Castiglioni interview: SPRs, F4 Milles, and F4 600cc.......greenspun.com : LUSENET : MV Agusta F4 : One Thread
This was taken right from MV Agusta's website:
CLAUDIO CASTIGLIONI SPEAKS AT LAST: MV Agusta - The Future
Interview by Alan Cathcart courtesy of Cycle New Magazine
Claudio Castiglioni has reason to be relieved. The 56-year old owner of MV Agusta Motorcycles - the company formerly known as Cagiva, embracing also the Husqvarna off-road marque - has succeeded in rescuing his company from the last chance saloon, after the collapse of its proposed merger with Piaggio that was inaugurated as long ago as July 2001, with Piaggio acquiring 20% of the MV Agusta share capital prior to a proposed full union of the two companies.
But for the past year, MV's 600-man workforce at its three different factories located in and around the company's Northern Italian base at Varese, has been essentially laid off, with only sporadic production of its back-ordered four-cylinder F4 and Husqvarna dirtbike models, as Castiglioni fought to prevent his company sinking under by unwrangling it from the substantially more heavily indebted Piaggio Group, which transpired to be suffering mightily in the wake of the worldwide decline in scooter sales, and the intense competition from Far Eastern rivals in a price-driven market. But, after the collapse of the 18 month-long negotiations with Piaggio, and with MV itself heavily in the red, Castiglioni finally signed an agreement on January 10 with the Banca Intesa merchant bank holding the majority of his firm's accumulated debt, calling for a cash injection to underwrite the restart of MV production, and thus ensure MV Agusta's continued existence. Such a move was made possible by the company's successful application to enter into 'amministrazione controllata', the Italian equivalent of US Chapter 11 bankruptcy (the same as United Airlines is currently undergoing). This was approved by Varese bankruptcy judge Marco Lualdi last November, after determining that the backlog of orders for MV's products, the quality of those products, the historic significance of the marque, the interests of its workforce, and Castiglioni's projected business plan for regaining profitability, all justified the company being handed a lifeline in order to try to trade its way out of insolvency.
The chance to learn more about the deal, and MV Agusta's future, from Claudio Castiglioni himself came by calling on him at MV's lakeside Schiranna factory below Varese, where the constant flow of trucks and workers across the factory yard outside his office window, which on a recent previous visit had been deathly quiet, underlined its more immediate benefits.
AC: Claudio, during the past two years MV Agusta has experienced the most difficult period in its long history. How did this happen, and what is the company's future in the wake of the collapse of its merger with Piaggio? Does it have one?
CC: Emphatically, yes - it does, although there have been moments in the past year when even I began to doubt this would be so. But this situation came about through the actions of other people, leaving us in an impossible position we have only now succeeded in resolving. Since it's not my policy to criticise others through the medium of an interview, even with someone like yourself who is such a close observer of the Italian motorcycle industry, let's just turn the page and look to the future.
AC: OK, but to be quite blunt, how can a potential customer for one of your products have any confidence in the company's future existence? How does he know the same thing won't happen again, and he'll be left stranded with no parts backup, no after-sales support?
CC: Alan, you know better than anyone that I've given my whole life to motorcycles. My brother and I rescued Ducati from the ashes, only days before it was due to be closed for ever. We turned it around, developed a range of new models which repeatedly won World Championships, and brought the fruits of that success to the customer. We also created Cagiva as our commercially successful family marque, and achieved further competition success at the highest level, as the only European company to compete with and defeat the Japanese in 500cc Grand Prix racing. After we left Ducati, we produced other bikes bearing the MV Agusta badge which the market has confirmed as extremely desirable, and which I certainly consider important milestones in the development of motorcycle design.
However, it is really apparent that the same process of consolidation which is taking place in the car world will also occur in bikes - just look at Suzuki and Kawasaki, for instance. To reduce costs and remain competitive, it's necessary to explore joint ventures with other companies - and that's what we did with Piaggio, in order to create a true fifth force in world motorcycling. This would have been the only manufacturer outside Japan producing scooters, dirtbikes, minibikes and every kind of full-sized motorcycle, especially sportbikes - a complete range of models bearing the names of glorious marques, each at the highest level in their respective categories. We had zero crossover, zero competition between us in any model sector - product-wise, it was a perfect marriage.
