Friday, June 10, 2011

Malaguti Italy still needs a buyer, any investors ready to take on a luxury brand?

I saw a Malaguti F-15 this morning on the way to work. It was a Ducati edition scooter so obviously the guy in Coral Gables Florida who owns this got it at the old Ducati Miami at $3999 a pop it wasn't for the average 50cc rider, this was a gift for someone who wanted luxury and to smoke an SR 50 at the track.

That's the thing that get's me under the right management with lower production these companies can survive. You can't compete with Asia in the low cost, high production category. Not only that we all known in the industry that every manufacturer in China gets a kickback for bringing in dollars. So how can any Italian company compete? They can't. They are under the false illusion that selling a couple of hundred Ferrari's and a few Ducati's each year will make up for the thousands of jobs they have lost in shoes, apparel, and in all the imitation Prada you see Tunisians selling on the streets of Milan that say Made in China on the back.

However, you can compete by making low production, high margin, quality goods. This is the Ferrari trick. Yes, they license the name to anyone so does Coke and Pepsi that's how you make some revenue, but the main good is still a quality good. That's the value of brands like Malaguti. They can be luxury goods. 

What is needed here is a management team and buyers who have an excellent track record in buying low-performing businesses with sales between 50-250m Euros. Someone who can get rid of the agreements with the Unions and bring in some cash.

The sad thing is that after months of ups and downs there is still no buyer. Rumors are circulating that the factory will come back with a Chinese partner who is buying the molds. Who knows.

It's pretty clear the politicians in Italy are useless. One by one they are letting the companies fail on their watch as the Asian brands take over. Next thing you know they will loose the pasta trade as well, oh geez they probably already did.

I imagine this how Michael Moore felt in the 1980s as Detroit just started moving jobs to Mexico, later on they would kill the electric car only to spend millions saying how green they are 20 years later. This is the state of Italian Motorcycling. They stood there and didn't bother adapting and now they are overcompensating. Parts companies are scrambling to sell to the public, screwing over US distributors, and running to catch up to Asian brands. It's sad, but it will be even harder if they don't keep the manufacturers in town.

The incentives are there. A good US luxury brand management company could come in, scoop up Malaguti, get those incentives, and turnaround the firm for next to nothing. If they could get past the red tape.

That and the fact that half the workers work less than 20 hours a week now.  
Maybe Mr Parrini will wake up and push this.

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