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Posts Tagged ‘CEO Matt Levatich’

“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

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The motor company gets beat down by critics for lack of technology advancements and then they’re pummeled on social media by customers every time they sway off from tradition.

In this category, the rock and hard place are A) the need for change and B) the danger of following the buzz.  And, in an increasingly social media driven world it is easy, and tempting, to mistake the buzz and savvy social pundits for a real business opportunity.

Simultaneously, the Wall Street view of Harley-Davidson’s move into electric motorcycles being an enduring trend will likely come up dry.  Then the industry analysts believe the U.S. motorcycle market is in terminal decline and are not influenced by a “fun appliance” and the More Roads to Harley-Davidson plan.

But, for many riding enthusiasts, the motor company has introduced so many changes over the last few years its difficult to know where to start.  I’m not talking paint colors, rather engineering developments, i.e. water-cooled engines, Reflex Linked Brakes with ABS,  Reflex Defensive Rider System (RDRS), subscription-based cellular connectivity, advanced electronics with Bluetooth connectivity, voice recognition (microphone/headphone fitted to the rider’s helmet), text to speech technology, sophisticated GPS navigation system, wind tunnel designs to reduce head buffeting, LED lights, revised manufacturing processes, 131 cubic inch Screamin’ Eagle® Crate Motor and the first great-looking electric motorcycle (LiveWire) along with a large number of smaller updates.

The list goes on and on….

Other than the fact that the motorcycles are not inexpensive and in several instances most everyone would consider as very expensive, there’s not much else really to grumble about.

Yet, Harley-Davidson stated yesterday in the Q4 2019 and year-end financial report that its motorcycle sales slipped again!  Despite multiple new models, electrification, expanded overseas operations and Brand strategies to resuscitate demand.

The 4th quarter 2019 net income was $13.5 million on consolidated revenue of $1.07 billion versus net income of $0.5 million on consolidated revenue of $1.15 billion in the fourth quarter of 2018.  That brought full-year 2019 revenue to $5.36 billion, compared with $5.72 billion in 2018.  For 2019, earnings were $2.68 a share, compared with $3.19 in 2018. Adjusted earnings for 2019 were $3.36 a share, down from $3.78.  Harley-Davidson sold 7% fewer units in Q4’19 than a year earlier. The U.S. dealers which account for half of worldwide Harley sales, saw their retail sales fall 3%.

CEO Matt Levatich tried to curb the narrative numbers skid (12th consecutive quarter of U.S. retail sales decline!) in the company’s announcement, saying, “Our performance in Q4 and the full year was in line with our expectations and indicative of increased business stability.”

I am reminded that in matters of business, it’s often the case that the most vehement of corporate assertions are at 180 degrees to inconvenient facts.

The freedom of the open road is all very well, but remaining in the marketplace and growing is key. The motor company should avoid “stooping to compete” with the rest of motorcycling (i.e. chasing buzz).  Harley is iconic because, instead of treating motorcycles as a commodity, it recognizes them as a basis for a lifestyle and a shared set of attitudes

Photos courtesy of Harley-Davidson

UPDATE: January 30, 2020 — added: 12th consecutive quarter of U.S. sales decline.

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It became evident today, that creative instincts, an innovation mindset, deep brand and consumer experience along with bottom-line orientation is no longer enough for Harley-Davidson executives.

I’m talking about Neil Grimmer (Twitter) — a San Francisco-area entrepreneur and previously, the Founder/CEO of a personalized nutrition life science company Habit, joined Harley-Davidson on April 5, 2019 as president of Harley’s global brand development.

200 days later it’s been reported by the Milwaukee Business Journal he is “no longer with the company.”  Of course that is an executive management euphemism for ‘You’re Fired’ — however, in the parlance of our times and to clarify he was — sacked, dumped, bounced out, canned, axed, eighty-sixed, let go, ran-off, given walking papers, given the pink slip, or given the old heave-ho.  To put a more cheery spin on it:  one could say he was “constructively discharged,” or “freed up for the future.”

In a memo to employees it was communicated that Harley-Davidson management received multiple complaints about Grimmer’s code of business conduct.   I’m being snarky, but apparently, those day-long seminars in workplace sensitivity never paid off?!

It’s been my experience that company execs get fired because of poor change management, maybe ignoring customers, or for tolerating low performers, or for denying reality or worse, for too much talk and not enough action.  But, it could be as simple as his ‘left coast‘ leadership style was just inappropriate for the MoCo’s particular culture.

I’m sure Mr. Grimmer is an extremely accomplished executive, but the reference by CEO Matt Levatich of multiple violations is a BIG deal.  The MoCo has a set of core values and principles along with a Code of Conduct HERE for employees and suppliers.

It’s not clear if Harley-Davidson has an executive non-fraternization policy, but clearly they prescribe to conducting business with honesty and integrity.  In addition, they prescribe to providing a workplace free of harassment based on personal characteristics and do not tolerate harassment of employees by managers or co-workers.

Harley-Davidson (HOG) stock was up today!

 

Harley-Davidson Code of Business Conduct:  HERE
Harley-Davidson Supplier Code of Conduct:  HERE

Photo courtesy of Harley-Davidson

All Rights Reserved (C) Northwest Harley Blog

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It could be the title of Harley-Davidson CEO, Matt Levatich’s memoir on his failed 2017 year while in charge of the Motor Company.

I happen to be riding with the HOG Lewis and Clark Expedition last week when Harley-Davidson announced their disappointing Q2’17 financial results and late to weigh in:

* Harley-Davidson net income dropped 7.7%. Sales in the U.S. were down 9.3% and 6.7% worldwide.

