Polaris' adios rocks Osceola

OSCEOLA. WIS. - It has been a tough couple of years for welder Mark Anderson.

First, he lost a job at a company that made fiberglass components. It took more than a year to line up new work at the Polaris plant in Osceola, where the company makes components for ATVs, snowmobiles and motorcycles.

Now that job could be gone, too.

Anderson was among 515 workers shocked to be summoned Thursday to a plantwide meeting where they learned that the Medina company plans to close or sell the facility and open a new one in Monterrey, Mexico. The company, which plans to exit Osceola in 18 to 24 months, said it wants to be closer to customers in the southern part of the United States.

"I understand business is business, but what do you do?" said Anderson, 42.

The news hit hard in Osceola, a quaint town of 2,750 people where the main street is dotted with flower pots, brick buildings and patio chairs. Politicians and consumers blasted the move as unpatriotic, while workers expressed misery.

"It sucks. I don't have a Plan B and it's too early to tell" exactly how badly it will affect workers, said Stephen Cox, 35, who has worked at the plant for 15 years.

Polaris CEO Scott Wine defended the move Friday in a conference call with analysts. He said he doesn't expect any backlash from consumers because Polaris is retaining a significant presence in the Midwest and is looking for a supplier to buy the shuttered plant. He also said Americans buy goods all the time that are made in Mexico so they shouldn't be taken aback when Polaris also has a plant there.

Ultimately, he said, Polaris' restructuring benefits the company's long-term goals of doubling revenue to $3 billion by 2014, expanding into Latin America and serving the southern U.S. market more economically.

Two-thirds of the company's $1.6 billion in revenue come from one-seater ATVs and two-seater "side-by-side" ATVs. About 40 percent of those sales come from the South.

In Osceola, though, the move adds to the sting the town was already feeling from the Great Recession. Polaris employment was already down to 515 from 800 a few years ago. Motor Books International moved a warehouse with 40 workers from Osecola to Appleton, Wis., a year ago and will shift about 20 administrative jobs to Minneapolis next month.

With Polaris ready to bolt, owners of the area's bowling alley, bars, supermarket, gas stations, coffee shops and flower shop said they worry about declining revenue.

Kathy Demulling, Osceola's village president and the owner of the Main Streeter Cafe, said about 20 percent of her business comes from Polaris workers.

"I have talked to a lot of the downtown businesspeople, and they have sons and daughters and sisters and brothers who have all worked there through the years," Demulling said. "So there's a pretty somber mood downtown today."

One Polaris employee said he left his shift early Friday because it was "too frustrating" listening to workers complain about the plant's closure.

Businesses that serve Polaris workers expressed concern for the older employees. "Where are they going to get a job at 50 years old?" asked Pam Pederson, an employee at Osceola Lanes. "No one is going to hire them."

While Polaris has suffered during the recession along with most manufacturers, business has shown signs of life recently. The company is profitable and recently reported quarterly sales up 16 percent from a year earlier.

It plans to disperse the Osceola factory operations to existing plants it has in Roseau, Minn., and Spirit Lake, Iowa, as well as the new plant in Mexico it intends to have running by July 2011.

It is also searching for a company to buy some of the Osceola equipment and processes with the idea that it could become a supplier. That idea gave some residents hope that another manufacturer could potentially save a few jobs for the town, where Polaris has operated since 1991 and is now the largest employer.

Today, the plant generates more than $8 million in property taxes for Osceola, provides roughly $16 million in annual paychecks and millions more to businesses around the region.

The move "really came as a complete surprise, a shock," Village Administrator Neil Soltis said. "This is a good, hardworking workforce. And this has a broader impact throughout the county.

"Unfortunately, we have just joined a large group of other communities in the manufacturing [realm] that have lost high-quality jobs to Mexico," Soltis said.

The effect will be felt beyond Osceola. Steve Wise, chairman of the board of the TwinWest Chamber of Commerce, worries about the impact on his own business, Cass Screw Machine Products in Brooklyn Center. Wise said his business has supplied parts to Polaris since 1962.

Wise, the CFO and co-owner, wonders if Cass Screw will still be able make bolts, bushings and drive shafts for Polaris. Cass has 80 workers, and $3.5 million of its $14 million in annual revenue depends on business with Polaris.

While concerned, Wise applauded Polaris for moving slowly. "There is a good way and a bad way to move business out of the country. And they are doing it as well as they could. They could have just shut the doors," Wise said.

Some question how consumers will react to the company's decision to head to Mexico. Wall Street analysts brought up the issue during the conference call Friday morning with Polaris top managers.

Wise said he wonders whether it will hurt Polaris in the long run.

"I drive a [Polaris] Victory motorcycle and I have a Made-in-America flag on the back fender and that means something," Wise said. "You can't put a dollar amount on the Made-in-America significance."

As a manufacturer himself, though, Wise said he understands some of Polaris' pressures. "Hey, they have to survive, too. Still, it's sad."

Dee DePass • 612-673-7725