Harley-Davidson continues to misfire, will cut 1,000 more jobs

 http://www.dailyfinance.com/2009/07/17/harley-davidson-continues-to-misfire/?icid=main |htmlws-main|dl4|link5|http%3A%2F%2Fwww.dailyfinance.com%2F2009%2F07%2F17%2Fharley-davidson-continues-to-misfire%2F

Harley-Davidson (HOG) experienced an appalling second quarter in 2009,
and storm clouds continue to gather as it attempts to overcome
inventory glut, bad loans, the "made in America" handcuffs, labor
problems, and a narrow product line. Whew.

The company reported earnings of only $0.08 a share for the quarter,
down from $0.95 a year ago, when the wheels were already starting to
come off the corporation. It has dropped its projected sales for the
year from 264-273,000 to 212-228,000. The company shipped 349,196
bikes in 2006.

Harley has also announced a further reduction in its workforce, as
another 1,000 will join the 425 cut in January and 90 in April.
Widespread temporary shutdowns are scheduled throughout the company
this fall and winter, as well.

New CEO Keith Wandell is also engaged in a dance with the union at the
company's York, Penn. complex, which he says may or may not close. One
determining factor is the willingness of workers to compromise on
issues such as inflexible overtime rules. The union contract is up
early next year, and Wandell is looking for $100 million in cost
savings from the York operations overall. I think the handwriting is
on the wall, and it isn't a joyful message for York workers.

The company has already taken steps to consolidate other operations,
especially in its home state of Wisconsin. Troubling for other HOG
workers is the prospect that the company may outsource the manufacture
of some parts currently made in-house. Harley suffers a competitive
disadvantage here from its strong identification as an American
machine. Jobbing out large parts of the bike manufacturing to China or
other lower-cost locations is not an option the way it is for Honda,
Yamaha, Kawasaki and Suzuki.


The company had hoped to move some iron this spring by pushing its
introductory model, the Sportster, with a guarantee to take it back at
full value as a trade-in later for a more expensive model. Apparently,
despite the economy, riders weren't interested in an Econo-Hog.

Harley-Davidson Financial Services took a huge hit this quarter,
writing off $28.4 million in loans and taking a $72.7 million credit
loss provision to re-classify motorcycle loan receivables.

Harley is also handcuffed by a narrow line of bikes, virtually all
heavyweight cruisers with the exception of the weak Buell brand of
sport bikes. It has no presence in the off-road and motocross
markets.

Harley's dealer network must be very unhappy as well. In the past ten
years, at Harley's insistence, its dealers have upgraded facilities
and established Rider's Edge motorcycle training classes.
Consequently, many now carry a much higher overhead that in the days
of the neighborhood shop.

And yet, the stock has been gradually creeping up from its 52-week low
of $7.99 to $18.73 on Friday morning. Go figure. The company changed
CEOs recently in hopes of turning the company around; at the moment,
however, prosperity continues to grow smaller in its rear-view mirror.

 
Harley-Davidson makes bikes.  HOG is Harley Owners Group.
(But you knew that)


"made in America" is detremental to sales?

In 1990 a dealer knocked $1000 off MSRP of my FLHTC and gave me the 5-year
waranty ($500) free.  He still had one left-over at years end. In 1991 he
sold every bike he could get. For years thereafter, ye charged $1000 to get
on a waiting list then he added a few $100 worth of accessories and sold
'custom'  bikes for $1000s over MSRP.  Finally H-D ramped up production to
suit demand.  Predictably, the 'yuppie' bubble has burst - as with the
housing industry - and  H-D will have to scale back.  So ...

Dunno who wrote that but Harley already outsources a lot of parts.

Each H-D model (Tourer, Cruiser, Sportster) has its devotees that provide a
reliable market once the fluff goes and the surplus gets used up.

Yup, "handcuffed" to the most profitable models.

That's true, altho I'm not sure about Harley's insistence. Most are
botiques.  Rumor has it my local dealer isn't selling enough to cover
overhead and may move to a smaller building with fewer employees - like he
had 20 years ago.

Meanwhile other brand dealers are belly up.

Most investors feel the same as I do - the bubble was nice but now we'll
have to go back to making motorcycles.  Again, look at the housing industry
as a paralell.

 
:Harley-Davidson makes bikes.  HOG is Harley Owners Group.
:(But you knew that)

HOG is also the NYSE designation for Harley Davidson Corp. I believe
that's the context for this article.
___
Cogito Ergo Spam - I think therefore I ham

 

Not necessarily, but if you advertise your wares as being made in America,
then all (that's ALL) parts need to be made in America and that's a tough
pair of handcuffs. If those who buy *because* the product is made in America
and they subsequently dscover that some parts are sourced from or
manufactured in other countries, those customers will feel cheated. That
will affect sales.


Which blows the "Made in America" statement right out of the water. Maybe
"Mostly made in America" would be a more honest description, although it
doesn't roll off the tongue so well and it probably won't impress its would
be customers.


No company ever survived on existing customers/devotee's. New business is
absolutely the frst essential for growth. Sit still, you're going backwards.

Apparently not though. If it were true, they wouldn't be struggling. Or
would they and if so, how?


I'm sure there are many dealers going belly up, (and that would incluse
Harley dealrs too, I suspect) but how many manufacturers are going belly up?


People NEED houses, the don't need bikes. Luxury items are the first thing
to get dropped from the sopping trolley when things get tight.


--
Beav

VN 750
Zed 1000
OMF# 19

 @newsfe18.ams2:


Maybe you hadn't noticed but EVERYONE is struggling right now.
Harley's market has shrunk yet their market *share* has increased. That
would tend to imply that everone else's market has shrunk even more.

It's a recession, nobody is healthy.

--
Bob Mann

Cap'n, ah need moor pow'r.