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Ducati Motor Holding S.p.A.

 


Address:
Via A. Cavalieri Ducati
3 40132 Bologna
Italy

Telephone: (39) 051-641-3111
Fax: (39) 051-406-580
http://www.ducati.com

Statistics:
Public Company
Incorporated: 1926 as Società Radio Brevetti Ducati
Employees: 950
Sales: US$281.9 million (1998)
Stock Exchanges: Milan New York
Ticker Symbol: DMH
NAIC: 336991 Motorcycles & Parts Manufacturing


Company Perspectives:


The future of Ducati is based on our past successes, incorporating a winning combination of Italian style, performance, craftsmanship and leading technology. We are committed to customer satisfaction, offering Ducati enthusiasts the products, accessories and service at a level that their passion and support to the Ducati marque merits. Our company philosophy can be summed up in a few words: Ducati was, is and always will be a leader for technology and innovation. Ducati will continue to incorporate this winning philosophy, a tradition of success and excellence, in its road and racing motorcycles.


Company History:

Ducati Motor Holding S.p.A. has the wind on its back. Since its financial rescue by investment firm Texas Pacific Group in 1996 and its initial public offering in March 1999, the famed Italian motorcycle manufacturer has performed a remarkable turnaround, shedding most of its losses while boosting its sales. Ducati produces a range of motorcycles, from its world-famous Superbike racing series to the more recently launched line of cruising bikes designed to place the North American and European casual biker onto a Ducati seat. In an effort to capture some of the marketing flair of rival Harley Davidson, Ducati has also entered the fashion business, producing clothing and other motorcycling accessories--some of which are designed by Donna Karan--which the company sells in its own expanding chain of retail clothing and accessories stores in Italy, New York, London, Capetown, and Sydney. The company's shifting focus--from its traditional performance-before-comfort design--has enabled the Ducati motorcycle to take an increasing place in worldwide motorcycle sales. From just three percent of the international market, primarily in Europe and North America, Ducati expects to build as much as a ten percent share in the early years of the 21st century. The chief architect of Ducati's turnaround is Federico Minoli, CEO since 1996.

Founding a Motorcyling Legend: 1920s

If the Ducati name would later become synonymous with racing motorcycles--and winning races--the company's origins were in another industry altogether. In 1926, Adriano Ducati, together with his brother and other family members, as well as other local investors, founded Società Radio Brevetti Ducati in Bologna, Italy. As the company's name suggests, its initial products were based on patents held by Ducati and destined for the developing market for radio equipment and components. Ducati's first product, the Manens condenser, gave the young company instant worldwide recognition. A string of other successful products followed, making Ducati an internationally recognized name.

By the mid-1930s, the company, despite the worldwide recession, had grown out of its existing facilities. In 1935, the company began construction of its Borgo Panigale factory, on the outskirts of Bologna, a modern production facility that was also designed to attract further industrial and technological investment in Bologna--an early example of the "clustering" found, among elsewhere, in California's Silicon Valley.

While construction continued on the Borgo Panigale plant, Ducati also began developing an international network of production and service facilities, allowing the company to offer its customers faster and more direct distribution and support services. By the end of the decade, the company had opened offices and subsidiaries in Caracas, New York, London, Paris, and Sydney.

World War II put an end to Ducati's glowing radio career. Extensive Allied bombing runs completely destroyed the only recently completed Borgo Panigale factory. By 1944, nothing remained of the Ducati site. While crushing the Ducati family's business, the destruction of the Borgo Panigale plant would nonetheless give rise to a new opportunity--and a new era for the Ducati brand name.

"Vrooming" into the 1950s

As Italy fought, lost--and then, technically at least, won--World War II, Adriano Ducati and his brother began making plans for the company's postwar future. Reviewing a number of new products, with which the brothers hoped to regain their company's international position, the Ducati brothers made the rather radical decision of switching product focus altogether. Instead of building radio components, the Ducatis began designing for a different market entirely--and by 1946 the first new Ducati product appeared: the "Cucciolo."

