Harley-Davidson Rides Across The Rubicon

Jochen Zeitz with an electric Harley-Davidson LiveWire motorcycle – Photo Credit: Joshua Kurpings

He saved Puma. Now he’s going to fix the Harley-Davidson global business!

I’m talking about Jochen Zeitz, the interim Harley-Davidson CEO.

The motor company today announced that Zeitz has been appointed President and CEO, effective immediately. You might recall that Zeitz assumed the role back in February when Harley-Davidson ditched CEO Matt Levatich for years of disappointing sales.

Before we ratchet up turnaround enthusiasm of new leadership, it might be good to peel back a layer on the mysterious Mr. Zeitz.  I’ve written a detailed background post HERE.

It’s been my experience that business leadership works much differently during a turnaround transformation.  Managers are less able to rely on practices that previously insulated them from criticism. In addition, a traditional consumer goods company is research driven, and don’t typically decide on action until research tells them to change – but the reality is that research doesn’t always tell you what the consumer wants.

Let’s check out some of the Zeitz FACTS:

• Zeitz is on a combat mission to make the Harley-Davidson business sustainable in a way that improves both society and the natural environment, and that creates economic growth.
• Zeitz was the driving force behind Harley’s sustainability efforts and approved former CEO Matt Levatich’s desire to “bet the farm” on electric motorcycles.
• It took 8-years and the work of a thousand engineers to fully realize the LiveWire, the company’s first electric model, that finally went on sale at $30K.
• Among the entire Harley-Davidson board of directors, there’s a total of ZERO years of motorcycle industry experience.  Coincidentally, ZERO is the top manufacturer of electric motorcycles for the street and dirt.
• No public (via Google search) photo exist of Zeitz riding a motorcycle, attending a motorcycle rally or HOG event.
• At Kering, Zeitz was known as the “sustainability Taliban” — Kering employees characterized him as impatient and demanding unrealistic standards.
• Lack of gender equality on the Harley-Davidson board, yet Zeitz has been a board director and influential member since 2007.
• Zeitz history of working with unions is murky.  In China workers don’t have the right to Freedom of Association and Asia remains Harley’s strongest sourcing region
• Zeitz gets the gist of enlightenment after a dialogue with Benedictine monk Anselm Grün – yeah, yeah, you let go of attachments, dissolve your ego, and then you get enlightened and write a book.

Let’s gain some additional insight of the Zeitz thinking from his previous statements; “My belief is that every company has an opportunity to innovate by creating business solutions for services or products that significantly reduce your impact and create more demand for your product.”  “Well, unless you are an extracting business. In that case, you’re a dinosaur and you’re dying.”  The solution is to marry sustainability with growth. “It’s a question of what we grow and how we grow, and how we can reduce our impact significantly and still grow,” he went on to say, “We have to grow within planetary boundaries.”

Planetary boundaries?  Huh?

I’m as green as the next fuel/air motorcycle enthusiast, but I had to do a deep dive on this one…  It seems the 11,700-year-long Holocene epoch (“Age of Man”) is the only state of the Earth System (ES) that we know for certain can support contemporary human societies. The planetary boundary (PB) concept, introduced in 2009, aimed to define the environmental limits within which humanity can safely operate.  The planetary boundary (PB) framework contributes to such a paradigm by providing a science-based analysis of the risk that human perturbations will destabilize the Earth system (ES) at the planetary scale.

Whoa, this is heavy!

I would assume that in Harley-Davidson parlance and every day practice, this means that instead of making short-term profits that may incur costs later on (an obvious example being depleted resources leading to higher raw material prices, or social inequalities reducing at-work performances and purchasing power), businesses need to spread some of that growth to the wider world around them, for the sake of the planet – but also themselves.

Who would’ve thought… buy a Harley-Davidson motorcycle for the sake of the planet!

Zeitz might actually be on a path similar to Alfred Ford.  Currently known as Ambarish Das, he is a great-grandson of Henry Ford and heir to the Ford Motor Company who has converted his earthly consciousness to helping build the Temple of the Vedic Planetarium in Mayapur, which was largely funded by Ford’s $35M donation.

