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Harley-Davidson® Pan America™ motorcycles

A lot has been written in the motorcycle media with photos of high mountains, plateaus, deep forests, beaches along the Pacific coast, fantastic riverbeds and deep mountain lakes that provide an epic backdrop for an exciting motorcycle launch.

Of course, I’m talking about what has been labeled the “real deal”—a highly capable, uncompromising large-displacement Adventure bike—the Harley-Davidson® Pan America™ motorcycle.

Harley-Davidson® Pan America™ motorcycle

Journalists cheered… remotely of course.  There were tears and applause, then more tears as the press fell apart during the historical motorcycle launch. Even Jochen Zeitz, chairman, president and CEO Harley-Davidson, made a cameo as a film actor riding — yes, RIDING — an actual motorcycle.  It was in the scenic landscape of Kenya, Africa no less.  The narrative is how he traveled to the vast wildlife preserves to lasso the twin Adventure Motorcycle and bring it back to America!

It’s the new AMERICAN adventure touring motorcycle that the motor company wants you to grab a tent stake, a Jetboil camping stove and join in on the outback camaraderie. Even the NY Times marked it as a “New Era” for Harley Davidson.

Not only were journalists drooling to throw a leg over the new Adventure Bike, Harley executives were exuberant for “knobs and tread blocks” to throw some dirt on the competition and share with the world what they’ve teased out for several years now. In this under two minute video you even get to meet workers from the H-D factory in York, Pennsylvania — the talented folks who assemble the new motorcycles. It’s pretty cool!

You might recall the new Adventure (ADV) model was revealed during an onslaught of online-presentations, keynotes and of course streamed worldwide across every social channel platform. It also included Jason Momoa (“Aquaman” actor) talking about his epic riding adventures.  Because who can’t relate to a Hollywood produced video of a multimillionaire actor’s motorcycle experiences? If you missed the initial launch you can replay it HERE. Or if you have time at work and want to watch a 25-minute video with dramatic musical overdubs about how this isn’t Harley’s first dirt rodeo check it out HERE.

I’m not sure about you, but I’m challenged to recall the last time I shipped a motorcycle overseas and tasted the bright red African soil on Kenya roads humming the tunes from the soundtrack of the Disney’s “Lion King.”

But, I’ve really wandered off the trail.

BMW R1250 GS

In this post, I’m NOT going to pontificate on the tsunami of Pan America jaw dropping impressions. I’ve previously posted on the Pan America engine HERE.  I promise that I’ll cover the Pan America motorcycle spec sheet in a future post.

I want to review the BMW Group with its four brands BMW, MINI, Rolls-Royce and BMW Motorrad. Harley-Davidson is going up against the world’s leading premium manufacturer of automobiles and motorcycles.

For nearly 3-years, (since early 2018), Harley-Davidson has been “pissing” on BMW Motorrad’s parade without the courtesy of calling it rain!  Using a drip, drip, drip teaser marketing strategy, while pre-broadcasting their intent to enter the Adventure motorcycle segment.  The same segment that BMW Motorrad owns. It’s important to note that BMW achieved it’s 2nd BEST sales result in company history in 2020 and doing so during a world-wide pandemic!  Sales stats are below.

BMW R18

After a couple of years listening to Harley’s ADV bluster, BMW launched their own salvo at Milwaukee with the new BMW R 18: a nostalgic touring and supreme cruising motorcycle. BMW borrowed from the famous R 5 models for both technology and visual impact, shifting the focus back onto the motorcycle essentials: purist, no-frills technology and the most powerful “Big Boxer” engine (1802 cc) as the epicentre of riding pleasure. This happens to be Harley-Davidson’s wheel-house.  The motorcycle features and stats are impressive, but equally important is the BMW collaboration with Roland Sands Design, Mustang seats and Vance & Hines exhaust systems.

Will the blue-and-white roundel aggressively defend its Adventure segment sales crown?  You bet, because BMW appeals to a youthful and more dynamic consumer and making money is important to any business.  But, lets get one thing out there on BMW immediately; I’ve encountered numerous riders who claim they used to own BMWs but switched brands due to the absurdly high cost of everything—parts, service and the motorcycles themselves. We could debate that Harley-Davidson follows the same premium parts, service and motorcycle strategy too.

BMW R 1250 GS Adventure – Edition 40 Years

Clearly 2020 was a tough year for the motorcycle industry, but let’s double-click on BMW.

BMW Motorrad delivered 169,272 BMW motorcycles and scooters to customers. However, the German brand sales dropped in 2020 (the first in nine years), which they considered a positive result considering the pandemic circumstances. The Bavarian press team is busy spinning its 2020 motorcycle achievements with market launches of thirteen new models and sales figures being the second-best sales (previous best year: 175,162 vehicles) result in BMW Motorrad’s history (which they are), though the success varies greatly by region.

BMW R18

In Europe as a whole, BMW Motorrad saw its sales volume drop by 5.3%, though Germany (27,516 units) and France (17,539 units) both had record years for motorcycle sales, posting 4.7% and 1.4% gains respectively. Those gains were offset by significant losses from Italy, Spain, and the UK/Ireland. BMW Motorrad didn’t provide the 2019 figures for these countries, nor their percentage drop, in its 2020 sales press release, but scrapping the internet and through mathematical deductions in my HP 12C, these sales numbers follow percentage decreases: Italy (-10.7%), Spain (-12.5%), and UK/Ireland (-23.9%).

