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Archive for January, 2010

Ambitious new motorcycles.

Nine in fact for 2010 as Bill Davidson (VP of Core Customer Marketing) stated at last year’s launch of the new models: “We are thrilled to offer our customers nine new models and a full selection of products… that lets their enthusiasm for enjoying great motorcycles continue at full throttle!” [exclamation point added for emphasis]

There were exciting features – sarcasm alert – like “slammed suspension,” “an optional flame paint scheme,” “a larger front wheel,” “a new tail light assembly,” and a lot of something called “light and lean extreme.”  Huh?  It’s massive changes like these that are really going to bring in the customers.  And with the unprecedented new plating process called “midnight pearl” used on the headlight cover, timer and derby covers, and fender struts young people will have these motorcycles flying out of dealers.

Now comes the introduction of the $35,999.00 MSRP Harley-Davidson CVO Ultra Classic Electra Glide.  The equivalent of two Honda Civics LX’s which cost $35,210 and money left over to install the optional Moonroof!  Or you could buy a tops down 2010 Lexus IS 250 Convertible for $35,495 and still have money left over for a kick butt pizza party!

My point?  Can a 107 year-old brand truly command these premium prices in this economy or are they pricing themselves out of business?  In Q3’09 Harley CEO Keith Wandell stated “… we are moving with the speed and decisiveness required to bring our business strategy to life…”, little did we know the change reference was how fast they can increase prices.

It’s only January and already been a long winter.   Not enough time has passed to pay-off the holiday credit card charges so, as cool as it would be to ride this motorcycle a $10K down and 11% interest loan for 60 months would leave little discretionary funds to ride it anywhere!

Of course I might reconsider if they’d throw in a toaster.

Photo courtesy of H-D

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NO thanks!  It’s a reference to Oregon Gov. Ted Kulongoski and the rift between the average Joe and state legislators which is now as wide as the Grand Canyon.

I woke up this morning disappointed, even a little discouraged and a whole butt load of resentment.

Why?  Well you see Multnomah county determined the future of the entire state by overtly influencing the outcome of Measure 66 and 67 which increases Oregon’s personal income tax rate and corporate taxes.  Sure the passage effects only the so-called  “high income” earners… it really should have been called the lets tax the “other guy” campaign.  But does anyone truly think for a second legislators will stop there?  NO! It will be only minutes before they start to whine about the next tax increase and the need to “save the children” and then it will be about going after the “kicker” law that rebates revenue surpluses.  And if you’re a betting person, there is money to be made if you bet on legislators who will silently work to LOWER the income bar on Measure 66 until all of us working at McD’s is considered to be a “high earner.”

Clearly the thing we will never hear from Salem is how they are making budget cuts like the rest of us in the state who are trying to survive salary reductions, layoffs and the recession.  It’s their ego and ARROGANCE which fuels my resentment.  These “tax and spend” legislators know only how to spend or make commitments to raise taxes.  Now they believe they’ve been given a mandate to raise taxes everywhere with Measure 66 passing.  They are ecstatic and will stop at nothing to satisfy their uncontrollable spending desires.

And if the lack of humility and blind arrogance wasn’t enough – the most egregious action by the people we put in office to represent us — our legislators — was making the Measure 66 tax increase retroactive to January 2009.  SURPRISE — A lot of people woke up this morning delinquent and owing back taxes to the state!  Get your check book ready.  In a state where 1-in-5 people can’t find work.  A state where 650,000 people are on food stamps.  Where there is record school-aged poverty and record mortgage defaults.  Yep, it takes a big EGO to submit tax increase legislation for all small businesses who create the jobs and increase the tax on the people who will invest in the state and then believe you are immune to any ramifications.

I previously posted that this tax increase will be the tipping point and likely shutter several motorcycle shops in the area. I hope I’m wrong.  All I can say is hang on.  For me?  In a word — Vancouver, WA. — it will likely be where my next home is located.

For the legislators?  I plan to set up the Taxation Addicts Anonymous outreach program.  Because after the next round of elections I anticipate there will be a large number of recovering addicts.

Photo courtesy of Ian Bradshaw

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Harley tells us it’s the real deal — and it’s coming soon.

Using nearly every marketing adjective possible in the dictionary  — raw, slammed, bulldog-stance, classic, radical, straight-on style, bad attitude, distinctive, authentic, broken-in, blacked out, aura of rebellion, custom cool styling and the ever fav “low profile” — to describe the new, but “old” Forty-Eight model.

The new motorcycle is a factory custom in the Sportster line and joins the Dark Custom family which includes the Nightster, Iron 883, Cross Bones, Fat Bob and Street Bob. More on the Dark Custom motorcycles is located HERE.   The 2010 H-D Sportster Forty-Eight is priced at $10,499 in black and $10,789 in silver or orange.

