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Posts Tagged ‘Great Depression’

Jason Momoa (i.e. “Aquaman”) collaborates with Harley-Davidson

How often have we recently heard… “We continue to face challenges during these unprecedented times.” — Harley-Davidson CEO Jochen Zeitz opening statement during the July 28, 2020 financial call.

I’m not a grammar nerd, but “unprecedented times” is a tiresome word.  Stop saying it Mr. Zeitz – and it’s also inaccurate!

We are not in an “unprecedented” time.

This isn’t the 1930’s Great Depression, the worst economic downturn in the history of the industrialized world. There’s been no dot-com bubble (i.e. Internet bubble) that was caused by excessive speculation in Internet-related companies in the late 1990s. It’s not the real estate bubble of 2008 and the follow-on market crash, recession and unemployment that was linked to the “subprime mortgage crisis.” There is no automotive industry crisis of 2008–2010 where declining automobile sales and scarce availability of credit led to General Motors, Chrysler, and Ford facing insolvency without major government intervention. It’s not the 1918 flu pandemic, which killed 675,000 Americans and the worldwide death toll was estimated at 100 million. One pandemic death is too much, but the COVID-19 deaths are currently nowhere close to that, thankfully.

Q2 2020 HOG Earnings Report

So, stop using these new most-hated sayings: “unprecedented” times, it’s the “new normal” and “we are in this together” mantra.

And, who’s the “we” here? The point is “we” are not all on the same team in this pandemic. Everyone is dealing with it in their own way. The restaurant employee who’s been unemployed for months isn’t in this together with a Fortune 500 CEO.  The nurse on the front-line treating pandemic patients isn’t in this with the marketing manager who can work from home.

It’s not “unprecedented” for me to rant about something while being largely sequestered at home for nearly five months. But it is what it is, I guess.

Back to the Q2’20 financial call… and some key comments made during the call:

  • The Harley-Davidson culture has suffered. The company has seen five consecutive restructuring’s every year in order to basically chase the downward trend in sales.
  • The Rewire” strategic vision is now being replaced by “The Hardwire.” (more on this at the bottom of the post)
  • Extending the 2020 model year through fall (historically launch was late August) and now new bikes will arrive in dealer showrooms early 2021.
  • Used motorcycle pricing increased about 6% throughout Q2, certainly, higher than Harley has seen in any previous quarter.
  • Harley continues to see strong potential in Adventure Touring and will launch Pan America globally in 2021.
  • Harley has streamlined the structure, which now requires approx 700 fewer positions and approximately 500 employees laid off.
  • H-D is not willing to sacrifice the strength of their legacy in a quest for pure volume growth going forward.
  • Increased recognition on the role of digital technology as a critical priority in the future for Harley-Davidson.
  • H-D will focus on roughly 50 primary markets that generate the vast majority of their retail sales and shipments.
  • Surprise!  Planning to add a Sustainability Officer to the team who will further H-D commitment to the planet and to society.
  • New brand building approach and social media campaign directed by “Aquaman” i.e. Jason Momoa (video of Mr. Momoa touring H-D Museum)

Q2’20 Numbers:

  • Harley-Davidson posted a loss of $0.60 per share for Q2’20
  • Worldwide retail sales of new motorcycles were down 26.6% versus prior year and Q2 revenue of $865 million was down 47% year over year.
  • U.S. retail sales in Q2’20 were down 26.7% versus prior year.
  • EMEA declined 29.8%, Asia Pacific was down 10.2%, and Latin America saw declines in Mexico and Brazil and finished the quarter down 51%.
  • U.S. market share of new bike registrations was 38.5%, down 8.1 percentage points
  • Motorcycle mix shifted from touring to cruising versus Q2’19, which reduced average motorcycle revenue per bike.
  • Credit losses were down due to lower delinquencies and lower repossessions helped by H-D offering of payment extensions to certain customers.
  • While Q2 results were again terrible, Harley-Davidson was still able to sell over 31,000 motorcycles in the U.S. during a global health crisis that closed off its retail stores.

During the financial call, Mr. Zeitz announced Harley will have yet another roadmap to follow: “The Hardwire,” the motor company’s third visionary plan in two years.

You might recall “The More Roads to Harley-Davidson” plan unveiled in July 2018 which stated the development of 100 new models over 10 years, giving more attention to international markets than in the U.S. market, and putting a much greater focus on electric vehicles.