We also know from past reports that the BMW R 1250 GS and R 1200 GS models claimed top honors as the bestseller in the lineup and the company is market share leader in the Adventure segment. In terms of motorcycle models, the GS is supreme, with over 59,000 units of the company’s boxer-twin ADV bike (R1200GS / RS1200GSA) sold in 2019. You read that correctly.  Just one model with two variants accounts for one-third of BMW Motorrad’s sales and in the U.S. it accounted for around 7.6 percent of BMW’s global motorcycle sales.

Oh, did I neglect to mention the BMW racing crew with first podium finishes in the FIM World Superbike Championship (WorldSBK) and the successful entry into the Endurance World Championship (FIM EWC) with the new BMW S 1000 RR?

And, I haven’t even started comparing the Ducati Multistrada V4 S Sport, KTM 1290 Super Adventure, Honda CRF1100L Africa Twin or Triumph Tiger 1200 lineup.

You’re likely thinking about now… Mac, you’re just one of those doubters.  That’s fair, but after reading a significant number of top tier media reports, watching a fair amount of YouTube interviews with motorcycle magazine writers, I have just one question. Why did so many riders/writers have unplanned dismounts?  Several of the riders laid down their 574 pound Pan America on the sandier trails during testing at that remote camp in the Mojave Desert, about 100 miles north of Los Angeles.

Did a year of the pandemic downtime diminish their riding skills or is it the motorcycle?

Harley has been enjoying about half of all new motorcycle sales in the U.S. over 600cc, but I remain a bit skeptical that the motor company can enter a new market segment where the Bavarian manufacturer dominates even with how good the Pan Am motorcycle is right out of the crate!

I hope to test ride the Pan Am soon.  Today, I’m having an expresso, but tomorrow I could be heading out on the TransAmerica Trail.

Photos courtesy of BMW Motorrad and Harley-Davidson.

All Rights Reserved © Northwest Harley Blog

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I’ve reached the stage of life where any compliment I get about appearance or physicality is accompanied by “for your age!”

After indulging in that “rant” about China and not posting for a few weeks some wonder if I caught the “COVID.”  No, but I’ve been waist deep in the fine art of Harley-Davidson apathy, trying to get back on track… So, let’s talk about exec salaries and how the year+ of the pandemic “rained money”… and not the eco-dollar benefits of any ‘Green’ initiative.

First, let’s establish a baseline. According to “Google”, the average Harley-Davidson salary ranges from approximately $25,000 per year for a Parts Specialist to $133,555 per year for General Manager. Average Harley-Davidson hourly pay ranges from approximately $9.08 per hour for Automotive Detailer to $39.94 per hour for Tool Maker.

Now let’s double-click on the 2020 Harley-Davidson top executives compensation:

Harley-Davidson’s current chairman, president and CEO Jochen Zeitz’s total compensation was $9.4 million in 2020 — Remember way back in April 2020 when Harley-Davidson said that its then acting president and CEO Jochen Zeitz and the company’s board of directors would forgo any salary or cash compensations? They pushed out a news release with the typical “aren’t we great” statements along with how the rest of Harley-Davidson’s executive leadership would take one for the team and also see a 30% reduction in salaries and most salaried employees in the U.S. would see a 10%-20% salary reduction.

So, “forgoing” a salary and/or cash compensation REALLY means collecting $9.4 million!

Where do I sign up?

But wait, there’s more… 2020 was the same year in which the motor company also paid over $4.1 million in severance to former president and CEO Matt Levatich, a serial overconfident exec who created unambiguously bad managerial optimism, which resulted in over 20-quarters of financial loss. In addition, two other executives departed with the same illness, let’s call it Managerial Optimism Flu (MOF).

Specifically, Matt Levatich received a lump-sum severance payment of $2.15 million in 2020, according to the company’s April 9 proxy statement. In 2020, the company also paid Levatich $343,572 in salary and stock awards valued at $5.45 million. Levatich also saw a $653,000 increase in the value of his pension and nonqualified deferred compensation earnings that brought his total compensation in 2020 to $8.7 million, according to the proxy statement.

Mr. Zeitz was named to the CEO position in May 2020. So, for his eight (8) months as chairman, president and CEO, his total compensation of nearly $9.4 million was more than the $7.6 million Levatich received in all of 2019, which was Levatich’s last full year in the job. Zeitz’s salary in 2020 was $1.68 million compared to Levatich’s $1.08 million in 2019. Zeitz also was paid a $1 million bonus, stock awards valued at $5 million, non-equity incentive payments of $1.5 million and other compensation of $206,233.

I’m surprised that line workers didn’t shout from the roof-top that they would “forgo” any salary too!

A couple of other former executives who received large severance payments of note were former CFO John Olin and former senior vice president and COO Michelle Kumbier. Olin left the company in July 2020. He was paid a lump sum of $1.34 million, according to the proxy statement. For six (6) months of filling that position, he also received $374,421 in salary and stock awards valued at $1.75 million in 2020. Michelle Kumbier received a lump sum of $660,000, according to the proxy statement. You might recall that this payment was previously publicly embargoed then it was disclosed; described as a “settlement” after she threatened litigation connected to ‘unspecified events’ related to her departure in April 2020. For the four (4) months in her position, Kumbier was paid $223,385 in salary in 2020 and stock awards valued at $1.58 million.

