The heart of Brammo will remain
TALENT — The skin and bones of Brammo's Enertia and Empulse electric motorcycles have exchanged hands. The brains and guts remain in the Rogue Valley along with the future of the company Craig Bramscher founded a decade ago.
Polaris Industries, a Goliath in the powersports vehicle world, acquired the bike operation and the ability to manufacture and sell Bramscher's babies a week ago. The circumstances leading to the transaction were set in motion perhaps even before the Minnesota firm began pumping money into Brammo, when it was part of a consortium that acquired a $28 million stake in 2011 and gained more say as part of an $11 million infusion in 2012.
There was no doubt the Enertia, and later the Empulse, were trendsetters with great speed, handling and reasonable range. The sticker price, ranging from $10,000 to $20,000, was offset by tax credits for awhile in the U.S. market. But Bramscher had much earlier discovered the potential demand for electric motorcycles as a form of basic transportation was far greater overseas than in North America, where it was considered more of a hobby bike.
Ultimately, Bramscher said Thursday, to push Brammo's motorcycles to the forefront was going to take far more marketing and distribution resources than the company could comfortably muster.
"Building a distribution network is capital intensive," Bramscher said. "We never planned to spend a lot of money to build a giant network. We kept trying to leverage (Polaris') network and size to get motorcycles into more dealers' hands and to people more quickly."
A second part of the growing equation, Bramscher said, was the steady drumbeat of potential customers wanting Brammo to develop power trains for their vehicles, something that could become far more profitable much sooner.
"I don't know the exact numbers, but it's in the hundreds, if not thousands, of vehicle manufacturers globally, from trams to ATVS, materials-handling machines to airport vehicles," he said. "They're all interested in drivetrains. We solved a very difficult problem with all of the new technology while we were developing a lightweight vehicle that was high performance. We'd be at a show and getting lots of requests for our technology — it was as strong or stronger than on the motorcycle side."
The demand, Bramscher said, is driven by the desire to convert petroleum-based motors and lead-acid electric batteries. As a result, Brammo's future is being propelled in a different direction, following demand for its lithium-ion electric drivetrain technology, battery packs and vehicle management systems.
"We're obviously in the right spot with lithium-ion costs going down, so we can help a lot of customers with it," he said. "We obviously had a challenge raising capital off and on, but we were successful in raising it. We hope to make the company more and more stable and more and more profitable. We want to be sustainable without outside capital and we're on the path to do that."
Four rounds of capital investment splintered ownership among several investors, Bramscher said. "A lot of people have over 10 percent interest."
Polaris remains a stakeholder in Brammo, along with other investors maintaining double-digit percent interest in the closely held firm. While Polaris takes on the task of recasting the role of the Enertia and Empulse later this year, Bramscher is preparing for the next chapter in the cavernous former Walmart store in Talent. A year ago, the company employed 60 people and Bramscher said the number could hover around that count or as much as double by year's end.
The planning for 2015 normally done before January was put on hold while Bramscher and his board worked out the Polaris deal.
"We were so busy closing this deal that we're still working out the details," Bramscher said.
Although the company is in discussion with 10 predominantly domestic, potential customers, Bramscher said four or five, in tandem with Polaris, would be plenty. Ironically, the potential is greater for additional engineers dealing with varied projects rather than more production help, which would mean higher average wages.
Although the drivetrain comprises more than 50 percent of motorcycles' worth, it takes about a fourth of the space to ship, also something in the company's favor.
"I'm more optimistic than I've ever been because Polaris can deliver a lot of motorcycles to the world and we can provide a lot of drivetrains to a lot of customers," Bramscher said. "Even though our path has changed, it's still accretive to where we are going."
Reach reporter Greg Stiles at 541-776-4463 or email@example.com. Follow him on Twitter at www.twitter.com/GregMTBusiness, on Facebook at https://www.facebook.com/greg.stiles.31, and read his blog at www.mailtribune.com/Economic Edge.