I don’t want to appear like I’m self-serving, but as you get gray hair in the beard you tend to focus the “More Roads” plan on which rides you are really trying to accomplish in life.  Maybe it’s time to published a memoir, meet-up in Alachua County, Florida and reflect in one of those “healing” pools.

I hope this transcendental awakening works out for Harley-Davidson.

Photo courtesy of Harley-Davidson.

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Covid-19 Bites Harley-Davidson

Q1’20 Harley-Davidson Retail Motorcycle Sales + Motorcycles and Related Products Segment Results

Let’s jump right to that impressive Q1’20 financial result:

• Harley-Davidson (NYSE:HOG) posted earnings of $69.7 million compared with $127.9 million in the same period a year ago.
• The dividend was slashed to 2 cents a share from 38 cents.
• The motor company is in talks with major U.S. banks to secure $1.3 billion in liquidity.
• Harley’s U.S. retail sales were down 15.5% compared with the same period a year ago.
• International retail sales were down 20.7% compared with 2019.
• Harley’s U.S. heavyweight motorcycle market segment share was down 2.2 percentage points, to 48.9%.

Another quarter, another poor performance from Harley-Davidson, though the market seemed to buy into the promise that this time it will be able to turn things around.

Déjà vu…

Management promising to fix things again by “crafting strategy accelerants” to deliver improved sales and better returns.  However, it admitted that its efforts thus far haven’t worked and also said it was “refining” the plans it had already devised, but it wouldn’t reveal how it was going to achieve them until this summer. Granted the financial problems Harley-Davidson encountered this quarter aren’t necessarily all of its own making, though it hasn’t helped itself along the way.

It’s important to note that the Harley-Davidson trends in the U.S. have been weak for years despite the economy being strong for so long. That is a major problem and the acting Harley-Davidson CEO, Jochen Zeitz, remains vague on what the motorcycle company is going to do to change that dynamic.

The “ReWire” Board

The fact that management chose the term “ReWire”, emphasizing the electric future to describe their refining plans reads like a satirical article in The Onion.  It’s as if CEO, Jochen Zeitz said, “I’ve heard some concerns going around, and I want to impress upon each and every one of you that I’m taking every possible step to ensure that we tap into a market that has traditionally been neglected by motorcycle manufacturers, Harley-Davidson is announcing a new line of motorcycles designed specifically for men.”

The “ReWire” plan consists of five main points:

• Enhance core strengths and better balance expansion into new spaces.
• Prioritize markets that matter.
• Reset product launches and product line-up for simplicity and maximum impact.
• Build the Parts & Accessories and General Merchandise businesses to their full potential.
• Adjust and align the organisational structure, cost structure and operating model to reduce complexity and drive efficiency, to set Harley-Davidson up for stability and success.

The ReWire playbook abandons some of the previously ratified “More Roads” plan, but there is so much “CEO Speak” — “designed to address top priority opportunities, drive consistent execution and reset the company’s operating model in order to reduce complexity, sharpen focus and increase the speed of decision making.” — in that investor call its difficult to know what exactly remains “committed” to or what will stop.

Little is certain these days, but there’s one sure thing: in a situation where 30+ million people were laid off or furloughed in the past 6-weeks, people are definitely thinking about their wallets.  And living with ever-present, crushing uncertainty and the knowledge that people all around us are dying isn’t the stimulus to rush out and purchase a new motorcycle.

Let us face facts.  It’s going to be a different world for a while. After all, temperature checks, touch-less payments, masks, wipes, take-out and distancing were not part of the Harley experience before the March closures.

If Harley-Davidson is about anything, it’s about bringing people together. Lots of them. And really, really close — with motorcycle rallies, music festivals, HOG events and all the cross country rides.  Looking at you Sturgis!

The whirlwind of 400,000+ motorcycle enthusiasts half-hearted adherence to CDC guidelines, while gathering all week in a number of local bars, and eating VEGAN-burgers could be viewed as a controlled experiment to determine the virus’s true incubation rate.

I have some gray in my hair and beard, something you will see in a majority of Harley enthusiasts.  I find the idea of a Harley specifically aimed at men deeply patronizing.

