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Archive for the ‘Harley’ Category

“Top-Dogs” Existing Harley-Davidson

Companies often don’t announce their troubles in advance — it’s a strategy that prevents mass exodus. But, when “top dogs” start leaving a company in packs, it’s probably time for you to consider the same.

The latest Harley-Davidson departure is senior vice president and chief operating officer Michelle Kumbier. In a filing with the U.S. Securities and Exchange Commission, Harley-Davidson did not disclose a reason for her departure, which is set for April 3rd.

For Harley-Davidson workers, the question of whether—and how long—to stick with a beleaguered employer is one that hits plenty of people at one time or other. Deciding whether to stay or go is always a tough call, and compounding the decision this year is that COVID-19 is an equal opportunity offender for job displacement.

A number of high-ranking executives have left Harley-Davidson in the span of six months:

  • October 2019 — Neil Grimmer was removed from his post as president of global brand development following an investigation that the company said showed violations of the company’s code of conduct.
  • October 2019 — Heather Malenshek, who was chief marketing officer and senior vice president, marketing and brand, left the company.
  • November 2019 — Paul Jones left his role as vice president, chief legal officer, chief compliance officer and secretary of Harley-Davidson.
  • February 2020 — president and CEO Matt Levatich announces his departure, but the hedge fund, Impala, stated he was fired by the board.
  • March 2020 — senior vice president and chief operating officer Michelle Kumbier leaves the company.

The motor company announced that Bryan Niketh has been promoted to senior vice president of product and operations and will assume Kumbier’s former responsibilities. Kumbier’s global sales responsibilities as chief operating officer will be assumed by acting president and CEO Jochen Zeitz.  In addition, assistant general counsel Paul Krause, who has been serving as interim chief legal officer, has been hired for the role permanently.

Harley’s drip, drip, drip of declining sales is well-trodden media territory.  If negative media coverage is unrelenting, the business stands little chance of bouncing back very soon.

I’m not going to pretend that this is easy stuff, especially given all the uncertainty. The lockdown situations in the U.S. and abroad in markets like Italy, Spain and France, will clearly impact Harley’s production and sales.  And after lifting a two-month or more lockdown are there going to be any buyers if there is a sharp recession or are people going to curtail their discretionary spending given “respectful exits” and the economic consequences?

Harley-Davidson needs to nail the fundamentals and it’s now more important than ever to continue to develop and produce amazing new products.

Photos credit: Patrick J. Endres

All Rights Reserved © Northwest Harley Blog

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President Ronald Reagan With CEO Vaughn Beals

In 2020, April Fools is passé and pranks are out.  The pandemic crisis has changed humor!

The popular metaphor for speech is “Shouting fire in a crowded theater,” which may cause panic.  The seriousness of COVID-19 has the capacity to frighten in a visceral way the public and dedicating a blog post to misleading people just seems like a very bad idea.

Do you remember a long time ago in a galaxy far far away, when tariffs were being used to control unfair trade practices (labor, environment and other issues).

Former H-D CEO Matthew Levatich With Recode’s Kara Swisher Discussing Tariff’s

Recall the hysteria of — Tariffs bad, Harley good?

Harley-Davidson execs and investors panicked when the European bloc raised its 6% tariff to 31% on motorcycles. That made each motor company motorcycle about $2,200 more expensive to export, and forced the company into opening another manufacturing plant in Thailand.

Thirty-seven years ago today, President Ronald Reagan took bold steps to protect Harley-Davidson from foreign competitors.  It was April 1, 1983, when Reagan ordered massive tariffs on large Japanese motorcycles to help the last surviving maker of American-made motorcycles.

President Ronald Reagan at H-D York, Pennsylvania on May 6, 1987

I’ve previously written about how during the 1970’s, Japanese motorcycle manufacturers flooded the U.S. motorcycle market decreasing Harley-Davidson’s market share. It had only been a few years since Harley-Davidson executed the epic buy back from AMF.  Their sales hadn’t reached the levels they envisioned, in part, because the AMF era was famous for shoddy quality, bikes requiring a lot of maintenance and the Milwaukee motor company was getting knocked down publicly and in need of some sunshine.

With poor quality and high-maintenance requirements, Harley was skiding toward bankruptcy.  In 1982, Harley-Davidson sought protection from the International Trade Commission (ITC) and requested a tariff on all overseas heavyweight motorcycles. This was the first and only time such a request was made to the ITC. They also lobbied the Reagan administration to raise tariffs on Japanese manufacturers because of “Dumping,” which in this context refers to exporting a product at a lower price than is charged in the home market, or selling at a price that is lower than the cost to produce it.

President Ronald Reagan and CEO Vaughn Beals at H-D York, Pennsylvania on May 6, 1987 — Recieving Appreciation Award

It was a different time and President Reagan used tariffs, versus tweets, to change the course of the American motorcycle industry.

