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Archive for July, 2011

Oregon Rep. David Wu (D) as Tony The Tiger

Meet Congress’ newest playboy…  56 year old Oregon Rep. David Wu (D).

A lawmaker from the northwest who has done nothing for motorcyclists or motorcycle issues is the latest to be accused of sexual misconduct.  Reportedly a woman, who is the daughter of one of Wu’s high school friends and a donor to his campaign efforts, is accusing the Oregon congressman of an unwanted sexual encounter.  Mr. Wu who is being treated for an undisclosed mental health condition stated the encounter was consensual.

Huh?

Mr. Wu defined the encounter as “consensual”?  Uh, right… everyone knows that 18 year old women are always searching for 50+ year old men for a ‘hookup.’

It wouldn’t be much of a stretch to speculate that Mr. Wu was a bit delusional on that consensual part.  In fact it’s been widely reported he had become an increasingly unpredictable person whose senior staffers were so alarmed over his erratic behavior during last November’s election that they demanded he enter a hospital for psychiatric treatment.  At least six staffers left his team in protest.  Some of them, including the chief fund raiser had been with the congressman for more than a decade.

Allegedly this “consensual” incident happened around the same time — Thanksgiving 2010 — and was recently discovered when the woman left a scathing message on Wu’s phone, and the message was heard by aides in his office.

It wasn’t but just a few months ago that Wu attempted to explain his erratic behavior on KGW’s “Straight Talk”.   He insisted that he didn’t know whether the painkillers he accepted from a donor were prescription oxycodone or over-the-counter ibruprofin. He claimed he was just clowning around when he sent e-mails in his childrens’ names to staff members asking them to lay off “his dad” when he was wasted. He cautioned people about sharing photos of themselves in Halloween costumes. His talking points, delivered in a Prozac-like zombie calmness behind an unflinching smile, kept returning to how he was in a “really good place.” After listening to the interview, I wondered just exactly where that place is.

Hey we’ve all been there before, right?  Who hasn’t gotten a little tipsy and sent out early-morning e-mails to subordinates and signed them with our childrens’ names? Who hasn’t popped a couple of pain pills offered by a friend without asking what they were?

So with pressure mounting and a looming ethics investigation Mr. Wu announced he would resign.  No, wait.  In keeping with his unpredictable status he then decided he wouldn’t resign but instead would not run for re-election again in 2012.  Oh joy.  Rather than admonishing us to wash our hands to avoid the flu, as he did in his taxpayer-funded public-service announcements leading into the last election, now he’ll be able to record new ones with a mental health theme.  Maybe a “no means, NO” video for the youth?!

Let’s provide some perspective.  Riding out these rough waters for awhile means that Wu would continue to qualify for a pension worth about $851,000 over his lifetime.  This number was calculated by the National Taxpayers Union and reported in the USA Today.  Congressional pensions are 2 to 3 times more generous than those offered to private-sector workers who earn the same salary.  In addition, unlike most private-sector plans, a cost of living adjustment is applied to the congressional benefit.  More information on congress’ disproportionate accumulation of privilege is HERE.

Yeah, Wu is in a very good place indeed.

After 13 years in DC Wu’s lack of effectiveness is clear (485 co-sponsored bills (ranks 72 of 440; 14 made it into law (ranks 172 of 440).  Even during the KGW interview Mr. Wu didn’t dispute his poor ranking.  Why should we expect results from an Oregon politician?  Besides, Wu’s transgressions are extremely pedestrian compared to Portland’s illustrious borderline-pedophile mayor – Sam Adams.

Makes me so proud, I think I feel a tingle up my leg.

Photo re-mix by editor and courtesy of Kellogg’s and Wu.

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Elevate your lifestyle with another glass…

It might become the new Harley-Davidson slogan as Keith E. Wandell (H-D CEO) recently joined the board of directors for Constellation Brands.

Constant who?

