CRAIG SHOEMAKER ON THE STRUGGLES OF LEADING FLY & WPS THROUGH THE PANDEMIC
BY JOSH MOSIMAN
The COVID-19 pandemic created 15 straight months of challenges, hardships and loss for people all across the globe, decimating certain economies and industries while simultaneously rewarding others. The powersports industry has been among the fortunate, as it experienced a huge boost in sales as families searched for new ways to have fun together. The influx of riders has overwhelmed the motorcycle dealerships, parts distributors, and hard-part and soft-part manufacturers with the blessings and challenges that come when orders are dramatically increased. Western Power Sports (WPS), a major distributor since 1960 and the owner of Fly Racing gear since 1998, is run by Craig Shoemaker, who, after working there for 15 years, bought the company in 2000. In all of his 35 years of experience at WPS, the COVID-19 pandemic has provided the greatest challenges but also the greatest opportunities for growth. We spoke with Craig to learn how Fly Racing and WPS have adapted to the current landscape of our industry in the midst of uncertain times.
WHEN COVID-19 HIT IN MARCH OF 2020, HOW LONG DID IT TAKE BEFORE SALES CAME BACK? For the last two weeks of March and the first two weeks of April, it was kind of like 9/11 when everyone stood around and watched their TVs. When this hit, everybody just hunkered down and panicked. I was actually surprised the first three or four weeks that it dropped as much as it did. As we got into week four, everything started to come back a little bit, and then by week five it was like, hang on, and it hasn’t let up since.
“FOR THE LAST TWO WEEKS OF MARCH AND THE FIRST TWO WEEKS OF APRIL, IT WAS KIND OF LIKE 9/11 WHEN EVERYONE STOOD AROUND AND WATCHED THEIR TVS. WHEN THIS HIT, EVERYBODY JUST HUNKERED DOWN AND PANICKED.”
WHY DO YOU THINK OUR INDUSTRY HAS BEEN SO HEALTHY DURING THIS TIME? It’s typical of our exciting industry that when times are hard, our industry, especially the aftermarket parts side of it, tends to flourish, because even if people aren’t buying new bikes, they want to fix up their old bikes. Then, when the time is good and they want to buy new units, they sell the old units and someone else gets a good deal, so they gotta fix it up. And when something is new, you usually use it more often, so you wear stuff out faster and you’ve got to replace stuff faster. So, we kind of come out ahead either way, because WPS isn’t selling units; we’re selling parts for new or old units. We usually have a little drop, but we come out okay in the long run. This time it was a little scary. In my 35 years of doing this, I hadn’t experienced a drop that hard, that quick. We actually didn’t stop buying; we just were careful. And within 30 days, I had to tell everyone to buy hard because I didn’t think it would shut down again for four or five months. Obviously, I was wrong, because it’s still going strong over a year later.“
“I HAD TO TELL EVERYONE TO BUY HARD BECAUSE I DIDN’T THINK IT WOULD SHUT DOWN AGAIN FOR FOUR OR FIVE MONTHS.
OBVIOUSLY, I WAS WRONG, BECAUSE IT’S STILL GOING STRONG OVER A YEAR LATER.”
HOW OPTIMISTIC ARE YOU ABOUT THE FUTURE OF OUR INDUSTRY? It’s super exciting, because our industry has gotten a 30-year kick in the butt, and it’s up to us to see how long that 30-year kick lasts. The pie of riders buying bikes/UTVs/ATVs and parts has slowly shrunk over the years since the 1990s; now it has gone back to the good times and replaced itself. For every one of those people who spent $25,000 to $100,000, and some people way more, one of them is going to use the bike three times and never touch it again. But after that thing sits in the garage for two years, it’s going to come back on the market, sell for cheap, provide great value for the next rider and keep the ball rolling. Now, it all depends on our OEMs. If they can supply units, we will see what 2022 is going to look like. With so many new players, our industry is now set going through the 2020s—meaning that for the next 10 years, it’s our job now to keep it healthy and keep it going. In my opinion, it’s going to go well, and I’ll probably be long retired before our industry goes back to the way it was in 2019.
WHAT CAN THE INDUSTRY DO TO RETAIN THE NEW RIDERS WE’VE GAINED? The real long-term potential is in retaining the families that we have gained over this last year. We have to understand that this is a family sport, and we need to have affordable toys for families. They can’t all be the rocket ships that us industry people love and that 80 percent of our customers think are too loud, too powerful, too scary and too expensive. We need to bring that entry-level person in and keep them in the market by making sure they’re having fun, rather than them saying, “Wow, that’s a lot of money, and my wife doesn’t ever want to go again because it’s too powerful and I scared her.”