On April 1, 1983, April Fools Day, President Reagan signed into law an act that imposed draconian import tariffs for a five-year period on Japanese motorcycles with displacement of greater than 700 cc’s.  This would give the American motorcycle maker some breathing room from intense competition to retool, get its act together and turn profitable. While the act was supposed to last for five years, then CEO Vaughn Beals asked that it be lifted a year early in 1987.

It was as good then and just as good today… Remarking about the celebrated Harley-Davidson turnaround in 1987, President Reagan quipped (recorded in this Podcast), “Never bet against Americans.

If you are in need of some reading humor, check out these previous April Fools posts:
Harley-Davidson Boom Box Infotainment Virus
I Quit
Harley-Davidson Launches Blackline L-Edition
Keith Wandell Retirement Revs Up Harley
Wagoner Tapped As Harley CEO

Bonus:  President Reagan’s Remarks (Video) to Harley-Davidson Company Employees in York, Pennsylvania on May 6, 1987.

Photos courtesy of Harley-Davidson, Recode and Ronald Regan Foundation

All Rights Reserved © Northwest Harley Blog

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Is Harley-Davidson committed to lending a hand?

It’s not obvious that Harley-Davidson execs realized their normal marketing plans will no longer cut it as COVID-19 overtakes nearly every facet of American life!

I’m not talking about an empty kumbaya ‘Let’s Ride’ sentiment.  Clearly, the typical messaging in the motorcycle marketplace isn’t going to work the same way as prior to the WW coronavirus pandemic.

Stating the obvious, one would think that Harley-Davidson would play into the motor company’s more than 116-year history and remind consumers how the company has responded during world wars and during previous disasters in America.  While buying or servicing your motorcycle may not be top-of-mind at the moment, offering up some type of payment relief program to consumers affected by this disaster would not only provide some peace of mind to customers, it would reaffirm that the motor company is really focusing on the consumer health situation vs. self-serving attention in suspending U.S. production to disinfect manufacturing equipment and pulling financial guidance for wall street.

Digital Advert — ‘Breathe’ by Droga5

The last significant digital advert (‘Breathe‘ — February 10, 2020), by Droga5, was a message of the outdoors and the experience of riding in a world that is humdrum.

In case you missed it, the world is no longer humdrum…  Droga5 should waive client fees for ‘pivoting’ H-D creative and media to be more reflective of the current situation.

Where is Harley-Davidson marketing?  Not only to pivot the current creative, but how about immediately trying to get a little bit of free publicity via “specially curated images” for video conference backdrops. Spitballing here… It’s important to be reassuring right now and not try to say to people ‘Rush into your Harley dealership for a sales event.

Where is the Harley-Davidson Foundation, the philanthropic organization of Harley-Davidson Inc.?  Where is Harley-Davidson Credit?  How about offering a program giving new motorcycle buyers very low-to-zero percent financing and the option to delay their first payment for 90 days?  Where is Harley-Davidson Service?  Maybe provide free service or reduced costs for people who only have a motorcycle for transportation?  And lastly, where is the “We’re With You Every Step” inspirational statement from the United Steelworkers and International Association of Machinists and Aerospace Workers’?

The COVID-19 pandemic is producing economic and social disruptions not seen before, and major industries have already felt the impact. People aren’t buying as much stuff. People are getting laid off. Despite government reassurances, the anxiety of closed businesses and lost employment and wages weigh heavy on people.

But, lets bring it back to the local situation in the northwest.

As of this morning, March 30th, the Coronavirus situation is:
Oregon: 13 deaths, 548 cases — Oregon numbers
Washington: 195 deaths, 4,896 cases — Washington numbers
United States: 2,600 deaths, 143,532 cases — U.S. numbers

While not essential for health, sustenance, shelter, and hygiene—it’s time for Harley-Davidson to step up and find a way to exist, operate, and communicate in ways that offer one of some combination of help, hope, and entertainment.

To Be Fair:  It is important to note that Harley-Davidson, it’s dealership network and the Harley-Davidson Foundation have made significant charitable contributions over the years.  From donating motorcycles to the Haitian Earthquake to funding Red Cross for the earthquake and tsunami in Japan and to natural disasters in the U.S. like hurricane Florence.

Photos courtesy of Harley-Davidson

All Rights Reserved © Northwest Harley Blog

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Highway 50, just outside of Great Basin National Park

You might not know, but there are 59 national parks and 4,092,729 miles of roads in the United States.

All the roads in Brazil, Germany, New Zealand, Canada, Japan, Mexico, Sweden, and France combined would not equal the length of America’s roadways.

Believe it or not, there was a time in our not-so-distant past when there were no paved roads bridging the gap between civilization and the North American wilderness.  The earliest Harley-Davidson motorcycles had the same suspensions as bicycles of the time: none at all. The roads were a hodgepodge of dirt, stone, and other materials. Bumps were everywhere!  Harley-Davidson’s weren’t necessarily the fastest bikes on the market, but they were built with reliability in mind and were among the first truly heavy duty motorcycles in the world that could be relied on for safe running over the atrocious roads of the day.

