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Posts Tagged ‘Harley-Davidson CEO Keith Wandell’

Gold top 10 winnerIt’s that time of year when folks are getting ready to ring in the New Year and its customary to provide a Top 10 list.

I decided to pull together a nostalgic list of some of the more ridiculous Harley-Davidson executive quotes.  There are some doozies and it makes a person wonder if they were cocktail chatter or actually written down and prepped by the PR team.  Honestly, it was difficult to narrow it down to just ten, but here they are: 

  1. “I would be really upset if you felt our strategy was about “meeting the nicest people on a Harley” because I can tell you that ain’t the strategy…” Harley CMO Mark-Hans Richer (Source: HERE)
  2. “These new bikes are leaner, yet still have a mean streak – they’re the real deal, made of real steel.” Harley CMO Mark-Hans Richer (Source: HERE)
  3. Little did we know we were doing a cross-promotion with God.” Harley CMO Mark-Hans Richer (Source: HERE)
  4. “‘Come Together’ is not merely a song in our [advert] spot – it’s an anthem for our relationship with our fans.” Harley CMO Mark-Hans Richer (Source: HERE)
  5. “We don’t do trend bikes, or fashion-statement motorcycles. We try to make something that will last forever.” **Brian Nelson, lead stylist on Project RUSHMORE  (Source: HERE)
  6. “I couldn’t care less if I ever wore a tie again.” Harley Chairman of the Board, president and CEO Keith Wandell  (Source: HERE)
  7. “None of us get up every morning and want to make people’s lives miserable and see people lose their jobs. If you think that’s the case, I apologize.”  Harley Chairman of the Board, president and CEO Keith Wandell  (Source: HERE)
  8. “We can’t survive on our core customers alone.” Harley Chairman of the Board, president and CEO Keith Wandell (Source: HERE)
  9. “The safety of our customers is our highest priority,” Harley General Manager of Motorcycle New Product Delivery Tony Wilcox (Source: HERE)
  10. “We think it’s a dichotomy” Harley Chairman of the Board, president and CEO Keith Wandell (Source: HERE)

There it is.  Do you have any memorable quotes to add to the list?

**Note: Mr. Nelson (#5) is not a company executive.

Photo courtesy of Sam Churchill.

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Kingfisher-LogoI’m talking about Kingfisher.

Beer was introduced into India by the British, who eventually set up a brewery that produced Asia’s first beer — a pale ale called Lion. However, these days, lager is the only type of beer you’ll find available in India and “The King of Good Times” is Kingfisher.

It’s India’s most recognized and widely available beer. Its name has been associated with sports, fashion, and even an airline.

And sooner than anyone would have thought… in Bawal, India a Harley-Davidson assembly line worker will be having a Kingfisher and relaxing with co-workers.

But, I’ve gotten ahead of myself…  let’s jump into the the way back machine and set the dial for — 2009.

The fact is we must focus both our effort and our investment on the Harley-Davidson brand, as we believe this provides an optimal path to sustained, meaningful long-term growth,” said CEO Keith Wandell at the October 15, 2009 announcement to discontinue production of Buell motorcycles.  On October 30, 2009 the last Buell (Lightning XB12Scg) rolled off the company’s East Troy, Wisconsin. assembly line.  It was the last of the 136,923 motorcycles built in the company’s 26 years of operation.

Harley-Davidson Street 750

Harley-Davidson Street 750

It was a combination of factors in making the decision, but essentially the global recession forced a reckoning and Harley-Davidson decided to refocus on its tent pole products or what I’d call doubling down on its core lineup of heavyweight bikes.  As a result, the motor company abandoned entry level motorcycles (Buell Blast), exited the sport bike (Buell and sold MV) and thumb their noses at the adventure market (Buell Ulysses).   In the process the motor company made a lot of motorcycle enthusiasts upset about what looked like a myopic approach of only looking at spreadsheets versus doing a bit more market research and addressing a need.