WHAT IS THE KEY TO PROMOTING THE FAMILY SIDE OF OUR INDUSTRY? We have all put someone on a 250 or 450 before and taught them what the clutch was and where the throttle was, and then they scared themselves and didn’t want to ride again. But, if we have something that they can work their way up to, and then, after they improve and they want more, we have that, too. The honest truth is, mom needs to be happy. And mom is saying‚ “I have to pay $8000 for a bike for my 9-year-old. What’s that all about?” We need to make sure we can keep the new group interested by making sure there is stuff that is available for them to ride and grow with over the next five years.
WHAT DO YOU THINK ABOUT THE GROWTH OF ELECTRIC BIKES? The OEMs are bringing in more electric stuff, and that’s good. That’s just going to be a way of life. In another seven or eight years, if manufacturers don’t have any electric stuff, they’re going to lose customers because we’re going to have these young people who are going to be so tied to that side of the fence that they may say, “C’mon, I have an electric bicycle, an electric car, an electric toothbrush, why can’t I have an electric motorcycle?” In the next 10 years, things are going to change. It’s going to be like everything else. There is still going to be that guy who likes muscle cars and will never buy an electric car, but if we want to be smart, we’ve got to play to everybody.
DO YOU LIKE THE IDEA OF ELECTRIC DIRT BIKES? Personally, electric bikes don’t excite me. But as a business person, I know if I don’t pay attention to it, five years from now we’re going to be behind the curve. Just watch, it’ll be a few years of electric bikes inching along and then it’s going to boom. Everybody is working on an electric bike, whether they’re saying they are or aren’t; they’re at least thinking about it and might already have it in the process. Right now, there’s nothing for us to do. We are the “after” in aftermarket. After they come up with something, we find a way to make it better or cooler. It’s kind of in the OEMs’ hands now, and for us as an aftermarket group, we’ll fill in the holes as they come.
“EVERYTHING SPED UP IN SALES: TIRES, SPARK PLUGS, BATTERIES, OIL FILTERS. OF COURSE, WE SOLD A CRAZY NUMBER OF MASKS, TOO…ANYTHING YOU CAN PUT OVER YOUR FACE TO KEEP THE DUST OUT OR WHATEVER.”
WAS THERE A CERTAIN SIDE OF YOUR BUSINESS THAT TOOK OFF FIRST IN APRIL OF 2020? Business in general just woke back up across the board, because the dealers realized they had twice as many customers coming in to buy new stuff and fix their old stuff. They were selling units and needed new stuff to wear with it. Some of the stuff that we sold off the hook about six to eight weeks into the pandemic was for brand-new riders. Nobody could keep new helmets in stock. Nobody could really keep gear in stock. Some of that is stuff we have to buy way in advance. Everything sped up in sales: tires, spark plugs, batteries, oil filters. Of course, we sold a crazy number of masks, too…anything you can put over your face to keep the dust out or whatever. We sold 10 years’ worth of masks in 30 days, and the manufacturers obviously couldn’t keep up anymore. It just kind of all went up…street, off-road, UTV and ATV.
WAS IT DIFFICULT TO MANAGE DEALERSHIPS ACROSS THE COUNTRY WITH VARYING RESTRICTIONS? In the early days, we did a lot of political coaching with our sales reps so they could coach their dealers and let them know that they could be open. It amazed me that there would be one guy who would be open and doing 40 percent more business, while the guy on the other side of town was shut because they were told to be shut. We helped them realize that they were essential businesses and gave them the paperwork showing them they had the ability to stay open. Some states, obviously, were slower to open. And to be honest, thank goodness, because it allowed us to survive. If every state would have woken up at the same time, it would’ve been tough to manage. All of the areas that bordered states that were closed actually benefited. It was the craziest thing; when one governor kept his state shutdown, his people would leave and spend their money out of state.
WAS IT DIFFICULT TO KEEP YOUR WAREHOUSES OPEN? We were able to keep them open because we were essential. Three of our seven warehouses actually were in areas where everything had to be shut down, so we had to give all of our employees letters, and occasionally they would get stopped or get questioned and they would show them the letter and explain that they were going to work. Not only did we never shut down, we were working six and seven days a week to try to keep up.