* Harley-Davidson now expects to ship 241,000 to 246,000 motorcycles to dealers worldwide in 2017, which is down approximately 6% to 8% from 2016.

* Harley-Davidson expects to ship 39,000 to 44,000 motorcycles in Q3’17, which is down approximately 10% to 20% from 2016.

* Approx 180 U.S. based manufacturing jobs will be cut in Menomonee Falls and Kansas City.  This in addition to the 118 workers who were axed back in April this year at the York plant as some positions were being shifted to Kansas City.

For those keeping track, this is a continuation of a three-year slide by the motor company.  However, during the call Mr. Levatich described what can only be called an “alternative reality” in hopes (I assume?) to reassure the financial markets and stated “we are going to build bikers first, add 2 million new Harley-Davidson riders and launch 100 brand new models during the next 10 years while growing the international business by 50%.

Huh?

I’m being a bit snarky here, but his statement appears either woefully naïve to the point of negligence or a continuance of marketing spin.  Proclaiming an unprecedented future result of this magnitude smells like stunningly wishful thinking at best or at worst plain lying.  For reasons I can’t explain, why would Mr. Levatich climb up on a high-wire without a net given such an overly-optimistic prediction?  Even with nearly 8-million Americans that are “sleeping license holders,” — those who have motorcycle riding credentials, but don’t own a bike — it doesn’t pencil and seems unobtainable.

I don’t know if the boardroom folks in Milwaukee read the NW Harley Blog on a regular basis and/or  hang on its every word.  But, we know the motor company has been continuously producing motorcycles for more than a century,  yet seemingly everyone on the internet with a keyboard thinks they can do it better.

And it’s a well-established fact that internet bloggers and commenters are geniuses. They definitely know how to run a business better than a company that has been constantly producing motorcycles through two world wars, the Great Depression, and roughly 20 U.S. recessions.

Sure the motor company needs our help and I’ve got some feedback and plenty of comments.  But, until the motor company calls me asking for it, I’ll look for Mr. Levatich’s memoir, which will certainly be “a deeply intimate account and a cautionary tale on the world’s most iconic motorcycle brand.

Slightly modified book cover courtesy of Simon & Schuster.

All Rights Reserved (C) Northwest Harley Blog

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Saddlebag Drawing

Saddlebag Sketch

This is more than a simple saddle bag retaining clip that takes less than 10 minutes to replace.

Harley-Davidson is facing steep competition.  Not only from less expensive motorcycles imported from Asia, but electric motorcycles from Zero, Brammo (now owned by Polaris) and also from core customers who look for a mainstream gasoline cruiser from Indian and Victory.  Polaris will undoubtedly be first to market with a chrome-plated electric cruiser given the previous discussion by CEO Matt Levatich.

In addition, it’s not clear that Harley-Davidson is getting much of a sales bump from the decision to double-down on support of outlaw biker gangs as part of their marketing pitch.  The hard-edge reference is NOT about the one-percent patches, rather licensing support of TV shows like Sons of Anarchy (SOA) and other Hollywood fluff.  Trying to appeal to people who don’t have much adventure in their lives with a TV show prescribing on the road escapism… well it escapes me!   Meanwhile they try so hard to alienate and re-write the Baby Boomer chapter!

But I’ve digressed.

Harley-Davidson reported slipping revenues for Q2 2015.  U.S. market share is below 50% for the first time ever!  The company is betting on its name recognition and motorcycle quality.  They even choose to muster up some brash swagger and declined slashing prices as a subtle way of saying “our bikes are better!”

And on that quality topic, Harley recently issued a saddlebag recall – campaign number 15V-427.  The motor company is the poster child for the “land of recalls” sans Chevy.  So many, that owners find it difficult to recall when their bikes didn’t!

Snarky comments aside, all manufactures have issues, but Harley-Davidson is unique in acknowledging and using quality as a key differentiator and strategy for increasing sales.  I’m not sure how well that will work for them.

Meanwhile the Dealers are replacing the 4 (2 on each side) saddle bag pin retaining clips free of charge. The motor company issued a recall stating that the saddlebag mounting receptacle, P/N 10900009 on some model year 2014 and 2015 Touring family vehicles (see drawing #1 above) may not adequately secure the saddlebag to the motorcycle during use.  If this condition remains undetected, the saddlebag may become separated from the motorcycle while it is in motion, possibly creating a hazard for other motorists including your riding buddy’s in formation behind that “separated” bag.

If this happens there is a good chance you’ll be picking up a new “road rash” painted saddlebag and dirty laundry strewn across the roadway!

UPDATED: July 23, 2015 (1:40pm PDT) — the recall effects 185,000 motorcycles which covers certain 2014 and 2015 Road King, Street Glide, Electra Glide Ultra Classic, Ultra Limited, Police Road King, Police Electra Glide and CVO Ultra Limited bikes. Also affected are 2014 CVO Road King and the 2015 Electra Glide Ultra Classic Low, Ultra Limited Low, Road Glide, CVO Street Glide and CVO Road Glide Ultra motorcycles. No injuries or crashes have been reported due to the saddlebag issues and no information has been provided on the number of “separated” bags.

UPDATED: July 29, 2015 — Polaris introduces its 2016 line up which includes the Victory Empulse TT ($19,999), an electric model which rolls out way ahead of H-D’s LiveWire.  It’s based on the Brammo Empulse R motorcycle produced by the electric motorcycle division of Brammo Inc., which was acquired by Polaris earlier this year.

Photo courtesy of H-D.

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