According to this report; CEO compensation surged 14% in 2019 (most current data) to $21.3 million.  They now earn approximately 320 times as much as a typical worker.

It’s been widely documented how exorbitant CEO pay is and how it’s a major contributor to rising inequality in the U.S.  The Harley-Davidson payouts might sound like a big cash layout, because — well, it is!

Wait. Mr. Zeitz grabbed the handlebar, replacing the “More Roads” strategy with a hard-nosed approach he called “Hardwire” and what if he turns around the company you ask?  Well, that is exactly what shareholders and the board expect…until or unless he doesn’t then it will be the next exec firing. And another multimillion-dollar severance package paid to the outgoing Harley-Davidson CEO.

There’s that apathy thing creeping back in again.  Big payouts.  It’s routine. It’s a pattern.

Full Disclosure: I don’t own $HOG shares. That said, I do watch the stock and the brand’s activities very closely, as it is of course a massive presence in the motorcycle industry, and as of late, has had its struggles.

Photo courtesy of Harley-Davidson

All Rights Reserved © Northwest Harley Blog

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Revolution® Max 1250 Engine

On February 22, 2021, Harley-Davidson® officially unveiled the multi-year teased then full-frontal hyped all-new Liquid-Cooled V-Twin (Revolution® Max 1250 Engine), which powers the new Adventure (ADV) segment (Touring and Sport) motorcycle called the Pan America™ 1250. The Revolution Max 1250 engine is assembled at the Harley-Davidson Pilgrim Road Powertrain Operations facility in Wisconsin.

The new engine is tuned specifically to deliver the desirable power characteristics for the Pan America 1250, with an emphasis on smooth low-end torque delivery and low-speed throttle control applicable to ADV off-road riding.

Harley-Davidson is bent on piloting across a dusty path into the deep-sand of the Dakar trail by taking on the most iconic and recognizable adventure motorcycle — the BMW GS. The GS, a direct descendant of a Dakar winner, has spent decades proving its capability in the remote parts of the world, with each generation improving on the last.

Revolution® Max 1250 Engine

Revolution® Max 1250 Engine Summary:

Displacement: 76.3 cu in (1,252 cc)
Bore x Stroke: 4.13 in (105 mm) x 2.83 in (72 mm)
Maximum horsepower: 150 @ 9000 rpm
Maximum torque: 94 ft/lbs @ 6750 rpm
Peak RPM: 9500
Compression Ratio: 13.0:1  (Piston crowns are machined)
Valvetrain: Chain-driven, DOHC, hydraulic self-adjusting lifters, intake & exhaust VVT; four valves per cylinder
Cooling: Liquid
Transmission: 6-speed
Primary Drive: Gear
Final Drive: Belt

 

More Revolution® Max 1250 Engine Details:

  • 60-degree V angle of the cylinders.
  • Single-piece aluminum cylinders with nickel silicon carbide-surface galvanic coating.
  • Rocker covers, camshaft covers and primary cover are lightweight magnesium.
  • Liquid cooled engine and the engine oil is also liquid cooled. Oil cooling jets are aimed at the bottom of the pistons.
  • The two crankshaft connecting rod journals are offset by 30 degrees which creates a 90-degree firing order.
  • The engine requires premium-grade (91 octane) fuel.
  • Four-valve cylinder heads (two intake and two exhaust) — exhaust valves are sodium-filled.
  • Cylinder heads are cast from high-strength 354 aluminum alloy.
  • The engine has Double Overhead Camshafts (DOHC) with Variable Valve Timing (VVT).
  • The engine features roller-finger valve actuation with hydraulic lash adjusters and has multiple internal balancers.
  • The engine has two spark plugs per cylinder, dual down-draft throttle bodies with an 11-liter air box over the engine and washable conical air filter.
  • The is a unitized powertrain, i.e. the engine and transmission are housed in a common case.
  • There is a six-speed transmission and the clutch is mechanically actuated with a large-diameter cable.

Harley-Davidson stated that the Pan America adventure motorcycle powered by the Revolution Max 1250 engine can achieve a top speed of 135 mph (217 kmh)!

Similar to the crossover in the four-wheeled world, the adventure motorcycle segment has now been expanded, thanks to Harley-Davidson.

Images courtesy of Harley-Davidson.

All Rights Reserved © Northwest Harley Blog

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It’s real, and it’s spectacular. Fastest I’ve ever clicked “buy.”

Wait! Not so fast. What are you talking about Mac?

Today was historic. The original film starts out greeting thrillseekers, music lovers and conversationalists all across the frozen plains.

You had me at; “You’re here by the grace of your lineage.

But, I’ve wandered off the main trail.

Our “movie hero,” Jochen Zeitz, chairman, president and CEO Harley-Davidson, was an actor riding — yes, RIDING — an actual motorcycle.  That in of itself might be a first?!  There he was in the scenic landscape of Kenya, Africa no less.  Traveling to the vast wildlife preserves to lasso the FIRST twin Adventure Motorcycle and bring it back to Made in America!