1913 Harley-Davidson Model 9-B Single — Valve Side

The transformational American road-trip essentially became touring wide-open spaces from the saddle of a motorcycle.

In last months posts, I touched on a collection of classic motorcycles in the northwest and provided tribute to an inspirational man (Bob) with a genuine love of wrenching motorcycles.  I also illuminated his first restoration in the collection — a 1937 Harley-Davidson Model U-Series Flathead.

In this post, I’m plunging head first into another motorcycle in the collection, a Harley-Davidson 1913 Model 9-B Single.  It was already Harley-Davidson’s 10th anniversary when this bike originally rolled onto the showroom floor. From their humble beginning and that first bike built in their 10′ x 15′ shed, they had overcome the competition to produce over 1,000 motorcycles in 1909 to almost 17,000 bikes in 1913.

1913 Harley-Davidson Model 9-B Single — Transmission Side

According to an advert for the 1913 Chicago Motorcycle Show, Harley-Davidson states (page 10) that they sold out their entire manufacturing output in 12.5 weeks!  Clearly, the Milwaukee motor company had grown past the “motorized bicycle for fishing trips” into planning  motorcycles for large volume production.

Postured affectionately in the corner of the vintage collection showroom, you’ll want to gaze at this motorcycle for hours, and each time notice something new. A small hand-turned screw on a throttle linkage, a one-off brass cam on the carburetor body, a perfectly machined castellated nut on the rear hub that firmly holds the pedal sprocket – a few indicators of its origins as a commercial motorcycle. All of these details amaze and remind me of just what this bike was built to do – both by its original designers and by its inherited restorer.

1913 Model 9-B Single — Valve Side Close-up

It was interesting to learn that Bob’s motorcycles were never chosen for specific “provenance” or heritage — the range of manufactures in the collection represent personal tastes as well as unique expressions — beauty, performance, functionality and style that resonated with him through the years.

This 1913 Model 9-B single originally sold for $250.00 at the factory in Milwaukee and it took Bob more than 15 years to fully restore.  It’s the oldest motorcycle in the collection, and was one of Bob’s top-three favorites, but not the rarest or most collectible in the world.

Restoring a Milwaukee icon is no easy task, but with Bob’s guiding hands this motorcycle showcases exceptional restoration craftsmanship, pristine attention to detail, and along with some unique history it might well mean that it is destined to be in a museum some day.

1913 Model 9-B Single — Transmission Side Close-up

The condition of this single-cylinder, four-cycle, air-cooled model is truly immaculate and a bill-board poster of simplicity.  It’s also the foundation of what generated the Milwaukee motor company mystique.  The motorcycle features a 35 cu in (565cc) motor with a nominal 5 HP, an overall weight of 235 pounds, a 2-gallon fuel tank, a 3.5 quart oil tank, and a Bosch magneto placed behind the motor to keep out road grit.

For the 1913 model year, the Harley single was updated with the mechanically operated inlet valve (replacing the ‘atmospheric’ type), which was developed first for the twin cylinder models, and at the same time boasted a balanced bottom-end, alloy piston and improved carburetor.  The stroke was increased to 4 inches as compared to 3.5 inches of the former model.  The wheel-base on the singles were 1 inch shorter than the twins.

1913 Harley-Davidson Model 9-B Single — Front Fort Close-up

Harley-Davidson also made a small change to the form of the clutch lever operating the “free wheel” in 1913.  On the flat belt models a guard was mounted.  These motorcycles were popularly known as the ‘5-35’ (5 horsepower, 35 ci displacement).  The 9-B single was available in belt and chain-driven versions while ease of use was considerably enhanced by the adoption of the rear hub clutch first seen on the twin cylinder.  As the twin’s popularity grew, the single declined, accounting for only 4% of sales in 1917 and production of the Harley-Davidson ‘5-35’ ceased in 1918.

The gray color paint on the restored motorcycle includes a bold striping scheme, which complements the original manufacturing process of taking great care during the enameling procedure with three hand rubbed coats of paint followed by a protective varnish.

1913 Harley-Davidson Model 9-B Single — Transmission Side

Manufacturing the Model 9-B single made up the majority of the company’s production in the early years.  By 1912, all Harley-Davidson’s had gained mechanical inlet valves and all-chain drive, but this restored model, included the belt option, which was offered for several years.  Both singles and V-twins had single-speed transmissions with a robust rear hub clutch operated by a tank-side lever, and their new mechanical inlet valve meant more power and higher revs were possible. The valve side has a pedal-and-chain drive. With the rear wheel raised up by the stand and with the clutch engaged, the pedals are used to crank the motor. The brake is engaged by a slight backward pressure on the pedals.

The rider sits on a leather brown saddle, mounted with a central, sprung pillar sliding with the frame’s vertical saddle tube, which was positively located by an articulated lever pivoting from the top frame, just ahead of the saddle nose.