Constellation Brands (NYSE: STZ) is a Fortune 1000 company with more than 100 brands in their portfolio, sales in about 125 countries and operations in approximately 30 facilities.  They are the world’s leading premium wine company with a broad portfolio of products across the wine, beer and spirits categories.   Constellation’s brand portfolio includes Robert Mondavi, Clos du Bois, Blackstone, Arbor Mist, Estancia, Ravenswood, Jackson Triggs, Kim Crawford, Corona Extra, Black Velvet Canadian Whisky and SVEDKA Vodka.

I can see a new marketing campaign now… the flirtatious, and witty pin-up bot from the future where there are no boundaries… SVEDKA Girl Grl.  You know her as the fembot of the future.  The world’s leading heavy cruiser motorcycle company joining together in a hip-hop nightlife where denizens do the “bot” dance… a version of “Dancing Machine” by the Jackson 5 (remixed by Scott Spock).  There will likely be posters and t-shirt giveaway’s with the sensual female robot standing astride a V-Rod… doing that super model burnout gig?!  Watch out Marisa Miller.  Your days are numbered!  Clearly merchandise tie-ins will be planned, scheduled and be most prolific.

In a company press release accolades oozed… “We are very pleased to welcome Keith to the board of directors and believe his experience in a diversified, consumer-driven industry, will provide excellent guidance as Constellation continues to focus on building its premium wine and spirits brands,” said Constellation’s Chairman of the Board, Richard Sands. “We look forward to the contributions he will make to the organization.

The editor of this blog wasn’t solicited for an opinion, however, had it been it would have went something like… “I think it’s important to not confine yourself to society’s stereotypes.  It’s radical to see H-D embrace every aspect of the robot future.  First in displacing manufacturing workers to potentially no real people in advertising.  No one owns the future so why can’t a fembot ride!

Look for my interview with the SVEDKA Grl soon.

Photo remix courtesy of Constellation and H-D.

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Not so long ago the saying among motorcyclists was “there is no replacement for displacement.”

In fact, on CVO models the 1800cc (110 cu in) engine produced copious amounts of torque and high horsepower numbers… it was the key to happiness and a big smile.  It’s H-D’s analog approach to a mostly digital world.

But, let’s start from the beginning.

Remember the day you sat in your basement, in your bedroom with the lights off, driving the stereo speakers to the point of distortion, listening to music that energized you and soothed your soul at the same time?

Well get READY!  Along comes the 2012 models and we’re talking about a one-hundred watt smile which emanates from the Harman/Kardon Advanced Audio system.  The kids these days might be listening on earbuds, but the H-D creators are clearly freaks for sound.  Who says high-end motorcycle audio has to be difficult?!  What’s coming out of the speakers on the new models is positively mind-blowing.

I’m financially challenged, but even I was doing the calculation on a new 2012 CVO Street Glide from Harley-Davidson…  New this year is a second 100W per channel amplifier and bridged tweeters mounted in the saddlebag lids.  That’s a total of eight speakers and two power amplifiers kicking out 400W of lower mid-range and crisp highs of crashing cymbals.  Not quite the gut-kicking bass of JBL concert speakers during a U2 concert, rather it’s like a warm ooze embrace of a digital sound field.  It’s the aural grease you’ll need to make it through the day!

The new 2012 CVO Road Glide Custom gets a boosted 100W (up from 80W) amplified Harman/Kardon system too.  The speakers are not the $3000 a pair Dynaudio BM15A’s you’d find in a music studio, but new this year are the two-way 5×7’s for booming down the boulevard.  If I had either of these motorcycles I’d park it in the garage and shut all the windows because the music tracks on this system mean you’ve got to crank the volume – up enough – that you’d be in the same room with the band.  Yeah, it’s that good.

