chainsaw?

  20. al banta says:

    Has everyone forgotten where Husqvarna was born, one of the oldest motorcycle manufactures in the world. Is the present day world economy the only important piece here? I’m glad that KTM now holds Husky and Huseberg, they know how to produce quality motorcycles and to make parts available to the world-quickly.
    Ducati is one of the few remaining mc companies in Italy, and look at who owns all of the Italian brands.
    Beautiful bikes, beautiful women, successful business with the exception of Fiat, Not..

    • Doozyes says:

      Ummm, Sweden perhaps. The economy is not everything; these are people that maybe have families that depend on this income for security. Sure if KTM owns it they can move it where they want, but I hope they have the integrity to offer relocation or some other help to those that served the company well.
      As for “they know how to produce quality”; I bought a brand new 2007 SuperDuke when it came to our area. It was a blast to ride, but I always had to check the oil level on it—it used so much, it would missfire for no detectable reason and the signals had a mind of their own. I won’t mention how much the first ‘service’ was on it. No thanks, glad it’s gone.

  21. Nick says:

    A few years ago KTM shafted the Kenny Roberts Moto GP team (http://www.motorcycledaily.com/2005/08/19august05_roberts_ktm/). Now they screw over an entire factory of Italian workers. Is KTM in some race to be crowned the biggest a$$hole motorcycle company?

    • blackcayman says:

      “screw over an entire factory of workers”

      ….what kind of Socialists Drivel is that??? NO ONE is guaranteed a job in the Real World. Companies make bad decisions and go out of business. Other people buy a bad business (at a low cost because its failing) with the hopes of turning it around (an making a profit).

      Grow up. Just becasue KTM wants to have oversight of the production of THEIR product doesn’t mean they are screwing over anyone.

      • halfbaked says:

        It sounded more like Marxist sentiment to me but that’s just my opinion. You clearly are a grown up since you have figured out that NO ONE is guaranteed a job. Have you also figured out why is it that the factory workers that do the job they were hired to do get sacked first.

  22. Tom R says:

    Wow, this brand has been owned by the Swedes, Italians, Germans, and now Austrians. Did I miss any?

    What’s next, Latvians or Sri Lankans? Let’s set up a pool for guessing the nationality of Husky’s NEXT owners.

    • para says:

      Ownership is effectively Indian now, since the company was very much aquired for Bajaj’s (47% owner of KTM) operations. The way they restructure Husky, its likely going to stay that way.

  23. bikerrandy says:

    This is what is called ‘economics of scale’. It happens almost every time there is a take over of an existing company world wide. I’ll bet these union workers are overpaid compared to comparable competitive businesses. They are losing their union gravy train and are not happy.

  24. Gary says:

    I’ll bet no one is watching these events unfold with more interest than the employees of Ducati.

    • todder says:

      I bet so also. When I visited the factory last year about this time, they had just been acquired by Audi and our tour guide wasn’t sure about the changes come. She thought they would be closing down factory tours and would be out of a job soon.

  25. MGNorge says:

    As someone who remembers the old “Huskys” from the early seventies I’d like to see the brand survive and find it’s place in the market. But brand identity is lacking, especially among the young. I hope they can get it together..and put those displaced workers back to work!