1913 Harley-Davidson Model 9-B Single — Top Looking Down at Valve Side

Harley-Davidson called this the “Full-Floteing” seat—a riders comfort not-with-standing accurate spelling—as the system should be quite familiar to any Duo-Glide owner.  The oil tank hid with the tool box. While the engine’s drip oil feed was “automatic,” any hard riding owner could give a visible shot of fresh lubricant from a tank-top hand pump.

The 1913 motorcycle frame was reportedly stronger than the previous year models and provided better handling, while the new vertical fins atop the cylinder head allowed the engine to run cooler.

1913 Harley-Davidson Model 9-B Single — Transmission Side

As mentioned earlier, the Bosch magneto was placed behind the motor to prevent collection of road grim, and proved to be a reliable instrument, making the machine easy to start via its bicycle pedals on the stand or off the stand using the valve lifer to take off.  The motorcycle has 28 X 2.5 tires with an Eclipse Knockout front hub that allows the tire removal by taking only one nut off.  The brakes are “coaster type” on the rear wheel like today’s simple pedal bikes.

In the late summer of 1913,  a new board track was opened in Milwaukee, right in Harley’s back yard.  The company’s professional race abstinence came to an end as Harley-Davidson change its corporate mind and the Racing Department was formed, with William Ottaway as its first Assistant Engineer to racing engineer William S. Harley.

1913 Harley-Davidson Advert — Courtesy of Motorcycle Illustrated and Google Books

The Harley twins pulled ahead of Indians and would dominate motorcycle racing in 1914.  The Racing Department was referred to informally as the “Wrecking Crew.”  However, one of the racers acquired a pet piglet, which was quickly adopted as the team’s mascot, and helped popularize the nickname ‘the Harley Hogs’ due to the race team carrying the team’s mascot around on the motorcycle fuel tank during victory laps.

The 9-B single is truly a peppy machine and can be ridden all day long at 40-45 MPH, as proven in the Motorcycle Cannonball Endurance Run, where a 1914 single-cylinder Harley-Davidson won the 2018 event with a steady, thumping pace.

This 1913 Model 9-B was a frame-off full restoration which Bob completed in the 1980’s.  Parts were sourced as needed from various swap meets, nickel ads, flea markets, yard sales, and scanning newspapers to find an elusive part!  There was no Dubya, Dubya, Dubya (i.e. Internet) in those days.  Most of us will never know the feeling of satisfaction derived from unearthing the perfect part at a swap meet and haggling its price down to a bargain.

1913 Harley-Davidson Model 9-B Single — Transmission Side

During the course of multiple interviews, I ask if anyone knew why Bob was so fervent about recruiting parts from swap meets. It turns out that Bob and his wife loved to travel. And, in the course of seeing America from a motorcycle, he recruited ever more vintage enthusiasts to help him find and locate parts for motorcycles he had in the restoration queue.

Those early days began the tradition of keeping motorcycles running and riding as much as possible.  It was called “self-assemble.”  Buying a complete front end may wipe-out your budget, but if one guy has a set of tubes for $40, and you remember seeing a triple tree on that table over by the Port-A-Potty, and you manage to negotiate a wheel and axle for $35… well, you are most of the way to having a front end cheaper than buying a complete unit — if it existed!  The rides and swap meet experiences were some of the best and fun times for Bob and his wife.

This is one of the finest restorations of an early Harley-Davidson model anywhere!

Previous posts on this vintage collection:
Vintage Restorations Uncovered In The Northwest
A Northwest Collection Gem – The 1937 Flathead

Photos taken by author. The black & white Motorcycle Illustrated advert courtesy of Harley-Davidson and Google Books.

All Rights Reserved © Northwest Harley Blog

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Harley-Davidson’s Entrepreneur and New Mastermind

Jochen Zeitz — Harley-Davidson interim President and CEO

The ultimate maverick has been hired to preserve and renew the freedom to ride.

I’m talking about Jochen Zeitz — the entrepreneur and new mastermind in charge of Harley-Davidson until he is offered the position permanently or a recruitment committee finds a replacement CEO.

So, what do we know and who is this man?

Jochen Zeitz at Segera Retreat Lodge

As a slacker who would debate a good life is better than a good job, paint me truly inspired for that list of accomplishments!

Talk about an extreme producer with a missionary zeal!  And, I haven’t mentioned the best part… a profile of his “day job” achievements.

Mr. Zeitz represents qualities too good to be true and the idea of him shilling for some corporation to hawk motorcycles deflates the “HERO” excitement.  It’s clear, Mr. Zeitz won’t be satisfied until he has done everything to promote his vision of a new, better world.

LiveWire — Jochen Zeitz — Milwaukee, WI

With his multi-millions in fortune, Jochen Zeitz is likely the richest person in history to run Harley-Davidson as interim president and CEO.

So, again, who is the 57-year old sandy-haired, 6’1’’ athletic build of a man?

Mr. Zeitz was born in Mannheim, Germany, in 1963, to a gynecologist father and dentist mother.  He grew up in a time when the Green Party and the anti-nuclear movement were enjoying strong support in Germany.  Along with the time he spent at the family’s lodge in the Odenwald forest, the outdoor exposure planted seeds of interest in environmentalism.  He was educated at Karl-Friedrich Gymnasium, Mannheim, south-west Germany, and then international marketing and finance at the European Business School of Oestrich-Winkel near Wiesbaden.