HOW ARE SALES GOING FOR YOUR DEALERS OVER A YEAR AFTER THE ORIGINAL SHUTDOWN? Luckily, most dealerships in the Powersports industry are open. Our dealers in California say that everything they lost by being shut down for 60 or 90 days, they’ve made back plus some. The dealers who never really shut down did better, because they were the ones selling units while other dealers were closed.
“EVERYONE LOOKS AT WPS AND SAYS, ‘WOW, YOU MUST HAVE KILLED IT‚‘ AND WE ACTUALLY DID ‘KILL IT.’ BUT, AT THE END OF THE DAY, WE SPENT THREE TIMES MORE MONEY KILLING IT BECAUSE I HAD TO PAY THROUGH THE ROOF IN OVERTIME PAY.”
WPS MUST’VE DONE WELL STAYING OPEN. Everyone looks at WPS and says, “Wow, you must have killed it‚“ and we actually did “kill it.” But, at the end of the day, we spent three times more money killing it because I had to pay through the roof in overtime pay. I had to hire new people during COVID to work and to be inefficient because we were all wearing masks and we were all trying to socially distance. We were all spread out and working different hours so we would have fewer people in the building at a time. Plus, we have lots of new people, so we had to train them, and they were running at 50 to 60 percent efficiency. Shipping costs went through the roof, too, because now your warehouses gets drained due to the tremendous amount of growth and slow amount of inbound from the manufacturers.
WHY IS IT SO DIFFICULT FOR EVERYONE TO GET PRODUCT? It’s the shipping containers. We have product that’s been sitting on a boat at the dock for six to eight weeks, and the manufacturer has to slow down because they can’t keep producing and holding inventory. And that’s not just us; that’s across the board with every company. And you know who’s paying for that? The consumer. Why? Because we’re paying three times more for a container now than we were a year ago. Supply and demand are high, and the cost of freight has skyrocketed. It used to take eight or nine days for a boat to come across the ocean, and then you would unload it after two or three days and it headed back. Now, the boat comes across the ocean and sits there for three weeks just to get unloaded.
WHAT WAS THE MAIN REASON FOR STARTING FLY RACING IN 1998? The reality was, we started to grow, and the other distributors were players that had their own clothing companies, so they held the trump card in their own hands. We didn’t have any control over the gear we were selling for other people, and we would find out that we were getting beat up out the back door by our suppliers, because they also sold it. After a while, it got old. We had other people wanting us to make gear for them, even distributors in other countries. So, we started small, just as a way to protect ourselves and help our friends in the industry outside of the U.S. It was a snowball once things got started. Fly is here 23 years later, and it’s a party.
IF FLY RACING DOESN’T SELL DIRECTLY TO CUSTOMERS, ONLY THROUGH DEALERS, WHY SPEND MONEY ON ADVERTISEMENTS AT SUPERCROSS? Our job at Fly is to create a demand so when a dealer has Fly, they can sell it. The dealer’s job is to have gear so when a consumer walks in, they can buy it. If you have something in the category that the customer wants, and the salesman knows how to talk about it, a lot of people will buy that. And then you have a smaller portion of customers who are like, “No, I know what I want and that’s all I want.” We understand that the brick and mortars can’t have everything, but it’s our job to create that demand. We’ve had dealers tell us, “I have to carry your brand now. I’ve had these other four brands in here for years, but people walk in and ask for Fly. And I don’t have room for every brand, so I have to kick something else out of my showroom.” It’s kind of fun when they say they have to have it.
HOW COME YOU ALSO ADVERTISE THE WPS BRAND IF IT’S A DISTRIBUTOR, NOT A TANGIBLE PRODUCT? Three or four years ago, when we were negotiating the deal with Supercross, I still felt that there were enough people who didn’t give Western Power Sports (WPS) a legitimate nod as being a competitive large distributor. Every dealer in the last 10 years that has come into our headquarters, verbatim would say, “I had no idea you guys were this big.” Through the years, it frustrated me a little bit. We are a conservative, humble company. I always told our guys, “We don’t have to be the biggest, just be the best.” Well, after a while, you start realizing that sometimes you do have to puff up your chest a little bit; otherwise, everybody thinks you are the little brother until they meet you and go, “Oh my gosh, you’re way bigger in real life than I thought you were over the phone.” That was part of the reason we did Supercross and threw WPS branding on half of it. I think it worked. We are the second largest distributor in the industry, and when we show up to the races with 300 feet worth of trucks, it opens people’s eyes.