Jump ahead 4-years and witness the financial rebound of the company and the launch this week of the new Harley-Davidson Street 750 and Street 500 motorcycles.  Could it be a Buell Blast ReDeux?  The smaller 500cc motorcycle basically fills a void left when they discontinued the Buell motorcycle line which included the 492cc Buell Blast.  More important in this announcement is the fact that the motorcycles will be made both in the U.S. and Bawal, India, marking the first time the company will manufacture a complete motorcycle at an overseas facility.  I’ll repeat that… the first time the company will manufacture a complete motorcycle outside the U.S.!

Harley-Davidson Street 750  (Side View)

Harley-Davidson Street 750 (Side View)

The manufacturing news in of itself will be fodder for many future blog posts, but sticking to the motorcycle announcement, the new ‘Street’ bikes are the first Harley-Davidson motorcycles to be designed from scratch since the V-Rod 13 years ago.

It makes this Road Glide owner wonder if that’s an indicator of where all the engineers were redirected in lieu of updating the ‘Glide’ with the all new Project RUSHMORE features that were incorporated into the new 2014 touring models?

The fact is the company has aggressively expanded its marketing efforts because realistically, there is no replacing white Baby Boomer men. And this means they have to attract younger men, non-Caucasian men, women, and do that from countries as disparate as India, Italy, Brazil and the U.S. with much more success.  By turning inwards, relying on a single-brand tradition and nationalism over the last 4-years and divesting itself of brands that were dimming the lights on a brighter future–the motor company can and now has expanded into other segments.

At the Street 750/500 announcement the Harley-Davidson, CEO Keith Wandell said, “The younger riders don’t want their dad’s chromed-out Harley,” “They want the Dark Custom, sinister look, the ability to rebel.

Sounds like a bit of marketing spin, but with more than half of its dealerships outside the U.S., Harley-Davidson has really put a lot of investment behind a push to expand and broaden its customer base including new motorcycle buyers–worldwide.

Photo’s courtesy of H-D and Kingfisher.  Note: Kingfisher, “The King of Good Times”, is India’s most recognized and widely available beer. Its name has been associated with sports, fashion, and even an airline.

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HOG-StockNeil Young wrote the song Keep On Rockin’ In The Free World in 1989.

Neil and a member of his band, Pancho Sampedro, were glancing at newspaper photographs on the funeral of Ayatollah Khomeini in Iran as the angry mob set America flags on fire and chanted death to America.  Sampedro commented, “Whatever we do, we shouldn’t go near the Mideast.  It’s probably better that we just keep on rockin’ the free world.”

And speaking of rockin’… listening in on the HOG Q2’13 financial call today felt upbeat with a positive vibe.  Sure there was plenty of financial mumbo jumbo, but every profession has its buzzwords to create the illusion that things are more complex than they really are.

Here are the Q2’13 financial highlights:

  1. Consolidated revenue of $1.79 Billion
  2. Net income was $271.7 Million
  3. Diluted earnings per share were $1.21
  4. Added 104 dealerships outside the U.S. since late 2009; the latest was Salvador, Brazil.
  5. With nearly 1500 dealers worldwide H-D sold 90,193 motorcycles
  6. U.S., dealers sold 58,241 motorcycles
  7. In international markets, dealers sold 31,952 motorcycles
  8. Through 6-months, net income was $495.9 Million on consolidated revenue of $3.37 Billion
  9. U.S. (Heavyweight) market share increased to 53.0%
  10. Completed its first year of seasonal surge production at its plant in Springettsbury Township
  11. For the 1H, H-D mostly attributes cool, damp weather — not the economy — to a 2.7 percent drop in U.S. bike sales.
  12. Supply and demand are back in balance… read that as an opportunity to raise model prices again!
  13. First corporate confirmation there will be no Road Glide models in the new 2014 model year as they retool and refresh the model
  14. 60 bands over 3-days at the 110th Anniversary celebration in Milwaukee

The most interesting question?

It came from Craig Kennison (Baird & Co.) – “Did you ask the Pope to pray for better weather?”  I liked the snarky question which was in reference to the fact that H-D attributes cool, damp weather — not the economy — to a 2.7 percent drop in U.S. bike sales and being somewhat of a drag on H-D parts and accessories.  If you don’t ride you don’t need to do much motorcycle service or buy parts.