For many riders they will stop right there when reviewing the new 2012 models and look for the check book.  But there is more…  H-D standardized on the Twin Cam 103 engine (with automatic compression release) as standard equipment on Softail, touring and most Dyna models.   H-D launched the V-Rod 10th Anniversary Edition and the new Dyna Switchback.  Some additional 2012 highlights include:

  • A Security Package that pairs Anti-lock Braking System (ABS) with Smart Security System with proximity-based, hands-free security fob is available for all 2012 V-Rod, Dyna, Softail, Touring and CVO models. The Security Package is standard equipment on CVO models and on the Road Glide Ultra, the Electra Glide Ultra Limited and the Road King Classic. The Security Package is a factory-installed option for all other models.
  • The Night Rod Special is updated with new tapered tail section, lighter-weight wheels, an inverted front fork and improved ergonomics. Harley-Davidson celebrates a decade of power cruising with the V-Rod 10th Anniversary Edition motorcycle, finished in Brilliant Silver Pearl bodywork.  All V-Rod models will carry V-Rod 10th Anniversary badges.
  • The new Dyna Switchback combines hard saddlebags and a windshield with the eager handling and Twin Cam 103 performance of the Dyna chassis. It’s a custom-touring bike ready for a long weekend trip, until the detachable bags and windshield are removed.
  • The Fat Boy and Fat Boy Lo have a new reduced-reach handlebar for more-comfortable ergonomics. The Softail Deluxe and Heritage Softail Classic will be available with a new optional “tubeless” Chrome Aluminum Profile Laced wheel option for ease of tire replacement and repair.
  • On Touring models, the Twin Cam 103 is equipped with an oil cooler. All Touring models except the Ultra Limited will offer a new “tubeless” Chrome Aluminum Profile Laced wheel option.
  • The Sportster line cuts across a broad range of riders with models ranging from the XR1200X to the SuperLow to Dark Custom roadsters like the Iron 883, Nightster and Forty-Eight. The Sportster 1200 Custom can be personalized for fit, function and style with H-D1 factory customization, and new 1200 Custom color options have been added to Bike Builder this year.

If any of this appeals to you go online to H-D and check it out.

Photo courtesy of RCA/Popular Mechanics (circa: 1958)

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H-D announced Q2’11 financial results this morning.

In a word – Booyah!

By every financial measure Harley-Davidson generated improvements in the second quarter of 2011, with strong earnings growth, increased shipments and growth in its dealers’ new motorcycle sales both in the U.S. and globally.  Here are some of the stats that CEO Keith Wandell and CFO John Olin reviewed from Anaheim, CA. where the annual dealer meeting and new product launch was in progress:

  • Revenue in Q2’11 was $1.51B (up 15%) with income up 36.8% to $190.6M
  • Motorcycle shipments up 7,769 in Q2’11 vs. Q2’10; Motorcycle segment revenue up $204.6M (18%) vs. Q2’10
  • Touring motorcycle shipments made up 38.3% in Q2’11; up 3.6%
  • International shipments were 36.2% in Q2’11 vs. Q2’10 at 42.5%
  • Shipment forecast for 2011 rose by about 8% and now H-D expects to ship between 228,000 and 235,000 motorcycles worldwide
  • Market segment share (651+cc) is 53.8%; up 0.2% from 2010
  • U.S. dealer network sales of uses motorcycles up 11% through May; Used bikes sales continue to firm up (meaning they offer the dealer a method to help offset the “sticker shock” of new bikes)

Did anything go less positive?  Well that depends on your viewpoint.  From a shareholder’s perspective it’s “Houston, we’re ready to throttle up”!   Stock price set a new 52-week high at $46.88.

As a rider/layman the touring motorcycle shipment increases were offset by the decreases in Custom and Sportster declines.  There were no age demographics quoted in the analyst call, but we’ve been told that typically “youngsters” don’t buy the higher priced baggers.  In addition, the new 2012 touring models that were announced earlier in the month have… shall we say… “lean” engineering innovation compared to previous years.  In a number of cases there we’re only paint palette changes and price increases made up the so-called “new” touring models.  There was about a 1% price increase in the U.S. market.  The lack of innovation is especially troubling (to me) given that product development spending was up $7M in the first half of 2011 which was described as a continuation of their strategy and focus on leaner engineering.  Sure metals and fuel costs are up, but the lack of stronger product changes is not always a recipe for long term success.