Nothing to see here Buell owners.

The emotional exhaustion of this past year must have gripped Mr. Zeitz’ soul, as he peered out onto the Segera Retreat, where a herd of zebra graze, swishing their tails in unison to keep the flies away.  Where a long giraffe at the outer edges of the garden keeps him company as he ploughs through a lengthy to-do list waiting for the Milwaukee employees to wake up.

Today Mr. Zeitz must be just thrilled of simply being alive and to share his wisdom with the motorcycle adventure world.

At the film preview, Journalists cheered… remotely of course.  There were tears and applause, then more tears as the press fell apart during the historical Harley-Davidson Pan America launch today.  Harley-Davidson told a syrupy sympathetic story with dramatic musical overdubs on how the motor company always made off-road bikes. The film narrator described that this isn’t Harley’s first dirt rodeo. You might recall, that back in the 1960s and 70s, Harley offered a variety of small dual-sports, and even briefly got into the motocross game. Harley filled the gap in their lineup by purchasing the Italian motorcycle manufacturer Aermacchi. Not too long after, Harley gave up on the idea of small dirt bikes and sold Aermacchi, which eventually became the company we know today as Cagiva.

It’s fairly evident that the motorcycle press has become nothing but “exhausting love letters to consumerism.” I’ll save my cynicism as a more legitimate response to a product launch once I have a chance to fully review the stats vs. just post another emotional reaction.

We all know that Harley-Davidson is trying to break into the popular adventure motorcycle scene with the 2021 Pan America 1250 and Pan America 1250 Special. The motorcycle and dealer network will compete with some of Europe’s top players, including the BMW GS 1250, KTM 1290 Adventure, and the Ducati Multistrada V4. Harley-Davidson pricing begins at $17,319 for the base model and $19,999 for the Special. The models will arrive at Harley-Davidson dealerships in spring 2021.

For me, it was an immense privilege both physically and spiritually to witness the Pan America launch via film/video. #sarcasmalert

Image courtesy of YouTube: Harley-Davidson Original Film (25:45 minutes)

All Rights Reserved © Northwest Harley Blog

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TAKEAWAY: The Q4 2020 Harley-Davidson retail motorcycle sales in the U.S. — the company’s biggest market — fell for the 16th straight quarter!

FINANCIAL PERFORMANCE DETAILS: Yesterday, I posted that Harley-Davidson unveiled “The Hardwire” — a new 5-year strategic plan.  My snarky responses were largely based on what I viewed as the motor company ‘selling the news’ with a lack of granular detail or disclosure around a growth path forward. It was a brutal Q4’20 and full-year financial result. Followed by executive management’s murky 2021 outlook.  The street wasn’t happy and the result was a 17% drop in share price followed by another 2% today.

My blog post today will be on the fourth-quarter and full-year 2020 financial results with less commentary.

The Hardwire Highlights 

  • The Hardwire includes investing in the Touring and heavyweight Cruiser segment, expanding into untapped segments of Adventure Touring and creating a new division dedicated to electric motorcycles.
  • The motor company views Inclusive Stakeholder Management in the context of people, planet and profit, as all three are now embedded in the past and future success of the company.
  • The motorcycle maker plans to give stock grants to its employees, inspired by a program devised by KKR & Co Inc. executive Pete Stavros.

Q4 2020 Highlights

  • Reported fourth-quarter adjusted loss of 44 cents per share. A big miss and notable executive mismanagement of expectations as the street consensus estimate was for a profit at 24 cents.
  • The revenue decreased by 32% at $725 million compared to previous year.
  • The company suffered a net loss of $96 million compared to the previous year’s profit of $13 million.
  • The loss per share was 0.63 and the adjusted loss per share was $0.44.
  • Total revenues from the Motorcycle and Related products segment, which constitute the bulk of the firm’s overall revenues, plunged 39% year over year to $531 million in the reported quarter.
  • For Q4’20, Harley-Davidson retailed 33,925 motorcycle units globally, down 14.1% year over year. The company’s retail motorcycle units sold in the U.S. slid 14.5% from the year-ago quarter to 17,274. Sales in the Middle East and Africa, Asia Pacific, Canada and Latin America declined 2.2%, 9.6%, 30.2% and 50.9%, respectively, from the year-ago period.
  • Revenues for Parts & Accessories (P&A) were up 13.3% from the prior year to $146.4 million. However, revenues for General Merchandise (GM) — including Motor Clothes apparel and accessories — dropped 13% from the prior-year quarter to $49.7 million.
  • The selling, general and administrative expenses (SG&A) increased to $276.4 million from the $266.4 million compared to fourth-quarter 2019.

Full-Year 2020 Highlights

  • Consolidated revenues for 2020 came in at $4,054 million, declining 24% from the prior year’s $5,362 million. Moreover, the company’s adjusted earnings per share for the year came in at 77 cents, tanking 77% from the $3.36 per share reported in 2019.
  • The motor company streamlined the product portfolio, reducing the planned number of models by almost 30%.
  • Paid dividends of $0.44 per share for the full year
  • Re-set motorcycle model year launch timing to align with beginning of the year seasonality
  • Exited 39 markets to focus on the approximately 50 highest-potential markets
  • Reduced total dealer network by approximately 160 net global dealers in 2020

Jochen Zeitz, chairman, president and CEO, Harley-Davidson summarized the financial call: “The entire Harley-Davidson team put forth tremendous effort in 2020 and we now have the right organization, structure and strategy in place to make step changes in our performance and enhance our position as the most desirable motorcycle brand in the world.”

