Lucas Oil Stadium and Manufacturers and Manufacturing & Technology and Sports Business

Lucas Oil launches high-end motorcycle biz in Indy

November 6, 2006

Little known in this market less than a year ago, Lucas Oil Products is roaring into town with its first brick-and-mortar operation, which will start cranking out product in early 2007.

Oddly, the locally manufactured product won't be oil. Lucas Oil Products founder Forrest Lucas has set up a sister company, Lucas Cycles, to make fancy, fuel-injected motorcycles developed as much as a promotional tool for his trademark oil lines as a profit center.

That doesn't mean Lucas doesn't have aggressive sales plans for his line of motorbikes. Lucas Cycles officials are currently working to complete research and development and set up a nationwide distributor network.

Lucas--a Hoosier native and former truck driver--cracked the local lexicon in March when his California-based company signed a 20-year, $121.5 million naming rights deal for the Indianapolis Colts' new stadium set to open in the fall of 2008.

The unveiling of Lucas Cycles has ratcheted up speculation that Lucas is considering moving his company--which has more than 200 employees and annual revenue north of $120 million--to central Indiana.

"We've talked to local officials, and we're considering it," Lucas said during a recent trip to central Indiana.

It's all about the oil

For now, Lucas is more focused on launching his local motorcycle division.

Lucas Cycles--like its parent company--is already proving to be an aggressive marketer. The prototype motorcycles are making the rounds to automotive and motorcycle dealer trade shows. Promotional deals have been inked to make bikes for the Colts and O'Reilly Auto Parts, among other corporate partners.

"This is part of the evolution of our oil business," Lucas said. "People like coollooking motorcycles. It's an image thing, and we think this will be a big part of our marketing."

Lucas started researching the motorcycle plan in early 2005 and has poured about $2 million into developing three models that will retail for about $35,000 each.

Lucas hopes to drive his company's newest product into dealerships nationwide during the first quarter of 2007 and expand that network to more than 100 dealers in 2008, by which time revenue should approach $3 million. Lucas Cycles officials hope to eventually have about 200 dealers and become profitable by 2009.

Lucas Cycles occupies 5,000 square feet of space and has four employees, but could add eight more in the coming year.

The launch of Lucas Cycles corresponds with Lucas' line of motorcycle oils, which hit the market this year. Naturally, any dealer that carries Lucas Cycles will be required to carry Lucas' line of oils.

"This is all about selling oil," Lucas said. "Everything we do is positioning us to be stronger in the consumer markets."

Lucas unabashedly admits he's going after industry giants such as Pennzoil and Valvoline. Selling motorcycles, Lucas said, is just one more tool to elevate his company's profile.

"If we break even selling motorcycles, and sell more oil because of this deal, that's fine by me," Lucas said.

Lucas Oil started by making oil for big-rig trucks, and later high-performance race cars. Lucas started mass marketing oil about three years ago, boasting that it lasts longer and performs better than mainstream brands. Lucas, who answers his own phone and is a hands-on marketer, began as a sponsor with the Colts two years ago to reach more oil-buying motorists. Lucas is also an active sponsor in NASCAR and the National Hot Rod Association drag racing circuit.

Risking the brand?

Lucas has his share of critics for putting his company's name on the new Colts stadium, and some motorcycle industry experts wonder if Lucas couldn't have found a better way to market his motorcycle oil.

"There's a big difference between building a promotional tool and going into the motorcycle business," said David Edwards, editor-in-chief of Cycle World magazine.

With more than 1 million new motorcycles sold in the United States annually, competition is fierce among large manufacturers, small boutique builders and custom chopper makers. The domestic motorcycle market, which is projected to be near $10 billion this year, is growing at a strong single-digit-percentage rate.

"There's no shortage of companies who have tried to get in this business and failed because they didn't have the support system to deal with warranties, liability, parts supplies and customer service," Edwards said. "If Lucas can relate their quality reputation to their motorcycle line, they could do well. If they don't maintain quality control, it could damage both lines of business."

But there's no denying Lucas' success to this point. Since founding Lucas Oil in 1989, revenue has grown to more than $120 million, industry experts said, and Lucas said his company is still growing 40 percent annually.

"People have questioned his tactics, and sometimes there seems to be a disconnect with what he does," said William Chipps, senior editor of Chicago-based IEG Sponsorship Report. "But he appears to know how to drive sales."

Locals in charge

Lucas is an interesting mix of seat-of-the-pants entrepreneur and calculating corporate captain.

Over lunch and a handshake less than two years ago, Lucas agreed to bankroll the Lucas Cycles operation. It is being led by James Crain, 40, a former automotive technician and motorcycle service shop operator, and his brother, Robert, 31, an engineer and master welder formerly employed by Roark Welding & Engineering Co. Inc., a Brownsburg-based firm specializing in titanium aeronautical parts.

James Crain said Lucas' folksy, down-to-earth style shouldn't be mistaken for lack of business savvy.

"He gives us control over the motorcycle operation, because that's where our expertise is," Crain said. "But he has an overarching plan and a vision for Lucas Cycles. Everything he does fits in with the growth of Lucas Oil."

Lucas' motorcycles have been a big hit at oil-related trade shows and point-of-purchase displays, Crain said.

"It can be tough to get a lot of people attracted to a bottle of oil," he said. "But they're drawn to a custom motorcycle. Once you get them drawn in, that opens the door for a conversation about all Lucas products."

Lucas motorcycles have custom elements such as paint jobs, but will generally be offered in one of three models to keep costs reasonable. James Crain, who formerly operated Indianapolis-based American Cycles East, is also pioneering a fuel-injected, computerized engine for Lucas Cycles that will meet new EPA emissions standards taking effect in 2008.

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