Jochen Zeitz and wife Kate Garwood

Mr. Zeitz began his professional career with Colgate-Palmolive in Hamburg in 1986. He then moved to Herzogenaurach in the Franconian countryside to work for sporting goods manufacturer Puma (Bio) in 1988. From there, he rose rapidly though the ranks to become head of marketing in 1991 and vice president — international and head of the global marketing and sales department.  In 1993, at the age of 30, he became chairman of the board of Puma, making him the youngest CEO of German firms with commercially traded stock. He dramatically reduced staff numbers, took production to Asia, made English the corporate language, started sponsoring African football teams and was credited with turning around the near-bankrupt business into one of the world’s top three sports brands.

The Zeitz Museum of Contemporary Art Africa (Zeitz MOCAA) — Cape Town

In 2003, he insightfully signed 16-year-old future Olympic champion sprinter Usain Bolt to Puma.  In 2007, he was appointed to the Board of Harley-Davidson.

Puma was acquired by luxury goods conglomerate Kering in 2007, and a few years later Mr. Zeitz served as Kering’s Chief Sustainability Officer.  In 2011, he set up a sustainability committee for Harley-Davidson, which he also chaired.

Also in 2011, he wanted to step back and focus on his environmental work and resigned as CEO of Puma.  He became a director of parent company Kering and chairman of the group’s sustainability committee.  He co-founded ‘The B Team’ with Sir Richard Branson in 2013.  That same year he launched the Kenyan Segera Retreat with a focus on his foundation’s 4C philosophy for sustainable tourism.

In 2020, he was hungry for something much more and became Harley-Davidson’s interim president and CEO.

Jochen Zeitz — 1929 Gypsy Moth Airplane Photo credit: Eric M Rojas

On a personal level — he divorced his first wife Birgit Jöris in 2012 following an 18-year marriage.  He is currently married to LA-based producer Kate Garwood‚ 41‚ producer of the 2016 movie “Race”‚ about U.S. track star Jesse Owens.  They have two children; 4-year old Jesse born September 2017 and a three year old. He keeps homes in Switzerland, Santa Fe, Los Angeles, a 50,000-acre ranch in Kenya and has property in west London.

When researching material for this blog post, I was blown-away on the amount of information published about Mr. Zeitz.

In a 2013 interview with the International Bar Association, he stated no plans to marry again, although at the time he was in a long term relationship with Kate Garwood. He was adamant about no intention of having children. ‘No, definitely not,’ he stated emphatically. ‘Never say never, but it’s very unlikely. It’s not something that fits with my daily life and I’ve never believed that having children without a father around is a good idea. It’s not really something I would get excited about.’  Just a short four years later both occur.

Jochen Zeitz at Segera, his 50,000-acre ranch. Photo credit: David Crookes

In recent press interviews, he’s stated the joy of his decision to have children late in life, because now he can see them grow up versus having such a busy schedule in running a company and traveling for 10 months in a year.  An interesting side bar: Speculation swirled that Jesse, their first child, was named after the 1930s athlete and fueled by the fact that Jessie Owens was provided with shoes for the 1936 Olympics by the Dassler brothers‚ who went on to found Adidas and Puma. 

But, I’ve digressed and want to return to connecting the Harley-Davidson dots… Mr. Zeitz’s experience at Kering was a critical influence and the driving force behind Matt Levatich’s (the recently fired Harley-Davidson CEO) pivot to sustainability that led him to think much more about environmental profit and loss at Harley-Davidson.  Mr. Zeitz had devised an environmental profit-and-loss account method at Kering which, put a figure on what a company’s air pollution, land use, water use and carbon consumption cost the planet.

Jochen Zeitz’s Favorite Thing — A Scottish Bailey — Photo credit: Charlotte Haden

While Mr. Zeitz — wealthy, world-view philosophy, competitive, over-achiever and relatively young — has the luxury of carving out grandiose, acronym-fueled sustainable ‘visions’, that struggling businesses like Harley-Davidson, desperate to increase motorcycle sales, might find distracting or even an irritant.

We’ll have to read the biography when ex-CEO Levatich publishes the book, but as an outside observer, one distraction example is: it took eight years, millions of dollars and the work of over a thousand engineers to fully realize a product that few want — the Harley-Davidson LiveWire — the Milwaukee company’s first premium electric motorcycle to go on sale in September 2019.  As a long-serving Harley-Davidson board member, Mr. Zeitz convinced executive management to focus not just on the moral justification for electric engines, but on the needs of Harley-Davidson customers to have healthy natural landscapes in which to ride. The logic behind this claim, was that “what every rider loves about the ride – it’s the environment they’re riding in, isn’t it?”  Soon afterward, the marketing and brand alignment teams marched in unison to support sustainability as a major part of the brand.

