Polaris 2015 Annual Report Download - page 31

maintenance of the products since many employees own the products we manufacture. We have manufacturing
centers of excellence established at our production facilities in Roseau and Spirit Lake, as well as at our
Monterrey production facility, which became operational in 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. Our plant in
Opole, Poland facility manufactures ORVs to serve the European market. Goupil has its manufacturing
operations in Bourran, France, while Aixam has its manufacturing operations in Aix-les-Bains and Chanas,
France. Our Roseau facility primarily manufactures ORVs and snowmobiles and our Monterrey facility
primarily manufactures ORVs. Our facilities in Spirit Lake, Iowa and its surrounding areas primarily
manufacture motorcycles and GEM vehicles. In January 2015, we announced plans to build a new production
facility in Huntsville, Alabama to provide additional capacity and flexibility. The 725,000 square-foot facility
will focus on ORV and Slingshot production. We broke ground on the facility in the first quarter of 2015 and
expect to start production in the second quarter of 2016.
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. 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. Since 2011, our reliance on and use of Fuji manufactured engines in our products has steadily
declined as our internal engine manufacturing capabilities have expanded. After decreasing from 2011 to 2014,
our use of Fuji engines in our vehicles stabilized in 2015, and is expected to remain stable in 2016.
We have been designing and producing our own engines for select models of snowmobiles since 1995, for all
Victory motorcycles since 1998, for select ORV models since 2001 and for Indian motorcycles since the
re-launch in 2013. During 2015, approximately 85 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 Taiwanese manufacturer to co-design, develop and produce
youth ATVs. We have since expanded the agreement with the Taiwanese 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 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 set-up and up-fitting is completed for
certain models before shipment to customers.
We maintain sales and administration facilities in Medina and Plymouth, Minnesota; Rigby, Idaho; Ponderay,
Idaho; Dallas, Texas; Winnipeg, Canada; Derrimut, Australia; Shanghai, China; Rolle, Switzerland; Sao Paulo,
Brazil; New Delhi, India; Monterrey, Mexico and in most Western European countries. Our primary
wholegoods distribution facilities are in Shakopee, Minnesota; Haviland, Ohio; Altona, Australia; Irving, Texas;
and Milford, Iowa. Our primary North American dealer PG&A distribution facilities are in Vermillion, South
Dakota; Wilmington, Ohio and Rigby, Idaho. We have various other locations around the world that distribute
wholegoods and PG&A to our international dealers and distributors.
Production Scheduling
We produce and deliver our products throughout the year based on dealer, distributor and customer orders.
Beginning in 2008, we began testing a new dealer ordering process called Maximum Velocity Program (MVP),
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