But for reasons which even now I don't fully understand, but which were entirely due to the other side, this did not work out. The result was a disaster for MV Agusta in that, while we were waiting for it NOT to happen, our production declined and we were unable to satisfy the thousands of firm orders we already then had, and still have, from all round the world for our products. It's the most frustrating situation I've ever been in, and now it will be up to the courts to decide who's responsible for that - and the one who was at fault, will have to pay for it. I will admit that I made an apparent mistake in ever believing such a marriage could take place with the people I was dealing with, but with one important consideration. I have all along behaved in a completely honest, positive way, and my business dealings were conducted from first to last in a serious, correct manner. It seems that was my mistake.
AC: You mentioned the courts. So you're going to sue Piaggio?
CC: We've already begun litigation against them - the court proceedings commenced on August 28, 2002. We've presented a claim for Euro 120 million in damages against Piaggio (about £80 million/$125 million - AC) which is currently pending a hearing, and when that takes place, it'll be up to the judge to decide who was right, and who was wrong. The damage done to our company was both brutal, and considerable: we had a range of new models ready to enter production, which had been launched to rapturous acclaim from both press and public, and for which we had many orders which remain unfulfilled. What the other side did to us was very untimely, and extremely damaging. We intend to gain full compensation for that, given that we had a signed contract as the basis for our merger.
AC: But, from your point of view, what prevented Piaggio completing the deal?
CC: Alan, because of the pending court case, I don't want to go into any more details about matters which are sub judice. But I will repeat again - I conducted myself in a completely open and honest way, but evidently trusting too much in the good faith of the other parties. I've died a death watching MV Agusta languish and falter as a consequence of that - the company which not only I but others too consider to have the most innovative ideas and most exciting products of any Italian manufacturer, bearing historic names which nobody else can rival. But now, we have the worst behind us, and are on the way back.
AC: On what basis is the company now structured - and, to go back to my original question, what confidence can a customer have in MV Agusta's continued existence?
CC: We presented a business plan to Banca Intesa, which is the bank which held the majority of the debt of both Piaggio and ourselves, and they have not only approved it, but also supported it by underwriting the capital needed for our return to profitability. We have restructured the operation of the company under our new CEO Paolo Donghi, who has already proven his worth in this type of situation (Donghi previously ran Moto Guzzi for De Tomaso during the 1980s, then worked for Cagiva in the Czech Republic, managing its ultimately abortive investment in CZ - AC). Furthermore, MV Agusta Motorcycles SpA has been restructured financially under the supervision and with the support of Banca Intesa, which has also brought in extremely significant outside investors of good standing in the Italian business community, whom they have recommended to become involved in relaunching the company. I am sincerely happy with this situation, not only for the obvious reason that it has permitted us to restart manufacture, but also because it brings to the company a level of expertise in the management of its affairs which I will admit it never had before.
AC: If it's true that both MV Agusta and Piaggio owed signficant debt to the same bank, Banca Intesa, why do you think it is that they have so far only decided to help bale you out, and not Piaggio?
CC: It's because MV Agusta has a line of products which people want to buy, and for which after almost two years of sporadic production caused by this situation, we still have thousands of firm orders. The bank has examined our affairs and concluded, rightly, that we can trade our way out of the difficulties we have been placed in, whereas for a company like Piaggio which is essentially a scooter specialist, it will be much more difficult. The scooter market is in continuous decline because of saturation, and will go still lower, and they have no motorcycle products which they can depend on to redress this. That's why they needed us. Look, Alan, the worldwide bike market isn't exactly booming, but at least it's flatlining and not in free fall, as scooters are. We manufacture a luxury product - even Husqvarna is just that, because nobody needs to buy a dirtbike to go to work on, in the same way they buy a scooter as a utilitarian means of transport. MV Agusta is the Ferrari of two wheels, Cagiva just one step lower - and the market for these products continues to remain firm, especially when they're as unique and desirable as ours. That's why our company has a strong potential - and that's what Banca Intesa has recognized.
AC: Is the bank now a shareholder in MV Agusta as part of the recovery programme?
CC: No, the company is again 100% owned by me and my family (therefore, by inference, no longer with Piaggio holding a 20% shareholding as part of the now scrapped merger plans - AC). The bank has invested Euro 25 million in cash (about £16 million/$26 million - AC) for a minimum 4-5 year period, which will guarantee our return to profitability. For this reason, our future customers may have every faith in our ability to support them with after-sales service and spare parts backup.
