Erik Buell Racing - the Road to Perdition or the Path Towards Glory

Yesterday, Erik Buell Racing and their new owner, Liquid Asset Partners, announced restarting the production at the East Troy plant, in Wisconsin. It's a new dawn for the American manufacturer, and we can only hope both EBR and LAP learned all the lessons that had to be learned. The wisdom of the old says that the third time is magic, and I'd add a corollary that, in this case, there may be no next time...
The news about restarting the production is a good one, because this means that at least some of the workers who were laid out when EBR entered receivership got their jobs back. And if things play out well, more workers will be hired, even though I doubt that EBR's commercial figures will boom in the few coming years.

Apart from Erik's well-known relentless desire to keep going, which, in certain moments, proved to be more or less the last resource he had, Liquid Asset Partners' money and expertise in running a business could turn out to be one of the key missing elements that may lead to success.

It's no secret that Erik, himself much more of a racer and bike builder than a businessman, will have to change the way he thinks about motorcycles. That is, if he doesn't want to burn through LAP's money fast and get back to square one.

Leaving the sales and marketing part for people whose jobs are sales and marketing might prove one of the truly smart moves that might help bring better days for EBR. In fact, Mr. Buell, still part of the management panel for EBR, has become the company's Chief Technical Officer (CTO) and will most likely deal more with the engineering side of the operations than marketing and all. And this is smart.

Regardless of management, a motorcycle manufacturer has to make and sell bikes

Now on solid ground from a financial standpoint, EBR has to make several crucial decisions that may determine the future of the company. No matter how deep the pockets of Liquid Asset Partners are, or of any other investor, for that matter, they will not sustain a business that shows no prospect of becoming profitable.

I've been talking with Scott Harden, VP Global Marketing for Zero Motorcycles, and he told me about how fast one can burn through sums of money that, in the first place, seem huge. Believe it or not, the costs of being an authentic bike manufacturer aiming for worldwide recognition are immense, and since, so far, nobody found an perpetual source of money, things can go awry at almost any given moment.

LAP most likely understood that putting EBR back on the floating line involves solid investments, and they are ready to make them. So good, so far, but the house of East Troy must start making the right moves and depend less and less on money that comes out of the blue (read LAP's bank accounts).

EBR announced that the 1190RX and 1190SX bikes would be the first to roll from the factory, around March 17. Most likely, these bikes are half-assembled already, left in this state when EBR closed their doors, so putting them together and making sure they work does not involve too many costs.

What follows after the wraps are set and the bikes created is what matters more. LAP and EBR must act fast and solve at least two stringent problems.

The first steps are probabaly the hardest

The first one is the dealership network, clearly one of the big missing links between EBR and the customers. This network is now quasi-inexistent, and those who still have EBR bikes on the floor are trying their best to move them, even at huge discounted prices.

Having dealers back in the bandwagon is a priority, because EBR is not Tesla and online bike sales will not do. Convincing existing ones to sell EBR bikes may be harder than building a new network altogether.

Some say that LAP investing in their own EBR dealer network could work much better, at least in the first place. Being in control of the entire chain should start producing good results in a fairly short amount of time, from advertisement, spare parts supply, warranty claims, servicing, after-sale services, and all.

If LAP can build the skeletal structure of a national dealer network and make it work, stocking and selling EBR motorcycles will certainly become more appealing and help the business grow.

On the other hand, EBR must regain the trust of their potential customers

Regaining the customers' trust in the brand is yet another key thing EBR and LAP must do, and that is because people became reluctant to buy a motorcycle for which they might not find parts in two years' time or so.

With EBR in and out of business at an alarming rate over the past years, the potential buyers were much more careful how they spent their money. Unfortunately, trust is much harder to (re)build after several bad experiences. Building 50 dealerships from scratch would take less time and effort than having the guys who had a bad time turn their faces back at EBR, but things can be mended.

Racing much?

EBR's involvement in the racing scene is yet another thing that has to be dealt with. "Win on Sunday, sell on Monday" is no longer THE philosophy in the motorcycle business, and the superbike scene in the US can't be compared to that in Europe, where sport bike sales are still ok-ish.

The current customers are looking for more than the prestige of riding a bike that is derived from the one X rode to victory in a race. Styling, performance, mojo, costs of ownership, parts availability and the quality of the servicing, bang for the buck and many more variables are being considered, and pulling the trigger simply became a much bigger responsibility.

Maintaining a racing program proved to be costly and inefficient. Only recently, brands like EBR and Bimota ran through the homologation process and saw how difficult things were, even with the concessions that were made.

And even if a sponsor joins the game, those bikes have to win, or at least battle at the top to make the guys writing the checks happy with the results. For now, I'd say that Mr. Buell should do well to sideline the racing dreams until EBR becomes stronger, more competitive and can afford to spend money on races.

Selling what the customers want to buy

Finally, here is one major thing that will change the future of EBR for good or for worse. Swimming against the stream and going against the grain are not the best business models, at least not when you don't sell a product that is amazing.

If you have to strive to make people reach for the wallet instead of fighting the hordes of buyers willing to pay extra only to get one of the things you're selling, then maybe trying to adapt your tune to how they dance is the smart thing to do.

Kawasaki sells 25K and 50K bikes but they are smashing, while Yamaha also seems to be able to overcome the transmission issues with their new R1M machines and still take plenty of orders. Ducati has something magic about their Panigale bikes and riders walk that extra mile to get them.

As for BMW, their S1000R seems to dominate the track authoritatively and is available at a very good price, considering its capabilities. Unfortunately, EBR just can't get neck to neck with any of these.

The old "American bike" tune might sound like godly music to some ears in the US, but most of the riders outside that market couldn't care less. The Internet oozes with old Buell fans who say that they want machines that ARE different from what the market has now.

Names like the old Lightning or Ulysses appear on pretty much any internet page where the EBR name is being discussed. People want a certain type of bike, and not the racer wannabes.

They also want affordable, dependable bikes, they want something that's special in ways they like and appreciate, not just "another motorcycle that's still using a Harley-like v-twin engine."

Buell fans might get mad at me, but these are the very facts. Over the past years, EBR lost its individuality as a brand and is slowly drifting towards that deadly "the ones Harley dumped" grey zone.

EBR needs to shed its skin and become a modern brand. They can retain all the sportiveness they want, but major changes have to be implemented. A smaller displacement platform could work wonders for EBR and still not cause them to lose anything from the spirit they hold so dear.

And you or EBR, for what's worth, don't need me to figure out how well smaller, more affordable and FUN bikes sell these days. If LAP and EBR understand that a dynamic approach is the only way they can succeed, we might see the racing horse badge spreading around the world in several years.

If they understood nothing from the past, I'd say we might as well save as many EBR photos in our archives, because the past is all that will remain.
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