Photos courtesy of Harley-Davidson.

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Vintage Restorations Uncovered In The Northwest

Archives Warehouse — Harley-Davidson Museum — Milwaukee, WI

Before jumping into the nuts and bolts…

Disclaimer: Some of the names and identifying details have been changed to protect the privacy of individuals.

This article is the first in a series of planned posts about a collection of vintage motorcycles in the northwest and the man whose work was steeped in the craftsmanship necessary to become proficient at restoring this collection.

Outbuildings, Workshop and Showroom

I’m not a motorcycle archivist, but definitely a fan of reflections in a classic motorcycle headlamp. Vintage motorcycles turn heads wherever they go.

You might find on a typical road trip to Sturgis, a classic motorcycle rattling along in it’s own space in the slow lane.  You’ll roll up along side to pass then with a nod to the rider, be momentarily distracted from the road as the vibrating antique parts try and reach out to tell their story.

I came to know about this remarkable collection of classics in the northwest and was most fortunate to interview the family.  Getting a tour of this private collection is a slow-walk through motorcycle history in America.  I was not only impressed with the number, but also the significance and uniqueness of them.

January 1937 H-D Enthusiast

As a general rule, bloggers are impatient and eager to illuminate a story, especially when it comes to finding a rare stash of motorcycle history.  But, I wanted to be deliberate in the research of the bikes and truly capture the ‘soul’ of the story — the man who is behind the restorations and who made the magic.

Let’s call this man, Robert (Bob) — the heartiest of men with a large stature, a strong handshake, a friendly smile and a genuine love of wrenching on classic motorcycles.

There’s something a little magical about taking an old, neglected, forgotten motorcycle, bringing her back to life, and restoring it to her former glory.

Why do classic motorcycles grab us fiercely by the heartstrings?

There is no simple answer to that question, but one thought is they intersect with our own history.  If not you, then your father or granddad, all who would’ve been lucky to ride one of these works of art and as is often the case, it triggers a flood of fond memories.

1937 Harley-Davidson Model UL

To provide some historical context and mental imagery — it was a time when there were far fewer people around, fewer laws and regulations, when gas was cheap, when driving was a pleasure, and if you owned a powerful two-wheeled machine you could point the chrome headlight down an empty road and go!

In 1937, the San Francisco’s Golden Gate Bridge opened to traffic — at about the same time, a new generation of side-valve engines were introduced from the Milwaukee motor company.  Replacing the V series which had a “total loss lubrication” system, the new U series motors in 1937 were dry-sump oil designs. Most of the motorcycle parts were made in common with the Model E 61 inch OHV motorcycle that debuted a year earlier.  As it turns out, Bill Harley was granted patent 2,111,242 for this oiling system on March 15, 1938.

1913 Harley-Davidson Model 9B

The completely revised engine had many upgrades that separated it from the earlier V motor including new cases, cylinders and now had roller bearings throughout the lower end. New forks, frame and sheet metal improved the image of the new bike, with styling cues heavily influenced by the Art Deco movement, something that the flowing lines of paint and emblems reflected.

Fast-forward to 2020 and my private tour was finally here!

1948 Harley-Davidson Model 45

I’ve aspired to attain eminence in photography and my bucket list includes photographing motorcycles in a professional studio.  But, finding a studio with a large white soft-box that’s big enough to ride a motorcycle into is an obstacle.  Well, it is for a regular guy and renting a commercial studio with light stands, multiplex flash strobes, drop clothes and diffusion panels to eliminate reflections in the paint wasn’t in the budget.

But, I’ve digressed…

I stepped through a side-door entrance and onto the wooden floor of the showroom that houses the motorcycle collection. The space is huge and it’s open and airy with an industrial aesthetic and light pouring in through multi-paned windows.  There is a lingering smell of oil and I noted a few drops on the polished floor.

1916 Indian Power Plus

A beautiful collection!

I didn’t want to be that annoying “tourist” snapping too many photos, but I was that irksome camera-happy dude on this day.