DISCLOSURE: The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Harley-Davidson.  The author does not own or does the author plan to purchase and/or sell any $HOG stock.

Photo courtesy Harley-Davidson.

All Rights Reserved © Northwest Harley Blog

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Drum roll please…with a rim shot!

Harley-Davidson released the secret recipe for “The Hardwire” — a new 5-year strategic plan rolled out oddly on Groundhog Day.  You can read the press release HERE.

Groundhog Day, the comedy film starring Bill Murray, Andie MacDowell and Chris Elliott portrays a cynical TV weatherman covering the annual Groundhog Day event in Punxsutawney, Pennsylvania, who becomes trapped in a time loop forcing him to relive February 2 repeatedly.

I reviewed the Harley-Davidson press release and like the film, the motor company seems to be in a time loop spewing marketing or business verbiage that doesn’t mean anything. The release reads like quotes from the books “Crossing the Chasm“/”Blue Ocean“/”Good To Great” / “Tipping Point” / “Outliers.”  I’ve never read all of these books, but I sound MBA literate if I quote them. And, besides, most biker enthusiasts probably never read them either to call me out on it.

Below are the main topics of Chairman, President and CEO Jochen Zeitz’s, The Hardwire = with my snarky management euphemisms added for clarity:

The Hardwire Strategy

Profit Focus: Don’t leave money on the table = Be as greedy with them as possible.
Selective Expansion and Redefinition: We’re all about value-add = Unlike our competitors who seek to add no value.
Lead in Electric: It’s best-of-breed = We hired a market research firm to say that.
Growth Beyond Bikes: This is the next big thing/new thing = Some of our 20-somethings have told me this is really cool.
Customer Experience: We’re customer-focused/proactive/results-oriented = That can’t be bad, right?  This is motherhood and apple pie stuff.
Inclusive Stakeholder Management: We need to monetize/strategize/analyze/incentivize = When in doubt, stick “-ize” on the end of a word and it will sound action-oriented.
People: I know you’ve been burning the candle on both ends = Get ready to do some more.
Planet: It’s basic New Green Deal blocking and tackling = How could you screw this up? I also played high school football and those were the best days of my life.
Profit: We want this to move up and to the right = I failed high school algebra but someone said this means we’ll be making a lot of money if this happens.
Financial Targets: It’s about synergies/1 + 1 = 3 = I don’t get the math either, but it sounds like more and more is better, right?

Metaphors or marketing euphemisms are always interesting to me.  Eu·phe·mism — a word or expression substituted for one considered to be too harsh or blunt when referring to something unpleasant or embarrassing. For example, a famous feature of the World Fair in New York in 1964-65 was something called the Dynamic Maturity Pavilion — basically a garden with benches where those of mature years could rest.

Maturity is a positive concept; it implies that a person is fully developed in body or mind. And as a “seasoned” motorcyclist I’ll need to wrap my head around reliving The Hardwire.  We’ve seen this film before. I’ll need to sharpen my pencil and circle back to fully understand the paradigm shift.

In the meantime, I know we’re all on the same team here, rowing in the same direction, and it’s not about me, it’s about us.

Photos courtesy Columbia Pictures and Harley-Davidson.

All Rights Reserved © Northwest Harley Blog

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Santa Wish List

Santa wasn’t good to the motorcycle industry in 2020.  It was the sort of year at Harley-Davidson where every week, you’d say “what just happened?” Soft sales and even negative growth along with company shutdowns then longer term layoffs followed by strategic plan “walk-backs” and then the high profile dumping of a Tennessee motorcycle dealer over racist Black Lives Matter posts followed by an ever discriminating consumer to boot.

Speaking of feet, did you hear that having footwear industry expertise is the new turnaround skill set for executives at the motor company?

As the motor company executives sit virtually in the Zoom conference room and wonder what happened to the year, I can’t help but believe there are some major things on their Santa wish lists.

So, I’ve followed the science (parody alert!) and highlighted below what I think a few of the top executives want for Christmas:

JOCHEN ZEITZ, Chairman, President and Chief Executive Officer, Harley-Davidson: Santa, I “charged” up and shorted out ex-CEO Matt Levatich on that EV motorcycle, but I got the head honcho job with the industry’s most iconic motorcycle manufacturer.  Did you know they have a cult-like following similar to my favorite thing — a Scottish Bailey guitar?  And to think that I’ve never even been photographed riding a motorcycle. I can’t think of anything more to ask for. Oh wait – listen up Santa, please help that Pan American be our rock star and displace BMW R 1250 GS Adventure bike sales. Santa, I need your help to move the company from The Rewire, to The Hardwire and now with marijuana being legal in Madison, my new strategic plan will be called The Higher Wire. Santa, I’ve never been to the White House for dinner and I wrote a book about my transcendental awakening with a Benedictine monk.  It’s my turn!  Please let the spinner land on my name. Lastly, can you help people forget about that botched “Gone Girl” firing of Michelle Kumbier and the $660K departure gift?