HAS SUPERCROSS DONE ANYTHING TO COMPENSATE YOU FOR THE MONEY YOU SPENT SINCE COVID HAS LIMITED SPECTATORS? There are a lot of companies that bailed. I’m not saying we’re super excited about it, but we didn’t get any discount. They tried to throw us a couple bones, like giving us extra tickets for people who can’t come. What good does that do? They’ll try to throw in an extra commercials or something, but the end result is that there was no negotiation. They’re getting killed, too, except getting killed worse. I look at it as an investment in our industry, even though we didn’t get nearly as much love in the pits the last two years. We didn’t take as many staff to the events; we took two trucks instead of three. It saved about $20,000 a weekend, because we could be at three races without having to move our setup. There were some savings, but nobody was at the races. There were some places where they had it so locked down…it was tough. But our job as a society is to say, “Let’s get through this together so we can all wake up tomorrow and keep going.” We’re looking at the long-term.
WHAT ARE OTHER WAYS YOU’VE GAINED RESPECT FROM PEOPLE, BESIDES SUPERCROSS? People really gain respect when they come to visit our headquarters. They come here expecting to see a 50,000 square-foot operation and 60 employees, but they say, “Oh my gosh, you have 350 employees in Boise. Your parking lot holds 500 cars. You’re on 40 acres. You are 365,000 square feet and four stories tall, with a full-on motocross track on your property. I had no idea.” It’s like being away from someone you haven’t seen in a while. Even with my employees, if I know their kids and haven’t seen them in a few years, I still remember them like they are babies. I think that’s how it is for us. Everybody thinks we’re still 7 and 8 years old, and we say, “No, we’re like 15 now, 6-foot-2, and next year I’m going to have peach fuzz on my face. But, you still think I’m seven years old because that’s what is in your mind.”
“THERE WERE SOME SAVINGS, BUT NOBODY WAS AT THE RACES. THERE WERE SOME PLACES WHERE THEY HAD IT SO LOCKED DOWN…IT WAS TOUGH. BUT OUR JOB AS A SOCIETY IS TO SAY, ‘LET’S GET THROUGH THIS TOGETHER SO WE CAN ALL WAKE UP
TOMORROW AND KEEP GOING.’ WE’RE LOOKING AT THE LONG-TERM.”
WESTON PEICK HAS MOVED TO BOISE TO WORK WITH FLY. HOW HAS THAT BEEN? We’ve been with Weston for a long time, and he’s come to Boise a lot of times for gear launches or sales meetings. A lot of our athletes are good at coming up with concepts and developing products. Even Trey Canard still wears our gear when he’s testing for Honda, and he’s coming up here next month. Weston is still super fast on a bike, but he doesn’t have the peripheral vision he needs to race, and you have to be able to see what’s going on out of the corner of your eye at that level. He just moved here officially. He’s an ambassador for us and is developing cool things for Fly Racing and for Hard Drive, our street bike division, because he likes both markets. I think he’s trying to show that he can make a living being a developer/designer and an ambassador/sales person, and we’re happy to have him and figure out what his next steps are.
“THE DEALER HAS TO PUT STUFF ON BACKORDER SO HE CAN MAYBE GET WHAT HE WANTS. WE’RE GOING TO BE BATTLING THIS ALL SUMMER AND ALL FALL. GOING INTO THE WINTER, I THINK WE’LL START TO CATCH UP.”
WHAT DOES THE CURRENT LANDSCAPE LOOK LIKE FOR WPS AND FLY? We have more product on order than ever before. We have more product showing up every day than ever before. It shows up and goes out the door. Some dealers haven’t figured it out yet, and they want to wait until the new model comes out to buy parts for it. But, the consumer has to put bikes on order now if he wants a new bike in the next 90 to 120 days. The dealer has to put stuff on backorder so he can maybe get what he wants in an acceptable amount of time. We’re going to be battling this all summer and all fall. Going into the winter, I think we’ll start to catch up. But, it’s really not up to us. We order and we’re shipping, and the dealers are good, but the fact is that the whole world is behind right now in manufacturing, and because of that, the costs are going through the roof. A single item that we sell has freight marked up on it five times before it comes to us. Last June I thought things would slow down in January of 2021. I just didn’t realize I missed it by a year.