It was a “ride through history” on rare and collectible motorcycles. More significant, were the remarks about the attention to detail and listening to the fascinating backstories, anecdotes, folk-lore and the restoration tales that my “tour guides” shared on each of the motorcycles.

A panoramic scan of the showroom is an overload of storytelling. Side-stepping across the wooden floor finds a person gazing across more than a dozen motorcycles stacked side-by-side.  Set up like an academic library, against an outer wall are multiple bookcases and shelves, where hundreds of engine manuals and parts catalogs were filed away.

The only item missing in this showroom was an onsite cafe!

1925 Henderson Four

There is even an old draughtsman drawing board complete with an articulated protractor head displaying some vintage documents.  The illustrations contained a collection of various engines schematics from their earliest incarnation.

Deep breathing makes a person more aware so, I quickly exhaled, then took another big breath while meandering my feet slowly across the showroom floor.

A bright Teak-Red restoration caught my eye; it was a stunning 1937 Harley-Davidson Model UL flathead.  It’s a little like seeing a childhood photo of someone you miss.  Then I turned to look at a bicycle form of mechanical sculpture…a tribute to the original “Silent Grey Fellow” was gently positioned in the corner — a rare 1913 Model 9B single cylinder… the very essence of simplicity!

Engine Manuals and Parts Catalogs

These old motorcycles were made when clunky was normal and oil leaks were expected. It’s oddly endearing.

Gleaming in the middle was an Azure Blue over Silver 1948 Harley-Davidson Model 45 and at the far end of that row was a shiny Dark Blue 1925 Henderson 4-cylinder.  And placed at a right-angle near the Henderson was a beautifully weathered 1916 Indian Power Plus that looked as if it had just been pulled out of a barn for the first time in many decades.

I’ve listed only a few of the motorcycles in this gem of a collection.

It’s striking and every motorcycle reaches out to tell a unique story of the time, money and effort required to be restored. Imagine how often you’d want to call in sick to skip work so that you could tinker with these bikes.  It speaks volumes of Bob’s discipline, persistence and the decades long practice of his craft.

If you are like me, old things make you feel young.  Admittedly, I have a fascination with dusty items and will be posting several articles on these vintage motorcycles, the workshop and the man behind the restorations.

Stay tuned…

UPDATED: February 27, 2020 — The second post on this vintage motorcycle collection is a deep dive on a restored 1937 Harley-Davidson Model UL Flathead (HERE).

UPDATED: March 8, 2020 — The third post on this vintage motorcycle collection is at: Every Restored Motorcycle Has A Story — The 1913 Single

UPDATED: October 21, 2020 — The fourth post on this vintage motorcycle collection is a deep dive on an original 1916 Indian PowerPlus (HERE).

Photos taken by the author and courtesy of Harley-Davidson.  Cover of the 1937 Enthusiast is courtesy of Harley-Davidson Museum.

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Harley-Davidson Snaps Back At Indian

Let me start off by saying I like Indian motorcycles. I really do.  I’m digging the variety of styles and the attention to detail on each build.

But, my heart is with Harley…

In a previous post I discussed the Indian “Challenger Challenge,” a campaign that invites motorcyclists to test ride the Challenger and the Harley-Davidson Road Glide® Special back-to-back for a head-to-head comparison.

It’s brilliant.

It’s worth pausing for a moment to consider how this campaign would’ve worked out if Indian used any other motorcycle in their lineup vs. the Road Glide — one of Harley’s bagger cash cow.  It’s dangerous to make assertions about “might-have-beens,” or what analytic philosophers like to call “counterfactuals,” because no evidence can exist that fully demonstrates the falseness of such an assertion.

But, I’ve digressed.

A “bake-off” for the preeminent bagger, demonstrates a battle for supremacy in the public mind.  It’s also a battle for cultural supremacy, not a judgement about features, technical prowess or achievements.  It’s the subtlety of Indian craving the appeal of that, what makes a Harley, a Harley.  That ineffable something (that je ne sais quoi, if you need a phrase to go with your cappuccino).