The Cucciolo was a small motor designed to be fitted to bicycles. The idea was a quick success, and the Cucciolo soon became one of the biggest-selling motors of its kind in the world. While sold as a kit at first, Ducati soon began marketing its own motorized bike, based on a Capellino frame patent and constructed by Caproni, in Trente. By the beginning of the 1950s, the Cucciolo had graduated from a motorized bicycle to full-fledged status as a motorcycle. With this Cucciolo, the company inaugurated more than 50 years of Ducati motorcycling fame.

The Cucciolo was quickly joined by other motorcycle models. In 1952, the company unveiled its Cruiser, featuring a 175cc engine, electronic ignition, and automatic transmission. The following year saw a more conventional bike, with a small 98cc (quickly increased to 125cc), designed as an affordable, if stripped-down, motorbike. Together with the Cucciolo, these models brought Ducati back to the forefront of the international manufacturing scene, and helped make the company a leading name in cycling.

Yet the company's greatest successes would come with the arrival of the legendary Fabio Taglioni as the company's chief design engineer in 1955. Taglioni brought an avant-gardist approach to motorcycle design, seeking revolutionary solutions for both technical excellence and high performance. Taglioni also understood the need to demonstrate the excellence of his designs, and led the company onto the racing circuit, particularly long-distance competitions including the Giro d'Italia.

Taglioni's influence quickly produced a new generation of Ducati motorbikes. In 1956 the company debuted a four-stroke, 174cc engine, available in touring and sports versions, that could reach speed performances of up to 135 kilometers (approximately 70 miles) per hour. These models, the Tourist, Special, and Sport models, were joined by the "America" the following year.

By 1958 Ducati had begun producing the 200cc-powered Elite model, which also featured for the first time the Taglioni-designed "Desmodromic" valve gear system. The Desmodromic system would remain an integral feature of the Ducati design through the 1990s, and would provide the launching pad for the company's great racing successes.

Racing Champion in the 1960s

The Desmodromic system paved the way for a new 250cc model, a twin-cylinder cycle specially ordered by racing great Mike Hailwood in 1960. The 250cc engine was soon adapted as a single-cylinder powerhouse for such models as the Diana, Monza, Aurea, and the later GP models, providing speeds up to 170 kilometers per hour. The company would produce still more single-cylinder models, including the famed 250cc, 350cc, and 450cc Scrambler models, which found great success in the United States market. Meanwhile, Ducati was building its reputation among the racing world, with the Mach 250 providing a breakthrough in 1964. This bike was soon followed by the 450 Mark 3D model, introduced in 1968, which pushed the speed limit beyond 170 kilometers (100 miles) per hour. This model was also the first production model to feature the Desmodromic system.

The arrival of the Japanese motorcycles, including Honda, Yamaha, Kawasaki, and Suzuki, soon challenged the Western market leaders and inaugurated a new category of bikes, the so-called Maxi Bike, featuring large-displacement engines of 750cc and more. While Ducati would remain synonymous with high-performance, small-capacity motorcycles, the company raced to join the Maxi Bike competition, producing a twin-cylinder 750 cc engine incorporating the Desmodromic valve system. The new motorcycle would make its debut in April 1972, when it captured first and second place at the Imola 200. This bike would give rise to a new Ducati series, the Supersport, a line that would continue into the 1990s. In 1978 the Supersport captured world attention when Mike Hailwood came out of retirement to capture both the Tourist Trophy and the Formula 1 TT on a 900cc Supersport.

In 1983 Ducati was purchased by the brothers Claudio and Gianfranco Castiglioni, who placed the motorcycle company under their growing Cagiva Group conglomerate. Described as passionate racing fans, the Castiglionis would allow Ducati to remain on the sports bike track, setting the stage for the company's string of 1990s victories. The Castiglionis also expanded the company's line of motorcycles, introducing more models, and adding a wider selection--and higher production volume--of the large displacement motorcycles by then leading the entire market. One of the architects of this new Ducati era would be Massimo Bordi, who joined the company as design engineer in 1983 and who quickly made his mark on the company's racing production.

