Some of the biggest names in motorcycling, all-terrain vehicles, snowmobiles, construction and agricultural equipment and even bicycling are all known for speed and handling.
But their products all have something else in common – the need to stop.
That’s where Mequon-based HP Performance Systems comes in. The company makes braking and suspension systems used by industry leaders like Harley-Davidson Inc., Bombardier Recreational Products, Caterpillar, and high end European bicycle manufacturers such as Decathlon.
“We are a braking and suspension supplier in the non-automotive market,” said Rand McNally, president and CEO. “We make brakes for everything from the smallest zero turn radius lawnmower all the way up to large Caterpillar tractors, backhoes and sprayers.”
From its Mequon headquarters and main manufacturing facility, HB makes brakes for motorcycles, ATVs, utility vehicles, snowmobiles, construction and agricultural equipment, and related markets. The company also operates a 100,000-square-foot facility in Milwaukee where it makes bicycle spokes, wheels and rims.
HB also has several facilities in Hong Kong that make high end disc brakes, suspension systems, handlebars, seats, seat posts, pedals and other components.
“We have a mountain bike focus, more on the premium segments. We have about 250 OEM bicycle manufacturers that we deal with,” McNally said. “These typically cost about $1,000 and up for the whole bike. We’re known much more internationally (for our bike components). We’re very dominant in Europe.”
HB employs about 350 in its 200,000-square-foot headquarters and main manufacturing facility in Mequon, where it makes brakes for its power sports, construction, agricultural and bicycle markets. The company’s Milwaukee bicycle manufacturing and warehouse facility has about 30 workers. HB makes spokes and assembles rims and wheels in Milwaukee, while the facility distributes its bicycle-related products to North America.
HB’s bicycle suspension systems, seats, handlebars, cranks and other products are made in Taiwan. The company has 50 employees in its sourcing office there and the company also has three contract manufacturers that work for it there.
HB also has its own bicycle rim manufacturing facility in China.
“We have our own bricks and mortar, balanced with the right expertise in contract manufacturing,” McNally said.
The majority of HB Performance Systems is owned by Providence, R.I.-based Nautic Partners LLC, a private equity group. McNally and several other top executives own a minority share.
The company had about $125 million in sales in 2008, but because of the global slowdown in sales of motorcycle, ATV, construction and other power vehicles, HB’s sales slumped last year, McNally said.
“Everybody was hit,” he said. “We were marginally profitable last year, but not as profitable as we’d like to be.”
During 2009, HB Performance Systems laid off about 150 of its manufacturing and more than 45 salaried employees. Many of those employees have come back to work now, but 15 percent salary reductions that McNally implemented on all of the company’s workers will remain in place until the company’s margins improve, he said.
“We’ve only lost two people (in the recession),” McNally said. “That’s how dedicated our people are. And I’ll take care of them when I can.”
The company is confident about its long-term prospects, largely because of the steady demand for bicycle components and increased demand for construction and ATV components. Although Harley-Davidson projects lower sales levels for the year, the motorcycle market still has some bright spots, McNally said.
“Harley has had a terribly rough year, but they’ll still sell 200,000 motorcycles,” he said. “And Bombardier’s Spyder sales will be up this year. Everybody went down quite a bit (in the recession), but we took business from people in the down time.”
HB Performance Systems is now transforming itself from a braking and suspension systems company into an advanced braking technology company, McNally said, largely through its continued research and development efforts. The company is now working to develop new braking systems for military vehicles, and is looking to develop systems for the wind power and energy exploration markets.
“We’re testing with most of the military (suppliers) now,” McNally said. “With the windmills, if the shaft snaps and you don’t stop it within two seconds, it can be very dangerous. The same is true in the oil fields – if something breaks, you need to stop and hold it.”