Say It Ain't So

[bmcdonau]

I think what that article shows is that Harley is still stuck in the last decade and only makes changes when forced. For example: I believe Harleys would still be carburated (Japanese Mikuni)if emissions laws did not force them to step up to fuel injection (Webber Marelli Italian).

I think the V-rod (or even Buell) was a radical step for Harley, but they did not carry the ball far enough.

Harley's are not high performance motorcycles, except for the VRod and really don't need fuel injection to maximize HP. I think you see the same thing in the metric cruisers, Honda just put fuel injection in the Shadow line this year. There is just no incentive to put a lot of technology into cruisers when the people who buy them don't want to pay for it.

 

[bmcdonau]

Taking a broader look for the moment ...

Everyone is talking about the decline in MC sales since the peak in 2005. However this seems to be a short sighted analysis. Look at the graph and conclusion from webbikeworld.com below ...

>>>

U.S. Motorcycle Sales 2009 and Totals for 1992 - 2009

January 22, 2010 - I updated our chart showing U.S. motorcycle sales figures, which now covers 1992 to 2009. These are gross numbers, including motorcycles (street bike, dual-sport and off-road) and scooters. The numbers were compiled from various public sources but most of the sources probably trace back to the Motorcycle Industry Council, who tracks motorcycle sales in the U.S.A.

Note, however, that if a motorcycle manufacturer isn't an MIC member, their sales may not be reflected in these numbers. But overall, this is about as good of an indication as you will find.

Note that motorcycle and scooter sales are now just about back to where they were in 1999, fully 10 years ago, a dramatic decrease by any measure.
<<<

Whilst there is a huge decline since 2005 this is the tail of a "bubble". Up to 1996 there was steady growth, around 1997/8 there was a sharp increase and THEN the decline post-2005. The bigger question is why this pattern of boom and bust? I was not riding then, does anyone know if a reason why there was a boom in 1997/8 thru 2004 ?

I checked gas prices, and they were relatively stable prior to 1997 and on the rise from 1998. This probably accounts for some of the boom, but I am not sure if it fully explains it.

It would be somewhat reasonable to conclude that the boom was in part from gas prices, and maybe other sources ? good economy - more people buying toys? baby boomers toy buying? good marketing? tax / tariff / import duty changes? Then the bust was due saturation and a worsening economy.

Now back to HD, they seem to be struggling to show the same rebound after 2009 that Japan is now showing. This may be in part due to the higher relative cost of HD bikes, or maybe an extension of the gas conscious boom pre-2005, tightening of European (and to a lesser extent the US) emissions standards, or simply HD trying to take advantage of a poor economy to put the squeeze on the unions/workforce/local govt.

Perhaps there is a different reason for ownership for HD vs. other bikes. HD's are perhaps seem more as toys or luxury items, whereas non-HD are perhaps more functional. I personally consider my ST as primary transport unless it is snowing (and sticking!). I know many other non-HD owners that see the bike the same way. This might be why HD suffers more in a downturn.

US manufacturing has been moving overseas, Detriot is the classic example where parts are now manufactured abroad, and final assembly is in the US. This is creeping into HD too. More parts are made overseas. HD is lucky that the 1994-American Automobile Labeling Act does not extend to motorcycles. It would be interesting to see what percentage was still US made. If this act was to extend to MC's it could be a serious marketing issue for HD.

Pricing interesting here too. HD's are assembled here an pay no import duty. However this is a significant cost per bike on European and Japanese manufactures. This is a huge advantage to HD profits in the US and is left over from the 80's "bail out" HD received in the form of tax legislation.

Long term it would seem HD has to reduce costs to stay competitive. Moving the plant (and cost incurred) doesn't save them that much if the majority of cost are still in the US and therefore still relatively high. Moving the plant overseas would be a marketing nightmare. So the only option is to move manufactured parts overseas and keep a minimal final assemble here. If they move I would bet the plant would be split, the final assembly staying in a cheap area of the US and everything else going to ... Mexico perhaps? China, India, Malaysia and Korea would also be options.

Can you tell I had a lot of coffee today? :coffee1:

I heard an explaination of this a couple years ago. In the sixties, baby boomers were kids and fueled the boom in small motorcycles and then into the early 70's when they were young adults, they bought larger bikes. Then, as they got families, their interest in motorycles dipped in the late 70s and the 80s. Finally as their kids left home, they started riding again in the late 90s. The whole up/down cycle of the last 40 years was driven by one generation, the boomers. The following generations weren't nearly as intersted in motorcycles as my (our) generation.

