Bimota: Booming Or Bankrupt?

BIMOTA: BOOMING OR BANKRUPT?

Alan Cathcart

BIMOTA GO BUST." “BIMOTA IN MONEY TROUBLES." If you happened to read headlines like these in the European motorcycle press several months ago, you’re to be forgiven for thinking that Bimota, the nearest thing to Ferrari on two wheels, was on the brink of going out of business. But that’s not necessarily so. The confusion resulted from the fact that most people outside of Italy don’t fully understand that country’s financial and labor laws. And although Bimota’s management, normally quite astute on public-relations matters, could have acted sooner to dispel this misunderstanding, it didn’t.

Italian law states that the component members of any industry in Italy can apply to central government to have that industry recognized as being in an official “state of crisis.” If the government agrees, it opens up a number of options to companies in that sector. They can, for example, lay off workers and even dismiss them altogether, something normally well-nigh impossible under Italy’s anti-unemployment legislation. They also can suspend payment of all outstanding debts owed to suppliers for up to one year, and do not necessarily have to pay cash for any new materials. Finally, they are then in a position to receive various government grants and tax credits aimed at putting the industry back on its feet again and in a position to earn Italy valuable export currency through overseas sales, as well as keeping at

least part of the work force employed.

This is precisely what happened to the Italian motorcycle industry. And Bimota simply took advantage of the official state of crisis in the motorcycle sector. The firm in fact is not bust, but it does have a cash-flow problem similar to that experienced by many other perfectly solvent companies in other countries. According to Giuseppe Morn, Bimota’s founder, the problems have been brought about by increasing operating costs, stiffer competition from the Japanese in Bimota’s specialized segment of the market, and the inability of some of the company’s distributors around the world, themselves in a cash squeeze, to pay for bikes already ordered, and in some cases sent.

Thus, the state of crisis has given Bimota a valuable breathing space, of which it plans to take full advantage. The company sold its entire 1983-84 production of over 450 bikes, and already claims a healthy order book for the future. None of its suppliers has put Bimota on a cash-only basis, and the company claims it can pay all current bills promptly. The work force has been reduced by only 20 percent, and there seems to be as much activity in the factory as usual.

Nevertheless, the worst could happen anyway and Bimota would have to close its doors for good, but don’t look for that to occur in the near future. Bimota may be down, but it’s far from being out.