So, in classic Harley fashion, and only 5-months in the role, Jon Bekefy (GM of Brand Marketing at Harley-Davidson) calls BS and snapped back at Indian.  Mr. Bekefy uploaded an agency polished Instagram post and in the process scorches Polaris. (Bekefy Twitter)

In other words, “Anything Polaris/Indian can do, Harley can do better.”  Clearly the General Manager of Brand Marketing at Harley-Davidson doesn’t want to get upstaged.

We all know that Harley-Davidson is not just a bike, it’s a choice.  An existential decision and the life that follows upon it.

Wait.  That statement may not be as defensible, since Harley is now promising to be another “transportation” manufacture delivering a Chinese 338cc bike where affordability remains paramount to the upscale EV future of two-wheel transportation and includes all bicycle types in between.

As Indian and Harley arm wrestle each other over boomer-centric models, it has a limited lifespan and is unlikely to generate a lot of new riders, but it’s pure theater and fun to watch!

Photo courtesy Instagram.

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Indian Looks To Smoke The Competition

Indian Challenger vs Harley-Davidson Road Glide

Earlier this week, Indian announced the “Challenger Challenge,” a campaign that invites motorcyclists to test ride the Challenger and the Harley-Davidson Road Glide® Special back-to-back for a head-to-head comparison.

It’s not the typical, behind-the-scenes advertising effort by Indian to sell a product in its own time and in its own way.  Instead, it’s a high-visibility campaign marked with in-your-face marketing which proclaims — the Challenger will absolutely “smoke the competition.”

That’s a blue-collar craftsmen and beer-bellied “motor-head” inflammatory call to battle!

Will Harley-Davidson laugh and say, ‘Good try, bad result‘ expecting it to reinvigorate the Road Glide sales or will the Milwaukee gurus sit up and make a hard-eyed comparison of the competition’s strengths?

I’ve posted previously that motorcycle growth rates domestically are decelerating.  Wall Street is worried that the motor company has tapped out demand for their line-up as sales cool.

Challenger Challenge Stats

My initial reaction of the Indian campaign was, it being reminiscent of the 1980’s when commercials were a sign of the times — desperate, struggling times that car manufactures hoped would turn prosperous.  You might remember, “If You Can Find a Better Car, Buy It” ad campaign?  The face behind that familiar slogan was Ronald DeLuca — the advertising whiz hired by Chrysler Corporation chairman Lee Iacocca to turn around Chrysler’s late-1970s death plunge in a recession-weary America.

Indian has the not-so-simple task of convincing Americans that the motorcycling passion isn’t an archaic lifestyle teetering on the edge of the toilet bowl.  Or if Millennials are truly killing motorcycles, then why not ride it out in style with a new Indian Challenger!

Carey Hart and Big B

The Challenger Challenge is set to launch at Daytona Bike Week on Friday, March 6th.  The product demo tour will visit Indian Motorcycle dealers around the country, as well as select motorcycle rallies and events, including Sturgis in August. In addition to the national tour, select Indian Motorcycle dealers will have a Road Glide on hand to ensure that any customer who visits their dealership can take the Challenger Challenge.

Of course there will be a full-court press with social hashtags and digital media including a video series where Carey Hart and Bryan “Big B” Mahoney, pit the new Indian Challenger against the Road Glide Special in a series of rubber burning tests that showcase power, torque, braking and handling.

We will know soon enough if the campaign is more about finding new customers who don’t necessarily want to own a motorcycle or boosting the Indian public image and extending the brand’s good name.

Photos courtesy of Indian Motorcycle.

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Harley-Davidson Q3 2019 Financial Results

Harley-Davidson, Inc. (NYSE:HOG) reported the third quarter 2019 financial results in a press release HERE.

Key indicators the motor company reported was revenue from motorcycle and related products fell 4.9% Y/Y to $1.07B in Q3.  Motorcycle shipments were down 5.8% to 45,387 and gross margin fell one point to 29.9% of sales.  The company stated it expects shipments of 38,500 to 43,500 motorcycles in Q4 and 212K to 217K for the full year.

In other interesting financial sound bites; Harley’s Q3 marketing spend was up over 30% with efforts on the LiveWire and LowRider S television spots running in major markets across the U.S.  International retail sales were up 2.7% driven by growth in both developed and emerging markets.  In addition, Harley-Davidson gained 2.2 percentage points of market share during the quarter within the Touring and Cruiser segments, which represents approximately 70% of the total 601cc plus industry.