In conclusion and more important to all the riders, the company remains on track to announce its 2014 model year bikes in the 3rd week of August.

Photo courtesy of H-D/Google.

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New Castalloy workers Martin Parker, Edward Fern and managing director Michael Tamasi celebrate the Harley-Davidson news.

New Castalloy workers Martin Parker, Edward Fern and Michael Tamasi celebrate the news.

I blogged back in December 2011 (HERE) that Harley-Davidson made a decision to shift wheel and hub manufacturing from Adelaide-based New Castalloy to China.

The plant was set for closure by mid-2013.

This news hit the Australian Workers Union State Secretary and union workers just prior to the Christmas holiday and resulted in some name calling and bad blood with the motor company.

Jump ahead a 1.5 years and New Castalloy had shed approximately 90 of the 212 workers, but there was some good news this week!  Harley-Davidson reversed the decision to shutter the plant and struck a 4-year deal, on both an extension to the plant’s lease and a new wage-agreement were obtained.

It would seem logical to assume that New Castalloy greatly improved its cost structure as they are now viewed as competitive at producing low-volume, high finish wheels.  The Australian government, which owns the Mooringe Ave. plant waived rent at the site to help secure the deal.

Congrats!  I’m sure the nice folks in Adaelaid feel good knowing they’ll continue to help H-D riders around the world express their own style of freedom.

Photo courtesy of Dylan Coker.

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NOAA-MapYou’re the CEO and going down your quarterly earnings check list:

  1. Still in business after 110 years – Check
  2. Secured music talent for 110th Anniversary Party – Check
  3. Number one seller of motorcycles to young adults (18-34) – Check
  4. Increase 2013 first quarter revenue to $1.57B (up 10%) vs. $1.43B a year earlier — Check
  5. Increase 2013 first quarter income to $224.1M vs. $172M a year earlier – Check
  6. HOG shares up 2.1% to closed at $54.31 – Check
  7. U.S. dealers sold 34,706 new motorcycles, down 12.7% from a year earlier – Ooops!

Colder temperatures and the wet climate set the stage for the quarterly sales miss.  At least according to Harley-Davidson CEO, Keith Wandell who stated in last week’s earnings call… “By far, the vast majority of the (sales decline) was weather related”.

Temp2-MapInteresting.  The earnings call didn’t signal any major marketing changes for the brand, instead pinning some of the losses on external factors such as rainfall in many parts of the country, the weak economy and the unseasonably cold weather.

Are the only unemployed consumers who keep getting rained on Harley-Davidson consumers?!

Generally speaking home sales and auto sales are up.  It would seem that management neglected to remind us about Superstorm Sandy, how federal tax returns have been delayed and how fuel prices are unsettling to consumers.  To be fair some retail outlets selling spring apparel, home and garden were depressed due to wintry conditions, but looking at the weather for an impact on Harley-Davidson consumer spending seems a bit trivial.

I spent the last week in Arizona and if you plotted temperatures from dawn until noon, you’d observe an alarming warming trend.  If you extended that trend line for the next 4-months, you’ll clearly notice that ice caps will melt and the poor polar bears will be swimming more.

We’ll soon know if the good weather in the upcoming quarter provides a recovery to more normalized sales volume.

Photo courtesy of NOAA

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Enterprise Resource Planning (ERP) was the watch word at Harley-Davidson’s Q3’12 earnings call earlier in the week.  So eloquent were the deflections it almost makes a person think they’re a SAP – for investing in SAP AG!

Harley-Davidson’s third-quarter earnings were income from continuing operations at $134.0 million on consolidated revenue of $1.25 billion, compared to income from continuing operations of $183.6 million, or $0.78 per share, on consolidated revenue of $1.40 billion in the year-ago quarter.