AC: But if MV Agusta is presently in a state of 'amministrazione controllata ', who's really running the company - you, or the bankruptcy courts?
CC: I am - together with Paolo Donghi and my son Giovanni, who has just returned home after spending four years in London majoring in Business Economics at the European Business School, during which time he gained hands-on experience in merchant banking. He's a very big bonus to have around, because he's much cooler and less impulsive than me, which obviously comes from all the time he's spent in England lately! I'm too much in love with motorcycles, Alan - if I had 600 million euros, I'd spend them in no time on something fantastic and exciting to do with two wheels, but Giovanni 's much steadier, less impulsive, and having him working alongside me will be a great asset for our business. The system of 'amministrazione controllata' allows for existing debts to be frozen for a period of up to two years, which in our case entails between 70 and 80 million euros (£45-50 million/$77-83 million - AC), which we anticipate being able to earn quite comfortably through sales of our products. The bank agrees, which is why they are underwriting our operation. But to monitor this, we have three court-appointed officials who for the next three years will keep an eye on the way we are running things, by visiting us every fifteen days or so to check everything is in order. However, they have no administrative function, only a supervisory one - their job is just to make sure we are observing the terms of our agreement with the court, then at the end of the five-year period when all the debts as paid off and the company is operating normally again - arrividerci! In the meantime, we are still running the company, as before.
I have to stress that our business plan is a very conservative one, erring if anything on the side of caution. For example, in it we have projected the manufacture of 1700 Brutales this calendar year - but we could sell double that number in Italy alone, without taking into account export sales. But we preferred to rebuild our operation on a firm basis, without gearing up too fast. However, the potential is there for serious growth.
AC: Is it true that, in the wake of the collapse of the Piaggio deal, you received offers from other motorcycle companies to purchase either the entire MV Agusta group, or Husqvarna alone? It's rumoured especially that Ducati made you an offer for Husqvarna, to give them the dirtbike brand they badly lack?
CC: That's not true - they didn't. And neither did TPG, if that was your next question!
AC: How many assembly line workers have you been able to retain during the past two years of stop-and-go production? It must have been hard to hold on to a skilled workforce under such conditions, where layoffs became almost an everyday occurence?
CC: While it's true that we did lose some personnel, we've managed to hold on to the overwhelming majority of them, and I sincerely appreciate the personal loyalty they've demonstrated by remaining faithful to our company. At present we have 370 employees, but we'll be hiring another 120 before the end of this year, then another 200 more during 2004 as we gradually build up again to full production. We'll end up with a total workforce of just under 700 people once we're working normally, at full pitch.
AC: Let's turn now to the future. When do you plan to restart production?
CC: We already recommenced manufacture of Husqvarna two-strokes at the end of January, followed by 680 more bikes, mainly four-strokes, in February. Because the off-road market is more immediate at this time of year, we are focusing to begin with on these models, and will manufacture a total of 15,000 Husqvarnas in 2003, including 1000 examples of a Centenario model to commemorate the marque's 100th birthday this year. But we restarted MV Agusta production on February 14 with the first of 3800 bikes we will construct by the end of December - including the Brutale Serie d'Oro, which will enter manufacture in March. That's when we will also restart building the Cagiva Raptor and Navigator, up to a total of 4900 bikes of all types bearing the Cagiva badge, for 2003. We aim to manufacture a total of just under 24,000 motorcycles this calendar year, for all of which we have firm orders from our dealers and importers around the world, so that they are effectively pre-sold before leaving the assembly line. This will provide us with the basis for further expansion in 2004.
AC: When will the 'normale' Brutale enter production - and how much will it cost?
CC: We will begin manufacturing it in April, and the projected list price here in Italy is Euro 14,000 (about £9,000/$14,000 - AC), plus OTR charges. But we have a problem here: we have firm orders from around the world for more than 6000 examples of the Brutale S, but this year we can only produce 1700 units. I know this is going to cause disappointment and frustration, but it's the best we can do under the strict financial budget we're operating under, and which we intend to follow to the letter. Although we could sell our entire production here in Italy, we're going to make sure that all our importers are fairly treated in this respect - we will sell 25% of our annual production here in Italy, with 75% exported and a special emphasis on the American market, which we intend to support to our maximum potential, working through our importers, the Ferracci family (as in Eraldo Ferracci, the Ducati Superbike tuning guru, and his son Larry - AC).