Inspired by Formula 1 racing, and by the Ford Cosgrove engine design, Bordi set to work designing a new series of high-performance motorcycles. For this, he incorporated the Desmodromic valve and distribution system to a four-valve, air-cooled motor based on the Cosgrove engine. The result was the "Desmoquattro," which debuted as the heart of the 748 model in the Grand Prix of 1986. Two years later, the 851 model would usher in the era of the Ducati dominance of the Superbike circuit: after winning its first championship in 1990, the Ducati bikes--the 888 in 1991, the 916 in 1994--would go on to win six of the next eight races, firmly establishing Ducati as the category leader.

While Ducati was winning races, it was also losing money. That is, the Castiglioni brothers, in attempts to resuscitate the Cagiva conglomerate, had been draining Ducati's revenues. Production--in the company's now ancient factories--had begun to slow, dipping to a low of just 12,500 motorcycles in 1996. Ducati once again faced financial ruin.

The struggling Cagiva empire caught the attention of Texas Pacific Group (TPG), a U.S.-based buyout specialist. Hiring Federico Minoli, TPG negotiated the purchase of the Ducati business, initially buying 49 percent of Ducati for some $43 million in 1996. Under the terms of the purchase agreement, an additional two percent was placed in a trust held by TPG, which gave the company control of Ducati. In August 1998, TPG bought out the rest of Ducati, paying the Castiglionis $174 million.

Meanwhile, Minoli worked to turn around the famous motorcycle company. One of his immediate moves was to make heavy investments in refitting the company's production lines, adding automation, while also negotiating with the company's suppliers to improve efficiency. Not content simply to increase production levels, Minoli greatly expanded the company's range of models, more than doubling the number of production designs and introducing the Ducati name into new categories. Minoli also replaced most of Ducati's management, putting in place a largely young team. As production levels rose, Minoli set to work streamlining Ducati's distributor model--instituting a two-tiered system of exclusive dealerships, some 40 Ducati-only shops, and some 900 store-in-store shops selling Ducati products in third-party dealerships.

Minoli also worked on revitalizing the Ducati image. Following the Harley Davidson model, Minoli sought to make Ducati as much a lifestyle image as a motorbike. A new line of Ducati-labeled clothing and biking accessories appeared, and the company launched a new, high-fashion ad campaign, selling the ads to such venues as GQ and For Him magazines. The company also hired Donna Karan to design some of its biking outfits.

The revived Ducati continued to win races and attract new motorcycling fans willing to pay up to $25,000 for a Ducati bike. The company's revenues began to rise, topping US$280 million in 1998, and expected to climb past US$323 million for 1999. With Ducati back on track, Texas Pacific cashed in, taking Ducati public in March 1999 with a listing on the New York Stock Exchange. Two months later, the company opened its first showroom in North America, on New York City's West Side. Featuring the Donna Karan clothing designs, including leather motorcycle jackets with price tags of $1,200 and more, the store also highlighted Ducati's new line of "Naked Sport" motorcycles.

If the rejuvenated Ducati had found fortune as a lifestyle choice, the company remained nonetheless committed to continuing its tradition of building some of the world's fastest racing bikes. The company persevered as a small business in an industry dominated by such powerful names as Honda and Yamaha. After Ducati's public offering, industry rumors began to suggest that a merger might be in store for the famed Italian manufacturer--with Milwaukee's Harley Davidson. The company immediately denied the rumors. But with just three percent of the worldwide motorcycle market, it remained to be seen for how long Ducati could stay independent.

Principal Subsidiaries: Gia.Ca.Moto.





Further Reading:


Colker, David, "Naked Motorcycles Travel Comeback Trail," Greensboro News & Record, April 2, 1999.
Heller, Richard, "Vroom-Vroom Versus Potato-Potato," Forbes, July 26, 1999.
Michaud, Chris, "Ducati Peddles Designer Chic in N. American Debut," Reuters Business Report, May 20, 1999.
Putter, Eric, "Ducati," Dealernews, November 1997, p. 22.
Tagliabue, John, "Passion Fashion for 2-Wheel Italian Motorcycle Makers Hope to Carve Out Niche in High End of US Market," Fort Worth-Star Telegram, May 25, 1999.

Source: International Directory of Company Histories, Vol. 30. St. James Press, 2000.




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