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Harley-Davidson CEO Meets POTUS

Earlier this year, the President met with Harley-Davidson exec’s and put a spotlight on the company in his address to Congress, yet there was no “Trump Bump” as the motor company reported earnings which included sharp declines in revenue and profit for the first quarter of the year.

Some of the key Q1’17 stats:
— $186.4 million in net income, or $1.05 per share, for the period ended March 26, down more than 25% from $250.5 million, or $1.36 a share, in the same period a year ago.
— Revenue was $1.5 billion, down from $1.75 billion in the first quarter of 2016.
— Motorcycle sales in the U.S. were down 5.7% in the quarter compared with a year ago and International sales fell 1.8%
— Reported motorcycle shipments fell 14.7% to 70,831 in Q1
— Market share in the 601cc-plus segment was up to 51.3%.  Execs stated that the Victory liquidation helped market share.

Nothing screams Americana more than deep vehicle discounts and Harley-Davidson jumped head first into that pool by offering its dealers financial incentives to clear out the leftover 2016 motorcycles.  And in an unusual move the company has purposely constrained the supply of its 2017 hottest-selling new models, including bikes with the new Milwaukee Eight engine, leaving some customers waiting to conquer the open road.  All of this is happening with only 4-months until the 2018 model-year launch.

If you listened to the earnings call this week there was a lot of “feel good” expressions from management about the way the company is performing yet, there are tepid sales, a downbeat outlook, and consumer confidence numbers that don’t reflect spending behavior.  Clearly households worldwide are slow to embrace new motorcycles as a way to enjoy life.

According to Harley-Davidson this is the 9th year in a row (based on IHS Market New Registrations) for motorcycles with 601+cc where they were the number one seller of new on-road motorcycles in the U.S. on both their “outreach” and “core” customers.  “Outreach” is defined as four segments — young adults ages 18-34, women, African Americans and Hispanics.  “Core” is defined as Caucasian men aged 35-plus.

Harley-Davidson reported that more people than ever before are discovering motorcycles and claimed that they are dominating the motorcycle market as well as being recognized as the leader in addressing key demographics — women, younger riders, African Americans and Hispanics, however, the patterns of growth remain elusive.

So whats going on?

Let’s drill down:
— Press and media continue to push negative motorcycle narratives (motorcycle crashes, distracted driving, club violence (last years Waco example) etc.).
— Increased pricing on new motorcycles have pushed out the average length of ownership.  For example new autos reached 6.5 years in Q1 2015.
— In the northwest along with parts of California the wet weather has limited the number of days to ride in 2017.
— Increasing Insurance rates  — on auto, home and health care biting into the discretionary funding of a motorcycle hobby.
— Income growth has declined.
— Interest rates have increased (in past years people pulled $$ from their house to buy a “toy” and now there is no where else to pull $$).
— Fewer “Outreach” customers (aged 18-34) own vehicles or don’t drive as much, they UBER.
— Apathy of the motorcycle hobby/life style as a form of entertainment

All or some elements of this could be weighing down new motorcycle purchases.  But I’m an optimist, and Harley-Davidson has a 10-year strategy to train 2 million new U.S. riders, grow international business to 50% of sales (currently about 32%) and launch 100 new “high-impact” motorcycles.

As it turns out and according to this report, about 22% of all new motorcycle purchases come from first-time buyers. This figure has remained relatively stable since 2001.  It’s very likely some of those 2M new riders will buy a new “high-impact” Harley.

Photos courtesy of CNBC and Harley-Davidson

Full Disclosure:  I don’t currently hold or intend to hold any $HOG shares.

All Rights Reserved (C) Northwest Harley Blog

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Screen Shot 2016-09-01 at 11.50.13 AMI had someone ask me recently, “Are you going to vote, Mac?” I gave a flippant answer along the lines of, “Can felons vote?” Comically looking to avoid any follow-on political conversation. They responded that they were a democrat.

They missed my point.

Unless you live under a rock you know it’s Presidential election season and that means 24×7 politics. It’s become a favorite sport for the talking heads and something that at times is difficult to watch.  The two parties are worlds apart and each convention had one shameful, but perfectly legal thing in common. Both events and some follow on rallies included protesters burning American flags.

It’s always hard for me to watch that type of demonstration, let alone understand.

And speaking of Colin Kaepernick, who was spotted sitting during the national anthem before a pre-season game… who described in post-game interviews his decision to not stand as protest for what he feels is racial injustice.  Come on, who doesn’t expect there’s a camera everywhere these days? In fact, Kaepernick didn’t stand for the first two pre-season games of this year prior to last weeks display. He wasn’t in uniform, so no one including the media took notice. Or if they did, they didn’t care because Kaepernick is struggling to reclaim lost magic on the field.