JULIE ANDING, Vice President and Chief Human Resources Officer: Santa baby, it’s cold outside. It’s not a Christmas party. It’s a non-denominational Zoom holiday mixer. More inclusive. With my team of over 200 HR professionals (“I say H, and you say R”) streaming video around the world, I posted a fun memo about the decisions made at the company Zoom holiday party will have consequences that will haunt them for the rest of their professional lives. I’ve got doughnuts. I’ve got jelly and sprinkles, but not cronuts because they’re a bastard pastry.

AMY GIUFFRE, Vice President and Chief Communications Officer: Santa, please let 2021 be “If the dream is big enough, the facts don’t matter” — a.k.a. the Mohammed Saeed al-Sahhaf school of bubbling optimism to distract the media and bloggers with superfluous BS so they ignore our fundamental problems. As the motor company leader of the world’s foremost authority on brand marketing please let my cutting edge hoo-ha marketers develop a comm’s strategy that will last longer than Aquaman in theaters!

JON BEKEFY, General Manager Brand Marketing: What the font?  Please Santa, I’m seeking stoke so, let the famously irreverent Enthusiast magazine right a wrong, while I write a song on the largest number of variable text sizes and drawing types ever used in a print magazine. We commissioned a student that designed a flyer for the H.S. prom to perform the magazine eye test. I’m a huge fan of Gliko Modern and Gliko Modern Condensed with Body copy set in Freight Text.  Oooh, so many fonts and so little time. I’m rather preoccupied with condensing the regular widths of every page and reducing The Enthusiast page count to a total of three on the next spread.  Is Santa seeking stoke?

BILL DAVIDSON, Vice President of the Harley-Davidson Museum: Hey Santa, I’m still working here and I bleed black and orange. Did you know I’m the son of William G. “Willie G.” Davidson? Just because the pandemic has closed the museum, I remain busy creating ways to bring light and meaningful impact to motorcycle enthusiasts.  In fact, I sketched a new color book that has cryptic clues, puzzles to solve, and you can uncover a mystery through an interactive story adventure in the museum gallery.  We’re doing this in collaboration with The Pabst Mansion and the Pabst Brewing Company. Pass me a cold one!

GINA GOETTER, Chief Financial Officer: Santa it’s not my fault.  The prepared foods at Tyson Foods taught me a lot. Please let me milk this “new in my job” for just a while longer.  What do they expect?  Miracles on Juneau Avenue!  Doesn’t it matter that I’ve been here less time than ZEITZ?   I do have a motorcycle endorsement.  And, my calculator is newer than Jonathan’s!

JAGDISH “J.A.G.” KRISHNAN, Chief Digital Officer: Santa, it’s all hands on deck. Open. Click. Buy. At Bose, I helped close 119 retail stores after digitization and all I want for Christmas is to be that invincible-gungho digital hero and repeat the success for Harley customers. I’m calling it The Wired Buyer plan. It’s no longer about taking care of every person who walks through our doors – whether that’s helping with a problem, giving expert advice, or just letting someone take a break and listen to a great rumble.  We’re going all in online and will digitize the entire customer experience. Now where are those IBM server rooms on Juneau Avenue.

JONATHAN ROOT, Senior Vice President, Harley-Davidson Financial Services: Santa, I’ve been busy creating forecasting models, assessing risk in investments and ensuring all accounting activities comply with regulations, but I need a new platinum edition HP 12C calculator.  The minus button on my current Texas Instruments model quit working.

PAUL J. KRAUSE, Vice President, Chief Legal Officer and Chief Compliance Officer: Santa, I’ll make this short and sweet.  Please tell us who is behind that NWHOG.com blog?!  We have an important legal document gift we wish to serve send over to the Northwest Harley Blog editor. By the way Santa, trespassing involves entering a chimney without consent, but by wishing for presents and sending letters we’re good to go on the legal front!

LUKE MANSFIELD, Vice President Motorcycle Management: I’m dreaming electric Santa. Think Serial Number 1! It’s a simple process that leads to a complex outcome, but I think I can optimize your gift delivery experience so you’ll be home for Christmas.  Sure you have the reindeer and elf idiosyncrasies, but consumer tastes are changing fast and they want those gifts immediately after they Open. Click. Buy.  Santa you need to adapt & disrupt.  By the way, we’re developing a new delicious lemon flavored drink for our motorcycle enthusiasts.  It’s called ‘Harley Harley‘ and will be a standalone new brand in the U.S.

BRYAN NIKETH, Senior Vice President, Product Development and Operations: Please make Indian Motorcycles go away like “Gone Girl” Michelle Kumbier.  We are tired of being embarrassed in our own backyard when it comes to American cruisers and we don’t want that company bragging about their superior performance anymore.  Santa, save the gifts for the laid off 70 employees in India because I’m flying over when the pandemic ends to discuss Harley’s continuing restructuring of the region. It’s the largest motorcycle market and the exit was hastily announced. Lastly Santa, can you find that blogger at the 105th Anniversary trying to take a photo during our plant tour. We ran his butt right out the building before he was able to take pictures of the lunch room, but the Six Sigma manufacturing team learned later we’re missing a crankshaft bolt.