That plan was largely abandoned earlier this year when then CEO Matt Levatich abruptly left the company and was replaced by chairman Zeitz. The “More Roads” was replaced by the vague and loosely defined “The Rewire” plan, which incorporated some of Levatich’s plan, but would instead focus more on key markets and products to drive the bike maker’s profitability and growth potential.

Now we can look forward to a new 5-year strategic plan; “The Hardwire,” which will be grounded in enhancing the desirability of Harley’s brand and protecting the value (i.e., keep pricing elevated) of the iconic products.” The Hardwire roadmap is expected to take over in the fourth quarter and serve as the strategic plan for the company to follow through 2025.

Photos courtesy of Asphalt & Rubber and Harley-Davidson

All Rights Reserved (C) Northwest Harley Blog

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Pearl Harbor

It was 68 years ago today – December 7, 1941 – that bombs fell on Pearl Harbor.  It was a stealthy attack that took the lives of more than 2,400 Americans, threaten internment of 150,000 people of Japanese ancestry in Hawaii and was a tipping point for the nation which jumped headlong into its 2nd major war of the century.  It was a day filled with sacrifices and heroism – one that should not be forgotten.

Just six years earlier Harley-Davidson founded the Japanese motorcycle industry.  In fact, from the H-D history page it states:

“1935 — The Japanese motorcycle industry is founded as a result of Harley-Davidson licensing blueprints, tools, dies and machinery to the Sankyo Company of Japan. The result is the Rikuo motorcycle.”

Rikuo Motorcycle

Very little is known about the specifics and mindful of the results Harley-Davidson isn’t doing much talking.  It bears a similarity to the clandestine support the U.S. provided Muslim fighters during the 10-years the U.S.S.R. fought in Afghanistan.  Maybe that’s an overreach?   At any rate, the highly ironic consequence of Milwaukee’s quest for export markets in the 1920s resulted in helping Japan ready for World War II.   It was during the “economic slump” of the 1930s that the creation of a Japanese big twin occurred. It’s known that during the 1920s, Arthur Davidson had aggressively pursued new sales openings, including the establishment of the Harley-Davidson Sales Company of Japan.  It had a comprehensive network of dealers, agencies and spares. In fact, the Milwaukee motorcycle stood so high that Harley’s soon became Japan’s official police motorcycle.

Harley-Davidson exports to Japan all but ceased in the wake of the 1929 Wall Street crash and Great Depression as the global economic crisis crippled the yen. The story might have stopped there but for Alfred Childs, head of Harley’s Japanese operation, who asked: “Why not build Harleys there?”

The motor company was skeptical, but Childs’ persistence finally convince management and the first overseas factory began production at Shinagawa, near Tokyo.  Motorcycles built with tooling, plans, blueprints and expertise directly from Milwaukee — Harley-Davidson built a factory that was considered the most modern in the world. By 1935 Shinagawa was manufacturing complete motorcycles, mainly 74-inch V-series flathead twins.  In 1930, these had become the official motorcycle of the Japanese Imperial Army. Later, when the army became the effective civil power, it declined the chance to convert production to the new OHV Knucklehead, preferring the proven durability of the H-D side-valve twin. It was at this point that the Sankyo corporation forcibly took over control of the “H-D” factory and began selling Japanese Harleys under the Rikuo name. The “74” twin became the Rikuo Model 97.

As it became clear that Japan readied for World War II, Harley cut its losses and got out.  As military demand increased (especially after the Japanese invasion of China in 1937), Rikuo sub-licensed the product to Nihon Jidosha (“Japan Combustion Equipment Co.”). Its “Harleys” were variants of the model 97s, entitled Kuro Hagane (“Black Iron”).

Eerily, the factory had only a few more years to run. Nihon Jidosha was located in Hiroshima.

Research Sources:
Yokohama Kanagawa Prefecture photos of Japanese Harley History HERE.
Classic Bike article (1998) by Hugo Vanneck HERE.
Rikuo (Riku’O) Motor Web Site HERE.
H-D Museum Photos HERE.
FBI History 1930 – 1945 HERE.

Photo courtesy of Nippon News and National Archives.

All Rights Reserved © Northwest Harley Blog

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