Nothing was noted on the call about the recent expansion in India.  Not sure why given that SG&A expenses were up about $13M on the strategy to grow 100 – 150 international dealers by 2014.  Latin America saw a decrease in retail sales which was largely due to all Brazil dealers being terminated.  There was a restart in that country and the new dealers (6) were coming up to speed.

Congrats to H-D on a great quarter!

UPDATE: Full transcript of the analyst call is HERE courtesy of SeekingAlpha.

Photo courtesy of H-D.  Full Disclosure: I don’t own H-D stock

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2012 Paint Palette

Have you been reading the headlines? There was a big earthquake in Haiti. Some men were rescued from a mine in Chile. Oh, and apparently there was a gigantic oil spill in the Gulf of Mexico.

What’s that you say? This all sounds like last year’s news?

Well, don’t tell that to Harley-Davidson. The motor company recently introduced 15 new models, which it considered innovative and groundbreaking  products:  a “tubeless” laced wheel option, and six new colors or color combinations on the touring models!   Then in a déjà vu lapse they announced the retention of last year’s integrated branding firm Graj + Gustavsen Inc. to continue advising the company on strategic branding initiatives related to apparel and apparel-related accessories.

It would seem that even Harley-Davidson understands that the touring models have so few innovations that their only hope of differentiating itself from the other players is through paint palettes…. So, the only buying question you’ll have to ask yourself, then, is: Does H-D make a convincing enough “color case” that you should invest about $20K in a “new” touring model?

Here’s the crux of H-D’s argument.  First of all, the new colors or color combinations are beautiful. The mostly unchanged motorcycles from 2011 are even more beautiful in 2012.  The unchanged frame is beautiful, too. It’s graphically coherent, elegant, fluid and satisfying. That, apparently, is the payoff when a single company designs and builds both the engine and frame housing?  The ‘advanced’ Harmon/Kardon radio retains its 1970’s BMW inspired ‘red’ glow and that glossy Vivid black paint — continues to be a magnet for fingerprints, boot scuffs, and unfortunately looks wicked great only in the dealer showroom. I think the words in the H-D press release were “The Legend Lives On.”  The band, Talking Heads, said it best… in the song “Once In A Lifetime.”  The “same as it ever was, same as it ever was” lyrics… really resonates for the 2012 touring models.

It’s been a while since I’ve had a good, proper, Harley-Davidson rant. Part of that has been the adventures of this year; I think it’s softened me and given me more patience, made me a little more graceful. Another part of it, probably closer to the heart of the matter is that I’ve been busy doing other things and a good rant takes time to incubate.

Well a rant has been building and I finally snapped as I read an article in last week’s “Wall Street Journal” (subscription required) where there was a front page story on Hyundai. How it went from a laughingstock to a runaway success in the car market. Now that they’ve solved the quality problem, now that they’ve caught up with Toyota and Honda, the company is confronted with a huge issue going forward, creativity. How do you lead when you’ve spent your entire manufacturing life following? Read WSJ article HERE.

The new Elantra is so far ahead of the market that Corolla sales have stalled and the new Civic has been blasted by critics as it fails to fly from the showroom. Instead of focusing on the econo box look, Hyundai imitated BMW and Mercedes-Benz. And the model was redesigned in four years instead of five, trumping its competitors in the marketplace.  The success of the Elantra is testimony to the change in culture at Hyundai. To one now focused on leading, on creativity.

This leads me to the question of is there a culture of innovation at Harley-Davidson?  When talking about innovation we often define the term too narrowly. In fact, innovation can – and does – occur in every industry of our economy, from consumer electronics to health care.  Yet, when I re-review the 2012 touring models, instilling creative thinking must be a work in progress.

For comparison, a few times a week, video screens around Hyundai’s headquarters in Seoul show a one-minute clip that has become a favorite. It shows an open office where workers wearing the same shirt and haircut are “beavering” away (that’s Oregon slang). Then a new person arrives with a different hair cut. Each time he voices an idea, the others shout him down. Eventually he gets the same haircut and everybody likes him. Then a question appears: ‘Aren’t we stuck in conventional thinking?’