AC: How about going to a double-shift system at your Cassinetta factory to ramp up production with your existing facilities?
CC: No, we won't be doing that on the assembly line, only on the engine manufacturing plant here at Schiranna. However, in 2004 we anticipate being able to increase production substantially, in light of the extra workers our business plan will allow us to hire.
AC: Let's examine the future of your three marques in turn, starting with Husqvarna. The recent loss of its chief development engineer Ing. Macchi and his entire R&D team, who are now working on Aprilia's forthcoming off-road range, casts a shadow over your ability to maintain the continued excellence of Husqvarna products. What's your response to that?
CC: Every cloud has a silver lining - in this sense. I have personally made it my policy never to poach technicians or designers away from rival companies, which is why we have such a loyal workforce here, who respect that we are a family which lives together through good times and bad, and that they may count on my support to see them through. To find out the hard way that one branch of this family no longer believes in such loyalty is sad, but a relief - especially as we have been able to immediately replace Macchi with an engineer of the calibre of Ing.Romano Albesiano, whose track record speaks for itself (designer of the later race-winning Cagiva 500 GP bikes, then development engineer for the Raptor family - AC). He is already bringing fresh ideas to Husqvarna's technical development which will revitalise the range of products we offer to our customers, because it's true that Husqvarna has marked time during the past year or so - even though nevertheless we won three Riders' World Championships in 2002, and four World Manufacturers' titles! But the renewed vigour which now characterizes our company will ensure than, in the next three years, Husqvarna will achieve great things on the world stage. This is a personal promise from me, Claudio Castiglioni - after what I've personally gone through the past two years, the rebirth of our company has given me and our other key employees an incredible motivation. Wait and see!
AC: You mentioned earlier that 2003 is Husqvarna's 100th birthday - a fact many have overlooked in the midst of all the PR spin about Harley-Davidson's centenary, which they even started celebrating one year early! What are you doing to commemorate Husqvarna's century of existence in its 100th birthday year?
CC: In fact, we have two milestone anniversaries to celebrate this year - Husqvarna's 100th, which commemorates an incredible blend of street and off-road production, dirtbike and Grand Prix road racing - and Cagiva's 25th birthday, which acknowledges an exactly similar history, but in one-quarter of the time span. For Husqvarna, we are planning a series of parties at the end of the summer in different countries - these are not road bikes, which we can expect our customers to ride to the factory here in Varese for one big commemoration! - which will celebrate the occasion, and we will manufacture 1000 examples of a special Centenario enduro model designed by Miguel Galluzzi, probably fitted with the 510cc engine, which will be handbuilt with many special parts - carbon fibre bodywork, magnesium crankcases, many components milled from solid, etc. This will go on sale in September and will be the most beautiful and desirable, as well as the most functional, off-road bike ever built.
For Cagiva's 25th birthday, on the other hand, we are planning something equally special - by constructing a limited edition of 25 exact replicas of the last 500cc Cagiva Grand Prix motorcycle! This is the only European machine to have defeated the Japanese in 500cc Grand Prix racing, which went to Japan for the third race of the year in 1994 leading the World Championship, and ended up third overall at the end of the season. These will be identical copies of the machines raced by Chandler and Kocinski, down to the last screw and carbon-fibre shroud, and will be built in the race shop here at Schiranna by the men who created and raced them a decade ago. They will of course be fully capable of being used on the track, if someone wishes to experience what it's like to ride one, or else they can be simply placed on display and admired for the quality of their design and manufacture. They won't be cheap - we don't have a price yet - but when we build them from September this year onwards, this will be the chance for 25 enthusiasts who have always dreamed of owning a works 500cc Grand Prix racer, to finally do so, as a means of commemorating the 25th birthday of the company which created them.
AC: Sounds a great opportunity, for those with deep pockets - but maybe you better think about providing parts backup for customers who'll want to race them! Speaking of which, what plans do you have to go racing in the future, especially with MV Agusta?