Segera Retreat — Laikipia, Kenya

The result?  A new mission, twisting the brand’s historic celebration of freedom into a desire “to preserve and renew the freedom to ride” and TWELVE quarters of sales decline.  Along with a $2,152,500 million severance payment to Matt Levatich.

Mr. Zeitz believes and is on record, stating there is more to corporate life than the relentless pursuit of profit. Wait, what?!  Isn’t profit what got Matt Levatich fired?

I’ve watched “An Inconvenient Truth” and the sequel. The oceans are heating and the poles melting, but color me skeptical of environmental groups with sustainable-for profit-business interests.  We’re all too aware of what the world needs: another multi-millionaire telling others how to behave better once they have made their own fortune while flying private and choppering into a rich man’s playground.

Jochen Zeitz GQ Article — in German

The motor-head scholars, bankers, real estate agents, lawyers and fashion designers who gather not to drink cheap brew, but to sip $15 “born to be wild” martinis and straddle $40,000 motorcycles might pontificate on the value of sustainability, but I just don’t see grizzled leather-clad loyalists describing Harley-Davidson as the world’s most sustainable manufacture over a beer at the Sturgis rally.

But, sometimes there’s a man. I won’t say a hero – ’cause what’s a hero? – but sometimes there’s a man – and I’m talking about Jochen Zeitz here – sometimes there’s a man who, well, he’s the man for the time and place.

A man who will improve the brand that is unique, exciting and one that gives value to it’s riding customers.

But wait, there’s more… An incentive if he kicks a field goal… according to the company 8-K regulatory filing, the interim Harley-Davidson, CEO Jochen Zeitz, is eligible and will receive a $3 million bonus (in the form of restricted stock units (RSU’s)) that would vest one year after the grant date and become payable if his employment continues to the date of the installation of a new CEO.  That $3 million would come on top of the annual base salary of $2.5 million he is receiving now after taking over for Matt Levatich. I don’t think this will be too difficult since Mr. Zeitz has served on Harley-Davidson’s board since 2007.

UPDATED: April 17, 2020 — Due to the ongoing COVID-19 pandemic and sales impact, Harley-Davidson announced that its acting president and CEO Jochen Zeitz and the company’s board of directors would forgo any salary or cash compensations. As mentioned above, Zeitz currently has an annual base salary of $2.5 million.

Photos courtesy of Harley-Davidson, Jochen Zeitz, Twitter, Eric M Rojas, David Crookes, and Charlotte Haden

Information Source & References: IBA, Independent,Wired,Business Daily Africa, Milwaukee Business Journal, Adventure Rider, Infosys, Telegraph, Financial Times, Angama Blog

All Rights Reserved © Northwest Harley Blog

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Matthew S. Levatich — Ex Harley-Davidson President and CEO

Harley-Davidson, Inc. announced yesterday that Matthew Levatich has stepped down as President and CEO and as a member of the Board of Directors. The Board of Directors appointed current Board member Jochen Zeitz as interim President and CEO following the abrupt resignation of Levatich.  A search committee is being formed, and the Company will utilize an external search firm to undertake the process to find a new CEO. The press release also stated that Levatich would assist with the transition through the end of March.

Levatich had a 26-year career at Harley-Davidson with the last five years as President and CEO. The abrupt departure marks 5-years of sliding sales and the value of the Milwaukee motor company has been cut in half.  It was not a cheerful week at Harley-Davidson!

The board and the CEO share responsibility for corporate performance, so it stands to reason that when a CEO fails, the board has failed as well.  I would speculate the company board is reacting to pressure from shareholders and seeks to appease investors in the short term by handing them the CEO’s head on a platter.  The investment community will want a replacement CEO who’s both promising and reassuring—and they’ll want him fast.

Jochen Zeitz — Harley-Davidson interim President and CEO

If we were to step into a time-machine and journey back to the future… from the V-Rod to the Buell Blast. Who can forget the MV Agusta dumpster fire and in the parlance of our time, there is now a green machine— LiveWire—a motorcycle short on juice, and one that few people want or can afford to buy.  Harley’s attempts to branch out has with out a doubt shown mixed results, at best.  In fact, some observers wonder if the company is “asleep at the switch.”

It would seem that “seeing the problem is easier than fixing it!”  Levatich’s mantra that Harley-Davidson doesn’t build motorcycles, it builds riders, always seemed a bit odd.  That’s like saying, “It’s not about horsepower, but more ideas per horsepower.”  Or “we don’t build motorcycles, we’re a lifestyle merchant company.” It’s that line of reasoning which is nice for marketing collateral, but when you actually dissect its meaning, it’s a  “wait, huh?” moment.

Harley-Davidson Five-Year Sales Slump

Levatich was promoted when Harley announced in February 2015 that he would succeed Keith E. Wandell as President and CEO of Harley-Davidson, Inc. upon Wandell’s retirement on May 1st.