I don’t know about you, but I’m looking forward to the time when I can throw away my mask. Visiting all my family and sitting around the table sharing stories, eating good food and laughing together again.  And of course, getting on the motorcycle and riding across the U.S. at pandemic-free events!

Thank you for your readership during this past year. Merry Christmas, happy holidays and best wishes to you and yours in 2021.

Photo courtesy of the author.

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Michelle Kumbier

When handled well, conflict resolution can save a company time and money and help maintain a healthy work environment. Unfortunately, conflict management at Harley-Davidson in the executive staff is imperfect, as they have lost hundreds of thousands of dollars due to workplace disputes.

The latest example is Michelle Kumbier.  

In October 2017, Michelle Kumbier was appointed senior vice president and chief operating officer (COO) of Harley-Davidson Motor Co. with responsibility for overseeing the Milwaukee-based motorcycle manufacturer’s U.S. and international markets in addition to her current responsibilities leading product and operations. Previously, Kumbier served as senior vice president, Motor Company product and operations. In that role, she led a team of more than 4,500 employees worldwide to bring Harley-Davidson motorcycles, parts and accessories and general merchandise to market.

$HOG 10-Q Filing

Obviously she was a failure…  for the new Chief Executive Jochen Zeitz, and wouldn’t be part of getting the company on “a path to winning” —  the ‘scarcity strategy’ called ReWire — so, Kumbier departed Harley-Davidson on April 3, 2020.  In the filing with the U.S. Securities and Exchange Commission, Harley-Davidson did not disclose a reason for her departure.

However, earlier his week, Harley-Davidson Inc. paid the former high-profile executive a settlement of $660,000 after she threatened litigation connected to unspecified events related to her departure, the company stated in a regulatory filing.  I’m not a workplace dispute solutionist, but the reason people sue is often not rooted in money as much as the person does not feel they are being treated fairly.

10-Q Filing Section 10.2

Kumbier, who had been a Harley-Davidson employee since 1997, and the company “have disputes over events that allegedly occurred relative to her resignation from the company,” the Milwaukee-based motorcycle manufacturer said in exhibit 10.2 included in its 10-Q quarterly financial report filed Nov. 5 with the U.S. Securities and Exchange Commission.  

Harley-Davidson said it “has denied and continues to deny Kumbier’s allegations” and also denies that it has any liability to Kumbier on any of her “disputed claims.”

But, went ahead and paid her $660,000 for the general denial of those allegations.

The company will make a lump-sum payment to Kumbier after she signed the settlement agreement that was dated Aug. 14, 2020. The document also states that Kumbier acknowledged the settlement amount is more than she would otherwise be entitled to under the company’s normal policies and procedures and that Kumbier released the company, its executives and its board “from all claims, charges, demands, and liabilities of any kind.”  Kumbier also signed a noncompete clause that prohibits her from working for or consulting with a large list of Harley competitors or potential competitors.

It might be appropriate that Harley-Davidson devise a “conflict calculator” to augment their environmental profit-and-loss accounting method to put a figure on how much the company spends on conflict resolution and executive termination each year.

Harley-Davidson CEO Jochen Zeitz Background

Photos courtesy of Harley-Davidson, Michelle Kumbier and US SECURITIES AND EXCHANGE COMMISSION — FORM 10-Q (November 5, 2020) Filing

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Good afternoon.

Election Day is a week away. There’s new evidence of water on the moon. Amy Coney Barrett is a Supreme Court justice, the fire hose of information continues to overwhelm even the most devout COVID-19 science junkies and Harley-Davidson shares soared 27% to $36.82 earlier in the day after reporting third-quarter net income of $120.2 million and post its best Q3 result since 2015.

A striking result after Harley-Davidson put a German environmentalist in charge and recorded a worldwide sales decline of 8%, which is the 15th consecutive quarterly decline.

Wall Street is reviving optimism about Harley’s future at a time when motorcycle sales are in decline. Talk about exaggerating your perspective.

Jochen Zeitz’s (CEO) “ReWire” (yes, a play on the LiveWire electric motorcycle) strategy cut 30% of the models in the lineup, exited 39 markets, eliminated 10% of its workforce including product teams developing new motorcycle models — were executed to manage down motorcycle volume and reduce its global presence due to low sales.  

The actions helped to stop discounting and drive dealership prices higher to MSRP in Q3.  It’s also a tacit acknowledgement that the motor company’s smaller scope and scale is the only way forward after multiple abandoned growth plans and over a decade long quest to appeal and reach new types of riders.

Abandoning affordable, youth-oriented motorcycles is a staggering reversal given Mr. Zeitz’s experience at Puma in connecting with the youth culture and claiming ownership of that generation in Europe. Remember “Puma chic” streetwear fashion?

Harley-Davidson Inc. is back!  Back, to making big, expensive motorcycles for its most devoted customers.

UPDATE: October 27 at 5:13PM PacificFull Disclosure: I don’t currently own or have plans to purchase HOG stock.

Photos courtesy of Bloomberg and Harley-Davidson

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1916 Indian Powerplus

Let’s start with a bit of history… on America’s first motorcycle company.