Sportster motorcycles became the starting point for many legendary choppers of the 1960s, and were also getting pumped up for dirt racing and daredevil stunt riding in the 1970s.  The 48 try’s to retain regain the aura of rebellion from the late 50’s, when the custom culture was formed by the hot rod era. 

I hear a lot of guys say they think Sportsters are starter bikes.  I’m not so sure, but they are typically short hop bikes unless you’re into punishment.  Given the economy and the price, H-D has just hit a bunch of folks straight in the face with this machine.  It’s a beauty!

Photo courtesy of H-D

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Harley-Davidson reported its first quarterly loss since 1993!

No surprise given home foreclosures, unemployment fear, stalled economy and ice-cold demand for high-end, premium priced motorcycles.

For Q4’09, H-D reported revenue of $764.5M and a loss of $147.2M.  Affecting Q4’09 results was the previously announced 53.1% reduction in motorcycle shipments from the year-ago period and $167.1M in restructuring, on the Buell end-of-life costs and the MV Agusta discontinued operations.  For all of 2009; revenue was $4.29B compared to $5.58B in 2008, a 23.1% decrease; income was $70.6M in 2009 compared to $684.2M in 2008, a decrease of 89.7%.  And don’t forget all the non-cash charges related to Harley-Davidson Financial Services (HDFS).

There was a surprise in today’s financial call.  Keith Wandell, (H-D President and CEO) stated: “We also feel good about where we’re at.” Huh?

Isn’t that the kind of thinking that would have Kodak saying that they’re relying on film, or newspapers saying they’re relying on print, or music labels saying they’re relying on CDs.  Just because you can’t see the cliff from where you are, that doesn’t mean it doesn’t exist.  Remember when everyone said no one would read a book on a hand-held electronic device, and suddenly now everyone’s saying the opposite, Kindle’s got so many new competitors and Apples yet-to-be released tablet gets more press than a starlet without panties getting into a car outside a pub.

Mr. Wandell may be referring to his reactive changes the past 8 months and the hope they will restore growth. I’m skeptical, and time will tell if they are the right decisions or if management can execute with a renewed intensity.  But isn’t that just the point.  REACTION to events vs. pro-active change?!  From the outside looking in, the majority of action the company has taken seems REACTIVE.  They curb demand, shrink manufacturing, reduce structural costs, pullback on spending, slash and cut employees, sell off businesses based more on profit margins not on the contribution to the customers soul.  Motorcycle sales are down more at H-D than other manufactures.  Why?

There is a saying: “Businesses should concentrate on their customers’ needs, not on specific products.” — “Marketing Myopia” (1960); Theodore Levitt, Harvard Business School

My opinion is that H-D needs to relearn customer needs.  If you desire to appeal to your core fans, then they’ll want to know that you are in it for the motorcycle hobby/sport, not just the money.  Stop calculating how to get to millions of revenue in a spreadsheet by maximizing this and that.  Just create something rawly desirable, then the revenue will come.  A great hit is more powerful than any marketing campaign.  People don’t need motorcycles, but they want one.  When the product is great.  When it speaks to them.  When it’s seen as integral to their lives.  You’ll have something!

Photo courtesy of JupiterImages.

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Out Of Busines

Harley-Davidson has undergone a grueling restructuring over the last year to better compete amid less demand.

The economy and housing bubble depleted consumers’ wealth and left a lot of folks unwilling to spend on Harley’s high-end bikes.  I anticipate that Harley will remain at least three quarters away from achieving positive retail sales trends in the U.S., especially given the companies lapse of a successful promotion in the first quarter.

I’m genuinely concerned.   More so about the decay of prosperity in the local motorcycle shops, parts suppliers, and dealers.  Be it routine service or customization, the local shops most often operate on their ability to make sure YOU are happy. They know if you leave satisfied, you will tell your friends about your experience with the shop.  Word of mouth is an integral part of a shops reputation in the local area and carries a lot of weight in generating new business.  “Giving” local shops rebuild, repair, or service work on your bike, while appreciated, is not going to keep a shop in business.   The industry at large will need sales to rebound or the local motorcycle businesses will lay-off their skilled workers or worse – close down operations.

Unless you own or work in a local shop, you have no idea of what it takes to stay in business.  Facility overhead, staff salaries, phones, heat/electricity and advertising are things everybody thinks of.  But what about insurance, hazmat costs, licensing fees and money paid to local city and state governments for all the TAXES they require?