You might even recall that back in August 2008, Matt Levatich, who at that time was vice president and general manager of parts and accessories and custom vehicle operations (CVO), was named managing director of its newly acquired premium Italian motorcycle company MV Agusta Group.  I blogged about this $108 million acquisition being a train wreck (Go Italian) back in 2008.  That deal was heavily promoted as a major part of Harley’s bid to increase its presence in Europe, where it had seen sales grow in the double digits the previous three years, offsetting weaker performance in the US.  The $108 million included $69 million paid to erase MV’s debts and included the Cagiva brand.

Just 14 months later, the Milwaukee “jetsetters” revealed during the Q3’09 financial results, the motor company would divest from the Italian national symbol of motorcycling and the real gut punch was—they would discontinue the Buell® product line.  I don’t recall seeing a lot of MV Agusta T-shirts, coffee and dog collars so, I guess it wasn’t a good fit.  Unfortunately, Levatich will go down in the motorcycle history books as the man that shut down Buell.  Granted the previous CEO, Keith E. Wandell, started unwinding the process caught up in the axel, but Levatich concluded the 16-years of collaboration.  It never added up as a smart business decision and every time I go back and research the articles and press releases it sounds more like someone had a vendetta they wanted to settle.

It’s my view that the blame for Harley-Davidson’s poor results lies squarely with the board of directors!

Poor performing companies don’t get that way because of any single decision or for that matter any single leader. Patterns of historical decisions, strategic neglect, and misallocation of resources all contribute to the deterioration in performance; some contributing factors may even lie outside the company’s control—looking at you tariffs!

Typically a CEO is dismissed not because the board has thoughtfully and deliberately concluded that it’s time for a change at the top, but because investors, concerned about poor performance, demand a change.

Let’s hope Mr. Zeitz and the board of directors have a blueprint for success.

UPDATED: March 1, 2020 — added sales chart and text on length of Levatich career.

UPDATED: March 4, 2020 — According to the company’s 8-K regulatory filing on Monday, March 2nd, Levatich will receive a severance in line with the company executive severance plan.  The company’s 2019 proxy statement states; top company officers will receive a cash severance of 24 months of base salary and 18 months continuation of certain employee benefits, such as life insurance, medical, dental, vision, as well as outplacement and financial planning benefits, if employment is terminated for reasons other than for cause.  The Milwaukee motor company had 12 previous quarters of sales decline, and Levatich’s severance payment will be $2,152,500.  Assuming a 2018 base salary of $1,076,250.

Photos courtesy of Harley-Davidson.  Sales chart courtesy of Bloomberg news.

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Harley-Davidson 1937 Model UL — Flathead

In a previous post, I briefly touched on a remarkable collection of classics in the northwest and how I was most fortunate to interview the family and learn more about an inspirational man with a genuine love of wrenching on vintage motorcycles.

In this post, I’m taking a deeper dive on the first (frame-up) restoration in that collection — a 1937 Harley-Davidson Model U-Series Flathead.

According to Harley-Davidson, the UL production in 1937 was 2,861 units and the motorcycle sold for $395 or the equivalent purchasing power of about $7,100 in 2020.

Harley-Davidson 1937 Model UL — Teak Red

There is nothing more alarming than a motorcycle that has been built, modified or customized by someone of dubious talent and knowledge. All it takes is a quick spin around Craigslist, searching for the terms “project,” “bobber,” “custom” or “café racer” to turn up any number of bikes that will have you saying WTF.

Many times these projects are started with the best of intentions, but the absolute worst are the ones that are started in an attempt to make a quick buck, or resurrect a wadded up bike.

However, this ’37 wasn’t someone else’s project.  It would need help bringing her back to life, but it had all the original sheet metal, flathead engine, transmission, speedometer, leather saddle bags, solo seat and more.

Instruction Manual

Bob spent several years on the identification, collection of manuals and parts search for this exceptionally high caliber restoration.  He completed the motorcycle restoration in 1975 and was often seen riding it at various antique club events through-out the years. The motorcycle has lots of crowd-pleasing brightwork, is an excellent runner with showy pieces of Art Deco styling and old school looks.

A fascinating backstory is the original restoration color on this ’37 was Olive Green with Black striping. Bob loved spending time with his grandkids who were all very involved in taking things apart including motorcycles.  It started with bicycles then mini-bikes and later on with motorcycles and automobiles.  In his workshop, he’d show them how to take apart things and repair them — the correct way — with the correct tools!  Several years after completing this restoration, he decided to work on a project with his grandkids and taught them how to disassemble the ’37 inorder to repaint the sheet metal Teak Red.  Those kids meant the world to him and passing down his tradesman skills might be his legacy.

1937 Harley-Davidson Model UL

The ’37 is an excellent example of the — Flathead Engine — a charming, honest, beautiful bike that doesn’t rely on diaper-shined chrome or flawless paint to impress.  Named for its flat-topped, vented cylinder heads, the side valve-equipped (using tappets) 74 cubic inch V model Big Twin actually came out in 1930, but in 1937 the U-series motors were of dry-sump oil design.