In 1897, George M. Hendee founded a bicycle production company called Hendee Manufacturing. Hendee Manufacturing would eventually come to be called the Indian Motocycle Company (without the “r”), shortened to simply “Indian” and became Hendee’s primary brand name due to a need for recognition in foreign markets as an American product.

1916 Indian Powerplus

In 1901, bicycle manufacturer, racing promoter, and former bicycle racing champion George Hendee hired Oscar Hedstrom to build gasoline engine-powered bikes to pace bicycle races. The machine he created proved to be powerful and reliable, establishing the company’s reputation for outstanding performance. Later that year the company’s first factory was established in downtown Springfield, Massachusetts.  The first Indian Motorcycle was sold to a retail customer in 1902, and later that year an Indian Motorcycle won an endurance race from Boston to New York City in its public racing debut.

This activity predates Harley-Davidson by two years.

Indian Motocycles Porcelain Signage

I’m not disparaging or trying to exploit Native Americans. The “wokerati” will undoubtedly object and fan the flames of hysteria on the signage reference, but the first half of the 1900s is when Indian Motocycle featured depictions of Native Americans on their products, signage and in their advertisements.

In 1916, co-founder George Hendee resigned as company president.  It was the same year that the United States was embroiled in a conflict with the Mexican revolutionary Pancho Villa, as he repeatedly made raids into the U.S.  It was also the first year of a new 61ci (990cc) ‘flat head’ (Gustafson side-valve) V-twin – the Powerplus, which replaced the F-head (inlet over exhaust) type.

1916 Indian Powerplus

The Powerplus motor was designed by Swedish immigrant Charles Gustafson. He was spurred on by Indian’s defeat at the 300-mile board-track race in 1915 by Harley-Davidson.  He knew a side-valve motor could be made more reliable than the F-head design and could be tuned for speed more reliably than Indian’s 8-valve racer.  The motorcycle oil consumption was stated at 30 mph, 400 miles/qt.; at 50 mph, 100 miles/qt. with an estimated top speed of 60 mph.

Then in 1917 the United States entered into WWI. Indian Motorcycle dedicated much of its production to the war effort. As a result, dealers had limited inventory and retail sales dropped significantly. The company provided the U.S. military with nearly 50,000 motorcycles from 1917-1919, most of them based on the Indian Powerplus model.

1916 Indian Powerplus

In 1923, the company changed its name from The Hendee Manufacturing Company to The Indian Motocycle Company—no “r” in motocycle when the word was used with the name Indian. Indian Motorcycle Manufacturing Company ceased operations and discontinued production of all models in 1953. In 1955, Brockhouse Engineering purchased the rights to the Indian Motorcycle name and sold imported Royal Enfield models branded as Indian Motorcycle models until 1960.  More Indian Motorcycle history is HERE.

In 1999, Indian Motorcycle Company of America (IMCA) emerged. America is at a crossroads … they opened and started operations in a different social climate than that of the original Indian Motocycle Company. IMCA was sued in 2000 by the Cow Creek Umpqua of Oregon under the Indian Arts and Crafts Act of 1990 for their use of “Indian”. Today, the company is now a subsidiary of Polaris Inc. as Indian Motorcycle International, LLC, having refocused its branding with far less focus on Native American imagery.

Edison-Splitdorf Magneto

You might recall that I previously posted articles on “Bob”… a remarkable motorcycle restorer and his vintage motorcycle collection in the northwest.

This original motorcycle is from that collection and shows an aged patina as one of the first-year Indian Powerplus V-twin’s from 1916.  It is in excellent running condition and was ridden and showcased regularly at vintage events. The Powerplus is a 61ci (997.6cc) ‘flat head’ (Gustafson sidevalve) 42-degree V-twin. The bore and stroke is 3 1/8 x 3 31/32 (18HP), the primary drive was a single-row chain under stamped metal dust cover, the suspension in front was cradle spring front fork with a single multi-leaf spring; the rear had an optional swinging arm and leaf spring, or the rare rigid version.  The transmission is a three-speed, hand-change gearbox and foot-operated clutch.. The Powerplus was an influential design of sidevalve engines and encouraged rivals such as Harley-Davidson to follow suit.

1916 Indian Powerplus

This Indian Powerplus is the rare “hard-tail” configuration, which implies to have been manufactured in Toronto Canada and made for the export market.  At the time, it was approx $25 less than the rear suspension model.  It was purchased in somewhat of a dismantled state and restored using Indian original components. Refurbishment included a complete reconditioning of main-shafts, bearing, cylinders, valve seats and various springs and gearbox bearing/pinions along with spokes and tires.  Bob also reconditioned the carburetor, but had to replace the original magneto with an Edison-Splitdorf magneto from the 1930s.

This motorcycle is a fantastic older restoration of a desirable early Indian in original patina condition. It might even be ready for use in an upcoming Motorcycle Cannonball!

1916 Indian Powerplus idling video:

UPDATED — Another post on this vintage motorcycle collection is a deep dive on a restored 1937 Harley-Davidson Model UL Flathead (HERE).

UPDATED — Another post on this vintage motorcycle collection is at: Every Restored Motorcycle Has A Story — The 1913 Single

Photos and video taken by the author.

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