In the attracting more people to riding and keeping riders riding space (i.e. the 2027 strategic imperative) — in Q3 the company gained deeper analysis and insights on why people engage, participate and disengage from riding.

Lets call it a “participation lifecycle!”

H-D Marketing and Brand Amplification

Harley-Davidson now has an acute focus on how to influence each customer at their buying decision points to build the total number of committed Harley-Davidson riders.  By 2027,  the company will expand to 4M total Harley-Davidson riders in the U.S., grow international business to 50% of annual HDMC revenue, launch 100 new high impact motorcycles and do so profitably and sustainably.  Lastly, Harley added Amplified Brand as a growth catalyst in the More Roads to Harley-Davidson’s growth plans.

For example Harley-Davidson refreshed their brand look at major events during Q3 including Sturgis, World Surf League and Spartan races and recently announced we will be the presenting sponsor at next summer’s hotly anticipated Hella Mega music experience tour featuring Green Day, Weezer and Fall Out Boy.  The Hella Mega Tour being promoted by Harley-Davidson is the co-headlining tour of rock bands Green Day, Fall Out Boy, and Weezer. The tour was announced on September 10, 2019 and includes dates from March to August 2020.

Navigating Section 301 Tariff Process

You can’t have a finance report these days and not talk about TARIFFS!  The dizzying series of trade and tariff events over the last few months has pushed the trade war front and center into Harley-Davidson.  How to navigate the Section 301 Tariff process, prepare for any impact etc., is a challenge in of itself.  For the full year 2019, Harley-Davidson now expect impacts of recent EU and China tariffs to be approximately $105 million. This is a $5 million increase from prior expectations and is driven by an increase in Section 301 tariffs, which continue to shift with the breeze as part of global trade negotiations.

It appears that some developed nations will slip towards recession, and governments and companies keep hoping the signs of economic weakness in China would push all the parties to a “deal” table faster.  Harley-Davidson looks to continue mitigating the impact of tariff increases through tariff classification, tariff engineering, first sale, and other methods.  Some of which may have an impact on U.S. manufacturing jobs.

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Q3’19 Press Release:  HERE
Investor Slides:  HERE
Transcript of Q3’19 Financial Call:  HERE
More Roads Plan:  HERE
Hella Mega Tour:  HERE
Section 301 Tariffs:  HERE

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Photos courtesy of Harley-Davidson

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Harley-Davidson: What Happened

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.

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Getting Older and Harley-Davidson Boomer Dilemmas

Reflection of a Marketing staff meeting at H-D?

I don’t know who the people in “People” are and candidly I don’t care.  I use to have some casual interest, but as I’ve aged, I realized that promoting faux stars is how an industry makes itself feel good about itself.

 

I grew up in a different time.  Yes, I’m getting older, put me down for it, as some readers do, but unlike some of you I’m wise and experienced. And when I grew up, hard work, a bit of skill and insight would not only get you a house in a reasonable neighborhood, but the ability to support your family and go on vacation. Now, most people can’t even pay their bills.

When you think of “aging boomers,” what comes to mind?  Accelerating retirements, workforce skill shortages, stagnant incomes, or runaway health care spending?  It’s unlikely you think about aging as an economic drag on Harley-Davidson, right?

H-D History

Down the road from my place, in the rolling farmlands north of Sunset Highway (U.S. 26), is a greasy burger joint called Helvetia Tavern … a place I’ve been known to frequent a little more often than my doctor might recommend, but the burgers are oh so good!  If you stop there on any given summer weekend, you might see a dozen or more bikers parked in the lot, who are talking bikes and showing off their blacked-out or chrome-laden Harleys.  And nearly all of them are over the age of 45. Many are over 50.

This isn’t a coincidence.  Harley-Davidson is a brand whose sales depend disproportionately — almost exclusively, in fact — on middle-aged males. There have been business case studies written and stock investment analysis looking at the H-D demographics while espousing doom and gloom for the company.  The fact is that motor company has been working hard to try and capture a younger, more diverse set of riders, including women and are trying to appeal to the less experienced and younger riders who want cheaper alternatives.