CC: With Husqvarna, we will intensify our existing involvement, competing in every off-road category at world level - so, four factory-supported riders in each of Motocross, Supermoto and Enduro, for a total of twelve in total. In the case of MV Agusta, I'm afraid that the many enthusiasts who dream of seeing MV back on the race tracks will have to wait a while. Our commercial and business necessities require that we concentrate for the time being on customer products and on the development of new models - today, MV Agusta's image is so strong that we have no need as others do of going Superbike racing, for example, in order to promote the marque. At the point we decide to do so, it will only be with an engine and a motorcycle capable of challenging for victory - because it is not part of MV Agusta's culture to be making up the numbers, trailing home in midfield.
AC: Let's go back to Husqvarna: given KTM's success with its new V-twin, do you envisage expanding your off-road range with bikes of more than one cylinder in the future?
CC: Not just yet - right now, we're going to focus on making what we already have even better, by concentrating on improving reliability and performance still further. It's worth pointing out that all our four-stroke products from 250cc up already have electric starters, and we're going to focus on Supermoto very closely, which Husqvarna after all was the first to make a bike specifically for. We recognize the huge potential of the off-road market at the present time, and we have some great products in the pipeline.
AC: Turning to Cagiva, this is a brand rather suffering from a loss of identity in the recent past. What do you plan to do about this, and will you still continue to buy engines from Suzuki, perhaps also to expand the range into the custom or sport touring markets?
CC: We have too much going on in the R&D department to have the luxury of jettisoning a family of engines which perform as well as the Suzukis do, in favour of our own V-twin design for Cagiva. We're considering expanding the range into other sectors, but right now the most important thing is to start producing the models we already have. We lost several thousand sales of the 650 Raptor because of the situation we were placed in during the past two years, so first we need to satisfy the outstanding demand for the existing models.
AC: Moving to MV, aside from the F4S and Brutale S, will you finally produce the high-performance SPR version of the F4 you've had under development for so long?
CC: Yes, this will be manufactured in 300 examples between April and June, when we will also produce the same number of F4 Ago models which we launched at Intermot last year. These will both have a high-performance version of our four-cylinder radial-valve engine producing 148 bhp, and will be the ultimate in the 750cc MV Agusta family.
AC: But how about the long-awaited F5, the 1000cc version of the MV F4 which you've been successfully developing in endurance racing for the past year or more? When do you plan to launch this - and has Tamburini already finished his work on the styling?
CC: The F4 Mille will be launched as a 2004 model, with the first customer bikes entering production in November, and the first 300 we will make will be a CRC Speciale version called the F4 Mille Tamburini, with certain special features I won't disclose now. Probably, we will launch it at the Milan Show in September - but supplies will be available very soon afterwards, which was a mistake we made in the past we won't repeat again. Then, after that, the F4 Mille S volume production models will begin production early in 2004. As far as aesthetics are concerned, the styling will remain essentially unchanged, because we believe this is a timeless work of art which will be as desirable ten years from now as it was the day it was launched - just like the previous model Tamburini created together with us, the Ducati 916. When you create a beautiful bike like either of these, you have to understand that you need to develop it, to evolve it - not to throw it away and try to do something better, because you won't. Look at Porsche - what a wonderful example. After years of manufacturing the legendary 911, one fine day they came up with the 928, which they explicitly intended should replace the 911, simply on the grounds that it was 'different' and 'modern'. Well, eventually they realised that what they had to do was drop the 928, throw it in the trash can and pull out the 911 again, then develop it, evolve it, into the best-selling form it's in today more than 30 years after its birth. We have no intention of making a similar mistake - as Ducati have indeed done by creating the 999 with a car silencer stuck in the seat, instead of evolving the 916 which is a landmark design in motorcycle history. They're crazy - even if we're the ones that will benefit, so I suppose I should thank them! But look why they've done it: the 999 has been built the way it is primarily with the intention of saving costs - but for this kind of motorcycle, which represents the dream of so many enthusiasts like myself to own, whether you save 300 Euros here or 20 Euros there absolutely should not come into it. We're producing dynamically excellent two-wheeled works of art at a price which customers can afford to buy in significant numbers, and which allows us a good enough profit to stay in business and keep developing them. So, that's why the F4 Mille will have the same unique, exquisite styling as the F4, but with subtle changes representing an 'evoluzione' of the existing model. Do you understand me?