And speaking of taxes, I’m very skeptical of government spending our way to prosperity.  Increasing the tax liability on small business owners does nothing to encourage businesses to take care of their employees.  In fact, in Oregon there is a special ballot measure on personal and corporate tax increases.  In my opinion this one-size-fits-all legislation may well force motorcycle shops to shut down.  You’ve heard of Measures 66 and 67 and read more about net profits and corporate structures to last a life time so I’ll avoid explaining the details.  Instead, let me ask a simple question.  Did you get a raise last year?  I know I didn’t.  And if you’re lucky enough to still have a job, I’m willing to bet that you didn’t either.  Most likely you took a pay cut.  Or had your hours reduced.  Or were required to pay a larger share of your health insurance coverage.

At the same time you and I were taking cuts the Oregon Legislature voted to increase the tax burden on higher incomes and businesses by $750 million dollars, it also authorized $248 million in pay raises for state employees.  Yep, that’s right.  State workers got raises during the worst economy we’ve been through since the Great Depression.

Still don’t care?  Then how about this.  The legislature approved a budget that increased state spending by 9%.  If I was operating a motorcycle shop I can assure you that if my business increased 9% over the past two years I’d be most happy.  The legislature increase is about $4.7 billion more than the previous two years.  Time for another question.  Do you think state services have improved as spending has increased?  Are the schools better? Is our infrastructure better?  At a time when Oregon has lost over 120,000 private-sector jobs in the past 18 months the state has added 10,000.  It would seem that in Oregon, government has become the ONLY growth industry!

I’m not sure about where you live, but in Oregon during the winter many think about what customization you can do to your bike in the off-season.  Before long you’ll be sitting at your MacBook, surfing the web looking to make some modification dreams come true.  You’ll likely have questions and find yourself on the phone calling the local motorcycle shop trying to get all those questions answered.  Before long you’ll have spent most of an hour discussing scenarios, getting advice and prices from the local shop expert.

What if they don’t answer your call because the parts expert is no longer employed?  What if they’ve gone out of business?

We’re told by the “spinsters” in Salem that the state is making “budget cuts.” Huh?  In fact it means simply they can’t have as much of an increase as legislators would like.  A 9% increase is NOT a cut!  It’s my opinion that the private sector creates wealth.  Government does not.  I hope you’ll join me in voting NO on Measures 66 and 67 to send a clear message to the Oregon legislators that a CUT means CUT.   

Increasing taxes on motorcycle shop owners means more will go out of business.

Source: Statistics from The Oregonian

Photo courtesy of Flickr.

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Happiness is doing what you love and given the northwest rain, gale force winds and cold weather means – I’m not feeling the motorcycle love! So, what else is there to do, but look ahead to the new year and map out some rides?!

A couple of trips that I’m hoping to budget for:

  • Drive a portion of Route 66 – Ideally this trip would include a large chase truck which is better suited to bringing back memorabilia collected on the way to wherever, but the route being considered is Phoenix to Flagstaff and Grand Canyon.  Then on to Kingman with a drive-by in Laughlin for the late April River Run.
  • Ride the ferries – British Columbia offers up remarkable scenery and where else do you go during the U.S. July 4th holiday?!   Nothing is more spectacular than a ride through Olympic National Park, catch the Port Angeles Ferry to Victoria then Buchart Gardens with dinner and libations.
  • Make a return trip to Sturgis – we’re 202 days out and this year marks the 70th anniversary.  It was just a couple years ago several of us rode to the Black Hills.  It wasn’t the first time, but it did celebrate the inaugural Black Hills State University dorm room in Spearfish, SD.   The Sturgis rally defines the term “cluster” so I’ll likely settle for a day well-spent in and around the little South Dakota town…followed by a hot shower and a soft bed before quickly departing to enjoy more of the ride.
  • Oregon State H.O.G. Rally – 2010 marks a combined Washington and Oregon State H.O.G. Rally.  It starts in Pendleton, OR on August 24th and ends in Coos Bay, OR on August 27th.  A week of riding and nearly 1500 miles with 8 dealer stops.  The current ride route is  through 4 states.
  • Good Rockin’ Tonight – I’m talking Street Vibrations in Reno, NV (September) and the reference is to cover bands playing rock hits from the classic acts back in the day.  We’ve got a new culture these days as folks go to dance clubs and move to the bass-heavy productions of studio wizards…but, back in the day it was Montrose (some of you are old enough to remember this exact performance!).  The 19 year old Sammy Hagar stood on stage and rocked the crowds.  However, Street Vibrations is where the cover bands imitate the greats.

What’s in your future ride inventory?

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Book of Eli

If the first installment of Son’s of Anarchy” (SOA), Kurt Sutter’s unique take on a motorcycle gangs modern life, served as a refreshing kick during a woeful aftermath of the financial crisis, then the 2nd installment served as a protest on assault weapon prices and the growing divide between the haves and the have-nots.

Even when viewed as mindless diversion, it’s difficult to imagine how the 3rd installment will provide bolder and grittier action for the discordant “Lock, Stock and Two Smoking Barrels” crowd.