Blackline Appeal

I would submit that riders younger than 30 generally lack the time, interest or the bankroll to buy a Harley for touring. And by the time they get into their 50s or older, riding with the wind in the face loses it’s allure.  It’s the noise, it’s the traffic, it’s the increased dangers, it’s the joint pain of long rides, it’s hot, it’s cold, it’s raining, it’s… always something.

I know that many of you are riding into your late 60s, but my observation is you’re doing it less frequently and you’re not buying a new bike as often as you might have in your 40’s.  That means Harley has a growth problem with the boomer demographic that will not go away.  Even with a robust economy which we are not experiencing.

But, this is all well documented and debatably old news (“Living High on the Hog” (WSJ: February 5, 2007).

Looking at the H-D boomer challenges…

The challenge for Harley-Davidson, in my view, is how they will continue to tap into the enormous resource that older Americans can provide?  Boomers are generally healthier and more educated than prior generations.  They are the largest group starting new businesses both in Oregon and nationally.  And many economic projections about aging are misguided because they are based on outdated notions about retirement and what it means to grow older.

I can speak with some authority on this aging topic and it’s debatable whether Harley-Davidson can grow if boomers decide to quit riding in mass.  I wanted to offer up some observations:

• Boomers are bombarded by media.  In an attention overload society it’s very hard for the message to get noticed because it’s noisy out there and hype is more prevalent than ever.
• Boomers believe everything they’re into should last forever, but it doesn’t, just like them.
• Have all the latest gadgets but barely know how to use them.
• Boomers know the lyrics of “Hotel California.”
• The boomers can’t square looking good with feeling bad. All the hogwash about 50 being the new 30 and 60 being the new 40 has convinced them that they’re breaking the laws of science, but the truth is people break down, everybody does.
• Want to be anti TV, but talk about doing Netflix marathons.
• Were into the Great Society, but now don’t want to pay taxes, especially if the benefits don’t flow to them.
• Believed boil-able vegetable bags by the Green Giant were the future only to find out fresh and local was truly “in.”
• Thought college was where you grew up and learned something as opposed to overpaying for an entry ticket to a job.
• Still believe in government, and that their voice and vote counts.
• Know that you work ever harder for less money.
• Remember when companies were loyal.
• Remember when you fixed stuff, now you just throw it out and buy a new one.
• Want manufacturing to come back to the U.S., but still want very cheap electronics.
• Boomers talk about their health. The pills they take, the conditions they have, it comes up in conversation, and it doesn’t bug them, it’s akin to discussing bands when they were younger.
• Realize opportunity has slipped through their fingers. But are still dreamers nonetheless.
• Baseball, motorcycles and big block automobiles are so twentieth century.  Baby boomers don’t stop talking about them, but their kids shrug their shoulders and lust for the latest mobile device.

Sure some of these observations are broad generalities and I’m painting a large group with a wide brush here, but I’m sure something resonated, right?   Once upon a time the baby boomers were the younger generation, champing at the bit to replace our parents. But now we’re fading off into the sunset, just like Letterman.  So long the era of the baby boomers. They were the largest segment of the population, who pushed and pulled and help change the world.

But, let’s face it, aging isn’t so much about the fact that we are getting older.  It’s about how the motor company is always going after the young buyer and often denigrates or discounts the older demographic.  They make an assumption that today’s Americans will behave in much the same way as prior cohorts did.  I don’t know about you, but boomers in general have reshaped every element of society as they’ve aged.  And, I would submit that Harley-Davidson is placing a disproportionate amount of focus and customer feedback on the youth lifestyle.  Sean Cummings, H-D senior vice president of global demand reinforced this by stating:  “We’re targeting the 55 million Generation X’ers to get them back out and riding.”  In doing so, it makes it harder for Harley to keep a finger on the pulse of the aging motorcyclist.

