Image: Indian production line
Christina Sandoval performs a quality control inspection on an Indian Scout at the end of the Indian Motorcycle assembly line in Gilroy, Calif. last year. Indian Motorcycle announced that it has ceased production effective immediately in order to conserve cash and preserve its assets.
updated 10/16/2003 2:00:35 PM ET 2003-10-16T18:00:35

Indian Motorcycle, a revival of a pioneering motorcycle maker, has halted production and laid off its entire work force, citing financial troubles that could force the company into bankruptcy.

Indian Chairman Frank J. O’Connell told 380 workers at the company’s Gilroy plant Monday that they would immediately stop manufacturing because a deal with a major investor fell through.

O’Connell said he had received calls from dozens of other potential investors, and he still hopes that the death-defying company would return to operation.

Indian introduced the first motorcycle with an electric starter and complete electrical system in 1913. Before World War I, the company was the largest motorcycle maker in the world, producing more than 20,000 bikes a year.

The company, first based in Springfield, Mass., went out of business in 1953, but the name was brought back to life in 1999.

Within four years, the new company had amassed thousands of fans, more than 200 dealers nationwide, and a soaring brand image. It was on track to sell 4,500 bikes in 2003, a company record. The list price of a new Chief can exceed $23,000.

Indian was on the verge of profitability but O’Connell and the rest of the board decided last week they couldn’t afford to continue manufacturing. Given the steep fixed costs of its assembly line and design studio, O’Connell said, the company was simply not financially viable.

“The company needs to go down a different path with a different cost structure,” he said Monday.

The company specializes in so-called cruisers - large, relatively smooth motorcycles with a relaxed seating position and cushy suspensions for leisurely riding. Cruisers are the fastest growing segment of the motorcycle market.

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