Through nine months, Harley-Davidson income from continuing operations increased 12.1 percent year-over-year to $553.3 million, or $2.40 per share, on consolidated revenue of $4.41 billion, compared to income from continuing operations of $493.4 million, or $2.09 per share, on consolidated revenue of $4.13 billion in the year-ago period.

“The third quarter marked a pivotal milestone in Harley-Davidson’s transformation. With the launch of the ERP production system at York, a major piece of our restructuring work is behind us. We are now focused on optimizing the system and look forward to the start of seasonal surge production early next year,” said Keith Wandell, Chairman, President and Chief Executive Officer.

Like partners in a three-legged foot race, both the management and employees were hobbled by their connection to this so-called new ERP production system at the Company’s largest assembly plant.  How ironic.  A new production system being implemented to improve manufacturing performance becomes part of the problem that resulted in comments during the call like:

  1. “Harley-Davidson’s annual new model launch was pushed to late August from late July.”
  2. “New motorcycle sales were adversely affected by a limited availability of new motorcycles in July, August and early September.” 
  3. And leaving no deflection rock unturned… “The economy remains fragile and there’s a lot of uncertainty for high-end products like a brand (Harley-Davidson) like ours.”
  4. No mention in the call about the Milwaukee HQ IT jobs outsourced in July to India (Infosys) and if that had an impact on Q3?!
  5. Nothing mention in the call whether what I feel has to be the lamest slogan (“Great Motorcycles”) on the 110th Anniversary models is creating sales issues.  It would be the first thing I’d take off the bike!

110th Anniversary Model with “Great Motorcycles” Slogan – Primary Cover

On a worldwide basis, dealers sold 61,053 new Harley-Davidson motorcycles in the third quarter of 2012 compared to 61,838 motorcycles sold in the year-ago period.  Dealers sold 40,402 new Harley-Davidson motorcycles in the U.S. compared to sales of 42,640 units in last year’s third quarter. In international markets, dealers sold 20,651 new Harley-Davidson motorcycles during the third quarter compared to sales of 19,198 units in the year-ago period.  During the quarter, retail unit sales increased 32.3 percent in the Latin America region, 9.8 percent in the Asia Pacific region and 1.8 percent in the EMEA region and decreased 4.7 percent in North America (U.S. and Canada) compared to last year’s third quarter.

Harley-Davidson Motorcycles and Related Products Segment Results Third-Quarter Results: Third-quarter operating income from motorcycles and related products was $144.8 million, a 19.9 percent decrease compared to operating income of $180.7 million in the year-ago period.

110th Anniversary Model with “Great Motorcycles” Slogan – Air Cleaner Cover

Revenue from motorcycles during the third quarter of 2012 of $774.0 million was down 16.1 percent compared to the year-ago period. The Company shipped 52,793 motorcycles to dealers and distributors worldwide during the quarter, down 14.5 percent and in line with prior guidance, compared to shipments of 61,745 motorcycles in the third quarter of 2011.

Revenue from motorcycle parts and accessories totaled $233.7 million during the quarter, down 0.8 percent, and revenue from general merchandise, which includes MotorClothes® apparel and accessories, was $75.6 million, up 9.1 percent compared to the year-ago period.

Gross margin was 34.7 percent in the third quarter of 2012, compared to 33.7 percent in the third quarter of 2011. Third-quarter operating margin from motorcycles and related products was 13.3 percent, compared to operating margin of 14.7 percent in last year’s third quarter.

For the full year 2012, Harley-Davidson continues to forecast a five-to seven-percent increase in motorcycle shipments compared to 2011.

My view is that they are not done transforming the company and it’s going to take more time to right the ship while getting the ERP humming to turn the management business vision into a reality.

Photo courtesy of SAP and H-D.

Note: In 2006 H-D selected SAP to help them manage and optimize their growth.  In June 2011, there was an article in Forbes referring to H-D involvement in SAP’s Community Network.  It’s unclear if the “new” ERP implementation is an updated rollout of a newer version of SAP or a major transition to new ERP vendor. 

Full Disclosure:  I have no investment in or hold any SAP AG or Harley-Davidson stock.

