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Columbian

Nautilus Inc., the Vancouver-based manufacturer of fitness products like Bowflex, built its company on strength machines designed to help young fitness buffs build six-pack abs.

Now Nautilus plans to spend at least $10 million during the next five years to convince an increasingly obese America that one way to shed those extra pounds is to use exercise equipment like Nautilus'.

The Nautilus Institute will commission the Sports Performance Clinic at the University of California at Davis to study cardiovascular machines. A host of national exercise experts, including Olympic gold medal speed-skating champion Eric Heiden, will guide the program.

Building a new business model

The strategy falls in line with Nautilus' decision in early 2004 to drastically alter its business model by bringing more of its product lines, which include Nautilus, Schwinn and Stairmaster, from direct sales channels to retail outlets and developing a greater array of cardiovascular exercise machines.

Jim Bellessa Jr., a financial analyst with stockbroker D.A. Davidson, said the institute's creation is a good public-relations move.

"I think it helps to bring attention to the fitness arena, which they're certainly trying to focus on," he said.

Bellessa, who owns shares of Nautilus, said the company sold $500 million in fitness equipment in 2004, so spending $2 million a year on the fitness study is a small price that could reap bigger returns.

News of the institute's formation coincided with Nautilus' announcement that it is selling 500 commercial TreadClimbers to 24- Hour Fitness. A company official said the deal is worth $3 million.

But more important, it exposes the hybrid treadmill-stairstep machine to potential commercial and residential customers.

The Sporting Goods Manufacturer's Association estimates the number of health club memberships has increased 90.3 percent between 1990 and 2003, going from 20.7 million members to 39.4 million.

That translates to increasing sales of home fitness products, according to the association.

The institute and health club sales are part of Nautilus' goal to be a global leader in the industry.

The company is helping promote that idea by moving from its current headquarters to the former Consolidated Freightways building at Columbia Tech Center in east Vancouver.

Executives refer to the building as global headquarters for Nautilus. The cavernous space has plenty of room for future expansion.

Jonathan Nelson covers retail, banking and the Port of Vancouver for The Columbian. He can be reached at 360-759-8013 or via e-mail at jonathan.nelson@columbian.com.

Update

*Previously: Nautilus Inc., the Vancouver-manufacturer of fitness products, emphasized the development of cardiovascular machines as part of its financial turnaround.

What's new: The company has formed Nautilus Institute, a venture designed to study and promote the uses of cardiovascular exercise and related fitness machines.

What's next: Nautilus will spend $10 million during the next five years to promote the institute.