AC: Loud and clear! But I've also heard the F4 Mille is delivering some pretty impressive performance in pre-production testing. Can you confirm that?
CC: Let's just say that the version we will sell to the public will deliver 180 bhp in street-legal form. That's not a figure plucked out of the air, but real horsepower - your readers can hold me to it. The prototype street bike has already lapped Nardo at more than 300 kph. Look - it's a function of the radial-valve technology which we employ in the engine, which gives a huge advantage between 10,000 rpm and 13,900 rpm, which is where we will place the limiter on the streetbike, although on the engine dyno it's proved safe to rev it consistently to 14,700 rpm. When you ride it, the engine note suddenly changes when you reach those revs - it starts to almost whistle through the intakes in a very distinctive way, and there's a significant improvement in performance. It's incredibly exciting when it happens - just you wait and see when you ride it!
AC: Can't wait! But what if a private team decided to go World Superbike racing with the F4 Mille, which certainly seems to have the basis to be competitive when the rules change next year to 1000cc across the board. Would the factory assist them?
CC: You're being very unfair asking me that, because you know my heart is in racing, and I'd give anything to be involved again at the highest level! But we have other priorities in the short term, and must concentrate on returning the company to profitability. Still, if customers wants to go racing with our products, I wouldn't try to stop them.....
AC: How about the Brutale - will there be a 1000cc version of that?
CC: No, the Brutale will remain a 750 for the forseeable future - there's more than enough engine performance with this capacity for a Naked bike, and the important thing is to get it into the hands of our customers who have been waiting so patiently for so long to own and enjoy it. Once they do, they'll realise this bike is so much fun to ride, they have more than enough power to entertain themselves!
AC: Looking into the future, what new MV Agusta models are you envisaging? How about a sports tourer, or a 600 Supersport contender?
CC: Look, Alan - MV Agusta has a very specific image which we will guard closely. It's a marque with the most glorious sporting history on two wheels, which means we can only contemplate making hypersports models or ultra-aggressive, stripped-out Naked bikes. So - no, definitely no sports tourer. But a 600cc four-cylinder Supersport F3? Absolutely yes, of course that will come in due course, once we've firmly re-established the company and have achieved profitability. I'd guess this is something we can project for 2006 or so - and when we do it, it'll be like the F4, the pinnacle of desirability and performance in its category.
AC: What steps have you taken to meet the aftermarket potential for MV Agusta? The lack of an official range of accessories or leisurewear has always seemed a lost opportunity.
CC: You're right, and we recognize that. Massimo Tamburini's son Andrea has recently started a company known as MV Agusta Special Parts, which thanks to his incredible drive as well as great technical ability will develop a wide range of extremely interesting aftermarket parts, and clothing, which we will promote around the world via our dealers.
AC: Speaking of Massimo Tamburini, I understand that Ducati recently approached him to do some work for them. Is that true, and if so, will the facilities of CRC be put at their disposal even though they're your commercial rivals?
CC: The answer to that is that, firstly, there still exist people in the world today who are loyal and know instinctively how to behave properly - not everyone is a bandit: there are still genuine people in the world of motorcycles. And, secondly - no, CRC will only create new products for MV Agusta Motorcycles, no-one else!
AC: So here you are, with MV Agusta's troubles of the past two years apparently resolved at last, and production already restarted. How do you feel right now? Relieved?
CC: More tired than I was six months ago - but much happier! And also, I must admit, satisfied with the way things have been resolved, particularly because so many people doubted our ability to survive, without understanding the essence of this company. Look, Alan - I have a great admiration for the Japanese way of making motorcycles, manufacturing such a wide range of products in such quantity, then selling them at very affordable prices. We in Europe can never hope to operate in a similar way, only to produce luxury products and to do them very well. We are sellers of emotions, not just sellers of motorcycles - and emotions are expensive, not only in the cost of supplying them to the customer, but of creating them in the first place. When you walk down a city street and stop to look in a shop window, it's because something has caught your eye which gives you a thrill, which excites and pleases you - that's why you stopped. Same with motorcycles - we sell products that are luxury goods, which give our customers a thrill, which make them proud to own, which please and stimulate their emotions. That's what MV Agusta is good at - and that's what we're going to focus on doing from now on. *********
-- Allan Gibbs (Phoenix, Arizona) (Agibbs996@aol.com), April 04, 2003