 

[bmcdonau]

Actually, the average (400-800cc) SuzHonKawYam has about a $600 profit right now.

That expains the cost of service and parts and accessories. Something has to keep the door open and it sounds like it isn't sales.

 

[thumperjdm]

Note that motorcycle and scooter sales are now just about back to where they were in 1999, fully 10 years ago, a dramatic decrease by any measure.
<<<

Whilst there is a huge decline since 2005 this is the tail of a "bubble". Up to 1996 there was steady growth, around 1997/8 there was a sharp increase and THEN the decline post-2005. The bigger question is why this pattern of boom and bust? I was not riding then, does anyone know if a reason why there was a boom in 1997/8 thru 2004 ?

My observation, working at a large government facility (plenty of middle class workers), is that when the housing market spiked (inflating people's home values), plenty of folks took-out second mortgages on the newly inflated values of their homes. They then went on lavish spending sprees--quite often buying a more expensive (and blinged-out) Harley than their neighbor next door just bought.

Those were the days when there was a waiting list to buy a Harley at $3-5,000 over MSRP--and people paid it!!

Good ol' "Keeping up with the Jones's".

 

[Pepe']

I remember that. You had to put money down and wait for availability of the next years model. I think some of the people selling now have that same idea except now there are 3 now sitting on the dealer floor waiting for owners..

 

[Bones]

OK, the younger crowd that's not into Harleys...what are they into? I'm guessing sport bikes, dirt bikes, and quads. I can't imagine Harley has the engineering capabilities to compete head to head with the Japanese and Europeans in sport bikes, but bikes for bad roads or no roads might make sense. Harley used to make dirt bikes so it even fits with their heritage. I bet there's a market for a Harley quad or a Harley dual sport, and I bet even the dedicated shiny chrome crowd could look favorably on a young whippersnapper showing up on a rugged looking, dirt-caked machine that sings potato-potato-potato. Roll out the Harley Dirt Glide!

 

[BakerBoy]

OK, the younger crowd that's not into Harleys...what are they into? I'm guessing sport bikes, dirt bikes, and quads. I can't imagine Harley has the engineering capabilities to compete head to head with the Japanese and Europeans in sport bikes, but bikes for bad roads or no roads might make sense. Harley used to make dirt bikes so it even fits with their heritage. I bet there's a market for a Harley quad or a Harley dual sport, and I bet even the dedicated shiny chrome crowd could look favorably on a young whippersnapper showing up on a rugged looking, dirt-caked machine that sings potato-potato-potato. Roll out the Harley Dirt Glide!

... Harley Road Side
... Harley Road Slide
... Harley Muck Truck
...

To your point Bones, I too think we'll see HD now try things that they'd only considered doing in the past.

 

[Grizzley]

Ooooh Boy...
I represented a company that went from private ownership to being owned by a large corporation run by MBA's and bean counters... They had the brilliant idea to move the company (2 plants and 4 facilities) 300 miles. Their "brilliant" experts predicted that 90% of employees would move. The average, yes, average time in the company for employees was 25 years; now that is what made the company and the products fantastic. Based in Minnesota, no union, pride in what they manufactured, owned all the buildings and town built around the company that had been there over 80 years; move to Rockford Illinois, to rented facilities, unions and management from a company going bankrupt they bought out... Only 2 people moved: Husband and wife and they were relatively new with the company and no one would have been sad to see either leave MN... It failed miserably and yes, the shares did go up when they sold the largest most efficient paint shop in the 5 surrounding States; then sold off 2 divisions that were highly profitable, sold all the buildings, etc... To me, they were like (forgive the unintended pun) pirates, they jumped on the ship, raped and pillaged, punched a big hole in the boat and floated away to do it to another company with the share holders grinning like little weasels...
The number one resource a company has is its people. Treat them fairly and with respect, pay them what their work is worth (do not overpay or underpay). Unions almost killed the auto industry in America (Canada is in America, remember), the Japanese manufacturers in America did not have a handout for being efficient, but the companies that failed did... What is the lesson??

Anyway, HD makes more $$ selling their brand name and logo than selling its iron. We all can say all we want about the bikes being overpriced Vibrators, but lets face it, for most of us, if we don't or never did own one, at one point, many of us were at least intrigued by them. They got allot of ink and film, got allot of us interested or intrigued in riding. Their design and style were emulated by Asian and even European manufacturers, HD was bailed out, rallied around, bashed and applauded. If "all" production leaves Milwaukee, I for one think it will go the way of the Indian... Same goes for the automakers, if they can find a way to reduce labor cost, they will be able to give us our money's worth when they put out a bike/car or sell them for what they are worth... How many of us had fathers that proclaimed: I'll never own a Japanese car!!! What's your dad driving now??

