Polaris 2011 Annual Report Download - page 22

technology, substantially the same equipment and personnel are employed in their production. We are vertically
integrated in several key components of our manufacturing process, including plastic injection molding, welding,
clutch assembly and balancing and painting. Fuel tanks, tracks, tires, seats and instruments, and certain other
component parts are purchased from third-party vendors. Raw materials or standard parts are readily available
from multiple sources for the components manufactured by us. Our work force is familiar with the use, operation
and maintenance of the products since many employees own the products we manufacture. In 1991, we acquired
a manufacturing facility in Osceola, Wisconsin to manufacture component parts previously produced by third-
party suppliers. In 1994, we acquired a manufacturing facility in Spirit Lake, Iowa in order to expand our
assembly capacity. Certain operations, including engine assembly and the bending of frame tubes, seat
manufacturing, drivetrain and exhaust assembly and stamping, had been conducted at the Osceola, Wisconsin
facility. In 1998, Victory motorcycle production began at our Spirit Lake, Iowa facility. The production process
in Spirit Lake includes welding, finish painting, and final assembly. In 2002, we completed an expansion and
renovation of our Roseau manufacturing facility, which resulted in increased capacity and enhanced production
flexibility. In 2010, we announced plans to realign our manufacturing operations. We have created manufacturing
centers of excellence for Polaris products by enhancing the existing Roseau and Spirit Lake production facilities
and have established a new manufacturing facility in Monterrey, Mexico, which became operational mid-2011
that assembles ORVs and certain engines. This realignment led to the sale of part of our Osceola, Wisconsin
manufacturing operations, moving frame tube bending into Roseau and Monterrey and outsourcing some
operations including seat manufacturing and stamping. Several of the engines used in our vehicles continue to be
manufactured in Osceola. With the acquisition of Goupil, we acquired additional manufacturing operations for
their product line in Bourran, France. GEM vehicles and Indian motorcycles are both manufactured in our Iowa
facilities.
Pursuant to informal agreements between us and Fuji Heavy Industries Ltd. (“Fuji”), Fuji was the sole
manufacturer of our two-cycle snowmobile engines from 1968 to 1995. Fuji has manufactured engines for our
ATV products since their introduction in 1985 and remains a supplier of engines to us. Fuji develops such
engines to our specific requirements.
In addition, we had entered into an agreement with Fuji to form Robin Manufacturing, U.S.A. (“Robin”) in
1995. Under the agreement, we made an investment for a 40 percent ownership position in Robin, which built
engines in the United States for recreational and industrial products. The Robin facility was closed in 2011 as the
production volume of engines made at the facility had declined significantly in recent years. See Note 8 of Notes
to Consolidated Financial Statements for a discussion of the Robin agreement.
We have been designing and producing our own engines for select models of snowmobiles since 1995, for
all Victory motorcycles since 1998, and for select ORV models since 2001. During 2011, approximately 65
percent of the total vehicles we produced were powered by engines designed and assembled by us.
In 2000, we entered into an agreement with a Taiwan manufacturer to co-design, develop and produce youth
ATVs. We expanded the agreement with the Taiwan manufacturer in 2004 to include the design, development
and production of value-priced smaller adult ATV models and in 2008 to include a youth side-by-side vehicle,
the RANGER RZR 170.
We do not anticipate any significant difficulties in obtaining substitute supply arrangements for other raw
materials or components that we generally obtain from limited sources.
Contract carriers ship our products from our manufacturing and distribution facilities to our customers. We
maintain several leased wholegoods distribution centers where final setup and up-fitting is completed for certain
models before shipment to customers.
We maintain sales and administration facilities in Medina and Plymouth, Minnesota; Winnipeg, Canada;
Passy, France; Askim, Norway; Ostersund, Sweden; Birmingham, United Kingdom; Griesheim, Germany;
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