It might be someone else’s time (looking at you Millennials and GenX), but what is not fixed is how affluent boomers respond to Harley-Davidson motorcycle changes.  You have to give boomers motorcycles/features they can get excited about and you can’t be too catering to old age.  No one likes to admit they’re getting older and at the other end of the spectrum you’ll alienate the entire boomer group if you cater to youth.

Power, sex and youth have long been used to sell motorcycles, so anything that suggests older buyers might not be as virile and agile as they were could backfire and only serve to fulfill the “Silver Tsunami.”

Photos courtesy of marketoonist.com and H-D.

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E-Bike Made By Harley – This Changes Everything

H-D LiveWire

Charged up, amped out and delivers a jolt…

Just a few of the colorful words used to describe the Harley-Davidson LiveWire which has received so much free and fawning press coverage about the prototype electric motorcycle that you’d think they invented electricity.

I get it.  The motor company builds good products, but does it really deserve wave after wave of gushing prose in every news article?  I blogged previously about the announcement HERE.

Let’s keep it real.  Is LiveWire any better than the other electric motorcycles on the market?  What are the rider advantages of LiveWire vs. other electric rides?  Are there drawbacks of an increasing reliance on electricity for transportation?  No one is reporting on anything other than regurgitating the marketing talking points.

Has the press failed to notice that there are many electric bikes already in use by riders and a growing number of police departments across the country?  From New York to Oregon, and around the world, including in Bogota, Colombia and Hong Kong.  The police versions of the “Empulse LE” by Brammo, Inc., based in Ashland, Ore., and the “DS” by Zero Motorcycles immediately come to mind.

But it gets worse.  The Harley-Davidson president, Matt Levatich tells the world during the LiveWire press tour that Harley’s are longer just for old guys…  Huh?

He must have been basking in a special Milwaukee sun-imitating light that failed to fend off seasonal affective disorder with that alluringly sales quote.

It happened at the Lower Manhattan Harley dealer during the recent LiveWire electric motorcycle test rides.  Mr. Levatich tells the press that Harley would not be forgetting its core customers who want old-fashioned motorcycles.  “We’re absolutely not abandoning any of that,” he stated.  “We’re going to continue to invest in the great traditional Harley-Davidson motorcycles…

As a current core customer, I guess I’m one of the riders only interested in “old-fashioned” motorcycles?  Hey Harley, hashtag this…  #YoureDoingItWrong.

Wow, nothing like slighting the mature motorcycle rider base, the base that has been paying the company bills with a back-handed comment that is clearly all about reaching out to Gen-X’ers and Millennials.  There’s a thin line between appealing to Millennials and pandering.

Yeah, I get wanting to open new doors to people that are outside of the motorcycle sport and only know the brand for its t-shirts.  But, that “old-fashioned” reference is as if Harley has come to terms with an electric future, which excludes their current customers, so let’s spit out aging and old-fashioned insults at them.

If Harley-Davidson LiveWire is “only looking at rider feedback at the moment” then why all the publicity?  You might recall that prior to Project RUSHMORE rolling out on the touring bikes there wasn’t a peep until it launched.  The motor company has by design crafted a publicity stunt and worked at driving social media outreach.  It’s a marketing campaign pure and simple.  And thanks to Harley, Zero had their biggest single day of Internet traffic in the history of the company on the day Harley made its announcement, according to Scott Harden, VP of global marketing for Zero Motorcycles.

Shouldn’t Harley-Davidson be talking to the “right” riders?  And H.O.G. grey-beards aren’t exactly the wrong people to be getting input from, but relying on this user base for feedback on this new GenX or “Millennial” motorcycle is unlikely the most salient feedback from the “right” people.  Shouldn’t they look for those Portlandia-esque grown men on BMX bikes who are ‘riding’ to weekend pubcrawls and who make their living in a variety of ways — some legally and others by any means within their particular skill set?

The fact is that future customers could be from newly wealthy Chinese looking for style, city-dwelling Millennials who need utility and affordability or retirees who want a trike that doesn’t embarrass them.

Whether electrics take off is anyone’s guess and your welcome to label me a gas station-centric oldster.

Photo courtesy of H-D.

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Harley-Davidson And The “The King of Good Times”

I’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

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)

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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