I don’t know if a video loop like that would necessarily fly in a Milwaukee plant with the union workers, but that’s not the point of this post.

It’s about how most every American business is in a mad dash to innovate except for H-D.  The only answer can be the titans at the top are traffic cops sans creativity?  Don’t blame the public or the economy, blame the fat cat executives who are denying they’re the problem like the honchos at Goldman Sachs. What makes the rich believe they’re invulnerable, always right and entitled?   Somehow in the “dash-for-cash”, it’s all about shooting low, to the sweet spot, where most people live so the purveyors can make money.  Good enough just doesn’t cut it and of course there are exceptions, but generally speaking we’re in a low point for H-D touring motorcycles.

It’s a new game. No one gets to rest on his laurels. Making it today is no insurance you’ll thrive tomorrow, look at the carcasses strewn along the highway… OCC, Indian, or Big Dog.

We’ve got endless hype and yet sales are anemic.  Mediocrity thrives at Harley-Davidson because it’s all about the money.  About playing it safe… with new paint palettes!

Photo courtesy of  Hyundai and H-D.

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Not the “Captain” you were thinking.

It’s called product placement and I’ve blogged about it previously HERE and HERE.  It’s all about socializing Harley-Davidson on the big screen.

Sure we know that Harley-Davison has used product placement in the past, but these days it’s up to the Davie Brown Entertainment Team to make sure it’s a core part of a marketing push into film/entertainment.  And as we’re told countless times each night on TV commercials… entertainment can sensationalize the excitement and thrill of riding a motorcycle to the point of moving people to the dealers to check it out, right?

Disregard that only 3% of the U.S. consumers own a motorcycle.  It’s the other 15-20 million individuals in the U.S. being targeted and the hope is to generate a desire to buy one. But, I’ve gotten way ahead of myself…

This bit all started at the outset of WWII, where the U.S. Government gave H-D an assignment.  Design a motorcycle that could withstand desert conditions. You see the Germans were already using a desert-ready BMW motorcycle in the North African campaign and we didn’t really have anything to respond.

Harley-Davidson’s response was the 1942 XA.  It had horizontally-opposed flat twin engine (750), a shaft final drive a hand operated clutch with foot-operated shifter and a “wet-sump” design circulated oil from the pan underneath the engine, protecting the oil from sand.  It also had heavy-cleated tires to provide traction against shifting terrain.  The contract was cancelled early due to war combat moving out of North Africa and only about a thousand XA’s were ever built.

It was also in about the same timeframe, during and around World War II that the Model WLA was produced to U.S. Army specifications.  Called the 45 solo type, due to its 45 cubic inches (740 cc) engine and single-rider design. The same engine, in a slightly lower state of tune, also powered the three-wheeled Servi-Car (the “G” family), leading to the “solo” distinction.  During World War II, Harley-Davidson produced and dispatched approximately 90,000 WLA motorcycles overseas to support the war effort. The motorcycle was affectionately known as the “Liberator” by U.S. Service Men and Women.

Private Robert J. Vance

Quick to recognize a product placement opportunity, H-D (via Davie Brown) worked with Marvel Studios to recreate five replica bikes which is tied in to the July 22nd release of Captain America: The First Avenger.  In addition, Harley Davidson has launched an interactive web site that showcases the hero’s vintage ride and offers fans a chance to win a one-of-a-kind custom motorcycle.  Cool.

Lastly, the northwest has something loosely connected with this movie…Private Robert J. Vance, from Portland, Oregon, had his photo taken while riding a motorcycle as a messenger of the 33rd Armored Regiment of the 3rd Armored Division in the fields of Normandy in late July, 1944 on a H-D WLA.

Photos courtesy of Marvel, H-D WLA Service Manual (large .pdf) and U.S. Army Signal Corps

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