Television sequels find it difficult to live up to the glory of the previous season, especially when the original was a hit.  And according to Kurt Sutter, season 3 will deal with SOA roots and “a world that is outside their own.”  Speaking of another world, I came up with some ideas for Sutter’s “anarchists.” In a word Kurt – APOCALYPSE!

Is there anything better than an apocalypse? No food, marauding motorcycle gangs out to kill you, survival skills, a horrible lack of soap – none of its good.  Season 3 could be all about how SAMCRO survives in an apocalyptic world?  The below film examples might provide Mr. Sutter story ideas for SOA season 3:

  • Introduce a dangerous loner – (The Book of Eli, 2010) – SOA could introduce a “Hatchet” Harry character like Denzel Washington who plays Eli, a dangerous loner who protects the only book that could save humankind or the SOA club. For some reason, there are a lot of people out to stop him, so Eli has to depend some handy kung-fu skills with a mini-sword to survive.  SOA would need martial-arts training to combat the loner and stay alive in a post-apocalyptic world.
  • Don’t trust the military (28 Days Later, 2003) – In a country overrun by zombies, it’s completely understandable that SOA would run to “church” – the first safe haven within hundreds of miles. But when that fortress is overrun by dozens of all- male military officers who haven’t seen women in weeks, their intentions toward female companions of the club are probably less than noble.
  • Conserve water (Tank Girl, 1995) – The year 2033 is basically a paradise for quirky middle-schoolers; But, drinking water is, well, harder to track down than Tiger Woods. So, don’t be surprised if the world’s most powerful corporation tries to kill everyone the club knows so they can control the water wells.
  • Kidnap an orphan (Waterworld, 1995) – This post-apocalyptic future is literally a water world, so change the location of the club and the survival basics are self-evident. Some kind of flotation device will be needed. Motorcycles are exchanged for Jet-skis. And if you can manage to collect enough old milk jugs, tie them together and form the floating Sons of Anarchic city state on the open water.  Of course they would rely on filtered pee for drinking water in the endless search for an orphan with a map to the Promised Land tattooed on her back.
  • Have a good, old-fashioned book-burning at the library (The Day After Tomorrow, 2004) – Sure, the effects of global warming occur over many years. But on FX what if global warming was impatient and decided to screw over SOA in just one week? Well, for one, Charming, California would get wicked cold – so cold that arctic wolves would roam the streets for food. Fortunately, the solution can be found at the local club house: members barricade inside.  Eat chips from the vending machine and start burning every book in sight. Who needs knowledge when the temperature is plummeting?
  • Invent time travel (12 Monkeys, 1995) – Wouldn’t it be swell if SOA could go back in time and do things differently for the good of the club? You know, so that Charming wouldn’t have been plagued by the white supremacy “virus” that forced the SAMCRO survivors to form a new society, deep under the Earth’s crust? Good thing someone invented time travel! That way, SOA can send club members back in time to try and collect information about the “virus” so that the future-people can make a cure. Time machines don’t do much about, say, the fact that the club is pretty well damned to live in the dark with a bunch of creepy scientists for company, but whatever.
  • Run! Run for your life! (Children of Men, 2006)- When every woman in Charming stops getting pregnant, civilization is bound to get a little nutty. So, imagine how SOA would react if they were in charge of protecting the sole pregnant woman on the entire planet. A friendly baby shower is out of the question and it’s best to lace up your boots and do plenty of cardio, because SAMCRO has a lot of terrorists and religious zealots to outrun.
  • Outwit, outplay, outlast (Mad Max 2: The Road Warrior, 1981) – You might think this IS the slogan for SOA. But when SAMCRO is trapped in the only remaining oil refinery and surrounded by a murderous gang of cagers that want your gasoline, the motto “outwit, outplay, outlast” may be what saves the club. First, try a decoy: While the bad dudes think the gas is in one place, take the real stuff somewhere else. Then get a loner with impressive kung-fu and driving skills to take out every last one of the psychopaths, while the club rides off into the unknown. You may not know where you’re going, but at least you’re going somewhere in the wind!
  • Be a good dad (The Road, 2009) – The apocalypse is no excuse to abandon parenting skills. In fact, this is the perfect opportunity to teach the outlaw children about peer pressure: Just because every other human on Earth has turned to murder and cannibalism to survive is no reason to adopt those habits for the club children, right? The SAMCRO offspring will not only learn valuable survival skills, but their self-esteem will be through the roof.

There you have it.  A few potential plot ideas for season 3.  I left off the possible extended two-hour episode of club hostages incorporating the Stockholm Syndrome into the tyrannical ways of the club.

Thank me later Kurt.

Photo courtesy of Comic Con and Tommy Lee Edwards.

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