At first flatheads seemed out-of-step or backwards compared to higher-horsepower overhead-valve designs. But, out in the real world, the “flatty’s” broad spread of torque, less clattery operation and cheaper buy-in continued to win over riders.  The 74 cubic inch “F” motor has a 4-speed tank-shift transmission and a Linkert M51 mechanical butterfly carburetor.

The teardrop-shaped fuel tank is adorned with an instrument panel (dubbed the “Cat’s Eye”) that bundled all the gauges into one graceful package. It even has the rare dash panel with the oil and amperage indicators.

1937 Harley-Davidson Model UL — aka “Cat Eye”

The Big Twin model was built in part to compete with the 74 cubic inch Indian Chief.  The U and UL models featured 74 cubic inch power plants, and the UH and the ULH models were outfitted with 80 cubic inch engines. The 80 cubic inch models were produced until 1941, and the 74 cubic inch U and UL models were in production until 1948. The three-wheeled Harley-Davidson Servi-Cars made from the early 1930s through 1975, were powered by flathead engines during their entire run of production.

One of the most notable improvements found on the ’37 U-series, was the new design, which recirculates the oil from the oil tank, through the engine and back to the oil tank. Up until 1936, all Harley-Davidson motorcycles used “total loss” systems, which essentially ran the oil from the oil tank, through the engine and ultimately onto the ground.  Thus the nickname: “road oilers.”

1937 Harley-Davidson Model UL

The valves are actuated by four gear-driven camshafts (one per valve) and used adjustable tappets to maintain precise spacing between the cam lobs and the valve stems. Although the cylinder heads don’t contain any moving parts, they do play an important role in cooling the engine. Initially Harley-Davidson outfitted the U-series motors with cast iron cylinder heads, but soon switched to forged aluminum alloy heads with deeper cooling fins for improved cooling. The engine has brass spark plug inserts added to address the former engines’ problems of stripping threads. This motorcycle doesn’t have them, but at the time customers could opt for optional silicon aluminum heads.

1937 Harley-Davidson Model UL

Fuel and air are fed into the motor using a single Linkert carburetor, which is positioned on the left side of the motorcycle. Harley reversed this arrangement for its overhead motors, which all have right side carburetors. Exhaust was routed and expelled via a single fishtail muffler on the right side.

The primary chain, located on the left-side,  transmits power from the engine to the 4-speed transmission. The transmission is hand shifted via a lever mounted on the left side of the fuel tank and the clutch is controlled with a foot pedal. A secondary chain transmits power from the transmission to the rear wheel using a brake drum mounted sprocket.

The front and rear drum brakes are engaged manually with no hydraulic assistance. The front uses a cable to connect a right side mounted hand lever to the left side mounted drum. The rear uses a series of adjustable rods to engage the motion of the right side brake pedal through the frame and out to the left side mounted rear drum.

1937 Harley-Davidson Model UL

The ’37 Model UL rides on a “hardtail” frame.  Basically, there is no rear suspension. The sprung solo seat helps offset the lack of any rear suspension, and the “Springer” front end is the main suspension on the Model UL.  It’s a two piece element that uses six external springs on the top and moveable rocker arms on the bottom. The springs absorb impacts while the rocker arms permit vertical movement of the front axle.

The left hand grip operates the engine timing, allowing a rider to retard the timing for easy starting and advance the timing for normal running. The horn button and the high/low beam switch for the headlight are located on the left side handlebar as well.

1937 Harley-Davidson Model UL

Shifting the 4-speed transmission is accomplished using a hand lever that is attached to the left side of the fuel tank. A shift gate helps the rider find the gears without skipping gears when shifting. The foot operated clutch, known as a “rocker clutch” is used to engage and disengage the clutch. All Harley’s use the “toe to go” set up where pressing the clutch pedal forward with the toe engages the clutch and pushing the pedal back with your heel disengages the clutch. A friction disc is used to keep the clutch pedal in the heel back position, so that the rider does not have to keep their foot on the pedal when the motorcycle is stopped.

It’s challenging to explain the ’37 Harley-Davidson Model UL mystique.  There is both excitement and apprehension in managing the technique of a rocker clutch and tank mounted shifter.  Adding to the rider challenge is counteracting the heavy Springer front-end during a corner. Stability, if there is such a thing on this model, is a complicated matter and the manufacture of motorcycles in the 1930’s were very reluctant to talk about it.

In the fast moving world we live in today, it’s difficult to wrap your head around the bicycle-like origins starting in the Davidson family’s backyard more than 116-years ago.  If we had the luxury of going back in time, we could ask the young inventors, but I’d anticipate the founding group would be exceptionally proud of Bob’s restoration treasure and the enduring craftsmanship on “their” 1937 Model UL.

UPDATED: March 8, 2020 — The third post on this vintage motorcycle collection is: Every Restored Motorcycle Has A Story — The 1913 Single

Author Comments:  Although my name appears on the post, it takes a “village” to pull together this type of information.  I’m not only delighted to be working with Bob’s family, I also get the honor of thanking them here.

Photos taken by author and courtesy of Harley-Davidson.  

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