It would be sad for us all if HD or any American factories move abroad. Every time we give up our smoke stacks, we sold out our technology and our children's heritage and future. In a couple of generations, our descendants will be buying our inventions and innovations from abroad...

Sorry for the length of this, but it bums me out to hear that once again, companies run by folks that don't come from the production or sales side of the business and bullied by unions, win while so many loose...

Grizz

 

[bmcdonau]

"Why would it backfire on HD and not the thousands of other companies who have moved to other states or even other countries"

Because Harley's ONLY claim to fame is being made in the U.S.

No other brand has based it's entire reputation on being made in the U.S.A.

Moving to a different state may not hurt HD's rep., but Milwaukee's reputation would suffer.

My question was to this post:

No ... two words. Union Busting. Old, nasty, habit of corporations that forget that people must have a good paying job in order to buy expensive toys. This will backfire upon H-D.

Which referred to reducing costs at the expense of workers who buy their products., But in answer to your question about "Made in the USA" I offer the following. I spend a considerable amount of time with a pretty good cross section of HD riders and very few of them bought because the brand is "Made in the USA". They are professionals, salesmen, teachers, lawyers, plummers and the like and understand global economics. They bought Harley because they wanted a Harley. Heck, most of them have blinged out their bikes and damn near every accessory you buy at the dealership has a Hecho in Mexico or Made in China label on it so they'd have to be blind no to know that Harleys are really only assembled in the US today.

 

[bmcdonau]

And I answered it. You may have the wierdest group of Harley Riders, in the world, in your area, but the ones that I've known, over the last 30+ years have always been quick to bring up the 'Made in America' aspect.

Which is doubly strange because, being in Canada, US made is as foreign as Japanese made. Many Canadian riders don't consider US made as foriegn at all.

Shhhhhh don't let the Harley owners know how much of thier bikes is made overseas! Harley spends a lt of time and money playing that down. HD has been swapping US made parts for foreign made parts over a long time, very slowly so that thier followers don't notice it. Think of poison in small doses.

Accessories are irrelevant. People choose them as they wish, then bolt them on to thier Milwaukee Iron.

Not exactly. I asked how moving and reducing labor costs by paying their employees less money was going to backfire on HD. You brought up made in America which didn't answer my question at all. I'm with you on not understanding why Canadians care if a bike is made in the USA.

 

[TPadden]

If MOVING has nothing to do with where something is made, you're right.

Otherwise, I answered why MOVING (especially out of the country) might affect their sales.

OK - but when the problem is you are losing money with current sales SOMETHING has to change; either reduce costs or increase profits.

Harley's problem IS they already tried increasing sales and it didn't work. They tried buy it and we'll buy it back so you can "upgrade", tried taking metric trade-in's, tried paying sales tax and set-up costs.

They've already tried cutting costs too: tried selling MV Agusta, tried cutting Buell, tried cancelling their the annual Open House, tried reducing production to match sales ......

Bottom line is they are no longer treading water and are now flailing to keep from drowning. :

 

[TPadden]

Of course, but now your jumping into a side discussion!

Not really - moving may be the only move left and that is the main discussion. Won't be the first time unions have killed the golden goose; or at least made it move to survive.

 

[st1300r]

Interesting.
Why would labor cost be so different in another state? It's not like they move production to China or something.

I've worked on both sides of that coin in the same company. You wouldn't believe the wasted resources in a union shop or one in fear of becoming a union shop.

Biz created the need for unions. Unions served a useful function it then tends to become it's own business in business for itself not for its members.

There is win win or lose lose, long term there is no such thing as win lose.

 

[Pepe']

The old adage of "Build it and they will come" might mean something here. If sales are in decline then they are clearly not building what the riding public wants.

 

[SoloTotoCoyote]

I think if Harley moves, it'll probably be into one of their other existing factories. With the already reduced production, they might not even have to expand.

I work for a Harley dealership and seeing it on this side, I agree that Harley is in trouble and doing everyhting it can to stay afloat. At the moment, I think they're just trying to bluff everyone into thinking it's not that bad and trying to project that they're holding a bunch of aces. Smart because you don't want people panicing under you. It should definitely be interesting to see what happens.