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I was in L.A. last week driving down part of Route 66 towards the Santa Monica pier and through Beverly Hills enjoying the nice California  weather.

There were more yet-to-be licensed Benzes, Ferraris and Porsches over a three-mile stretch than I’ve seen in the past year.  And here I was in an ultra-cool Nissan Cube rental, arm out the window and for a few blocks co-mingling with the rich and famous.

Speaking of… did you read that the Harley-Davidson president and CEO, Keith Wandell, opted not to have his base salary increased in 2011, according to a proxy statement filed with the U.S. Securities and Exchange Commission.

On the surface this – “we’re all in it together” – grand gesture would make a person believe that a CEO who accepts a ZERO increase in salary is saying they’re a team player who wants to make a sacrifice for the good of the company.  After all wasn’t it Harley-Davidson management that laid-off hundreds of workers, closed plants and obtained impressive union concessions in a new multi-tiered workforce structure for the survival of the company?

Call me cynical, but when I hear about these it seems more like “camouflage” to deflect scrutiny off the extraordinary set of CEO benefits or at minimum to get publicity and produce significant positive short-term market reaction.

In fact, there are a number of reports which suggest these type of salary tactics are nothing but a ruse or smokescreen as a number of CEOs have adopted these pay schemes.  It’s the kind of opportunistic behavior from those wealthier, more confident, influential CEO’s rather than sacrificial acts they are ‘projected’ out to be.

I certainly don’t know if or what Mr. Wandell’s intent was, but we do know his total compensation in 2011 rose nearly 13% to about $7.2 million, compared with $6.4 million in 2010.  We also know the motor company paid Mr. Wandell a bonus of $365,639 in 2011.  He also received a base salary of $975,037 in 2011, equal to his salary in 2010.

And to be clear this post isn’t about wealth envy or whining about how it must be nice to be rich.  We all know that rich people and bankers are beating the system.  They’re writing off multi-thousand dollar meals with rare wines at places with unlisted phone numbers that you/I can’t get into.  Unless you just woke up in North Korea, then you know that in America, if you don’t like what you earn, where you work or what you do for a living then you’re entitled to leave (quit) and go start a company, further your education or do whatever the hell you want.  It’s clear that company’s exist to make a profit for their shareholders and if the shareholders don’t like what the CEO is doing, or earning then they can fire the board of directors to include the CEO.

But wait there’s even more.  Mr. Wandell received total cash bonus payments, both discretionary and performance-based, totaling more than $2.8 million in 2011, compared with cash bonus payments of about $2.3 million in 2010.  His stock awards were valued at $1.5 million, compared with $1.4 million in 2010, while his option awards were valued at $1.7 million, compared with $1.6 million the previous year.  He also received “other” compensation totaling about $175,000 in 2011, compared with about $84,000 in 2010. The payments included $29,600 in lieu of receiving certain perquisites and personal benefits, nonqualified deferred compensation plan contributions of $68,466, 401(k) plan contributions of $31,850, and life insurance premiums of $13,727. He also received additional benefits that totaled $25,478 consisting of financial planning services, personal use of company aircraft and clothing.

What’s the punch line?

Well given that Mr. Wandell has made things happen, meaning that as “Head Honcho” he made moves that H-D insiders historically shied away from.  He played hardball with dealers, shed crappy brands, cut labor contracts, made major job cuts and closed plants. Some folks were let go just prior to Christmas, but unfazed he continued to trim the fat and raised cash by selling some old investments, like Harley’s semi-secret test track in the Everglades.  He also challenged Harley’s own traditional norms by altering its marketing strategy to attract non-traditional segments, like women and minorities.  He also embarked on an international growth strategy that will eventually bring the all the products, the parts, the lifestyle, and the American V-Twin to enthusiasts worldwide.  The financial numbers speak for themselves.

All this from a guy who came to the Motor Company and did not even ride any kind of motorcycle!  He’s earned a raise.  How hard is it to understand… Harley success = Industry success.

Photo taken by author’s iPhone and post-processed in Snapseed (Nik Software).

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