Kaepernick is just an athlete, not my role model, but since the NFL has to sell advertising, the media and talking heads, get on the bandwagon and venerates these overpaid people so out of touch with the reality of middle-america.  True that they have pursued their sport for their entire lives, But the talking heads lead us to believe they’re better than us.

They’re not.

I’m not saying we have to like the work of those who make it, but you do have to admire their perseverance and all the hard work they put into making it.

Over the years I grew to respect the American flag more than I ever had as a child.  It wasn’t that I had become more patriotic; it was brought about in later years seeing military honor guard and flag-draped caskets of veteran relatives and friends.  I gained a better appreciation of their patriotism and the artifact of the family pride in how each had served their country which resonated.  I believe you should stand during the national anthem and take your HAT OFF.

People died for that flag, but I’m not here to give Kaepernick a lesson in patriotic etiquette. I’ll sit that one out.

My relationship to the national anthem and what the American flag means reminds me of another philosophical orientation related to the outlaw motorcycle club patch.  A creed of love, loyalty and respect for what a club patch represents to it’s members. It’s the same throughout the motorcycle club world.  There are basic rules to follow, which are really just common sense. You never let it hit the ground, you don’t conduct yourself in a unbecoming manner, never let it be disrespected and never let it be taken from you.

I’m not a member of an outlaw motorcycle club or have a patch to defend, but I hope to God I will always have that American flag!

Photo taken at Northwest HOG Rally – Spokane, WA.

All Rights Reserved (C) Northwest Harley Blog

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Screen Shot 2016-08-18 at 11.26.49 AMThe “spin” is that Harley-Davidson reached a settlement with the U.S. Environmental Protection Agency (EPA) regarding the sale of its Pro Super Tuner — an aftermarket tuning product used to calibrate motorcycles intended for off-road and closed-course competition.

The 411 is:  Harley-Davidson agreed to no longer sell its competition-only tuner in the U.S.  They also agreed to pay a $12 million civil penalty and spend $3 million on an air pollution mitigation project.  In addition, Harley-Davidson will also have to buy back and destroy the roughly 340,000 “illegal” devices that it sold.  As part of the mitigation of air pollution under the settlement, the motor company agreed to work with an independent third party to replace conventional wood-stoves with cleaner-burning stoves in designated communities, thereby improving future air quality.

Important to note is that the settlement is not an admission of liability by Harley-Davidson.

The EPA took legal action and alleged that by selling the Harley-Davidson Pro Super Tuner through its U.S. dealer network, the motor company enabled dealers and customers to tamper with motorcycles used on public roads. Harley-Davidson disagreed with the EPA’s position, noting that the tuner was designed and sold as an after-market, competition-only product used to adapt engine parameters for use with Harley-Davidson after-market equipment.  The product was sold for more than two decades, under an accepted regulatory approach that permitted the sale of competition-only parts.

Screen Shot 2016-08-18 at 11.28.51 AMIs this government overreach or the administrations regulatory process/approach to public protection in the race/competition-only arena?

Ed Moreland, Harley-Davidson’s Government Affairs Director contends that it was legal to use the Pro Super Tuner in race conditions in the U.S., however, “concern for our U.S. customers and dealers weighed heavily in reaching this compromise with the EPA…”by settling this matter, we can focus our future attention and resources on product innovation rather than a prolonged legal battle with the EPA.”

To settle or not to settle a case often comes down to a corporation’s litigation culture. Harley-Davidson likely determined that legal fees and the possibility of liability/payouts at the end of a losing legal battle meant it was more cost effective to capitulate, remove the product for sale — settle for $15 million and move on.

Harley-Davidson, is one of many suppliers in the aftermarket race/performance parts industry and the legal tactics of the EPA, along with the potential consequences of prolonged legal action with manufactures will have a chilling effect on the performance parts market.

It should be noted that Harley-Davidson’s corporate stance is and has been committed to meeting or exceeding all emissions requirements for its motorcycles in every market it serves.  They have always included clear product labeling of competition-only products and detail on what performance enhancements are considered street legal and for competition-use only, and called out the legal consequences of tampering with emission controls and components, and what enhancements would void the vehicle warranty.

Photos courtesy of H-D.

All Rights Reserved (C) Northwest Harley Blog

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DRONE-GUYKnown as “remotely piloted aircraft” or “RPAs” in military parlance, drones may well have a coming out party at this years 75th Sturgis rally.

Ellsworth Air Force Base is located approximately 10 miles northeast of Rapid City, South Dakota and about 30 miles from Sturgis. The 432nd Attack Squadron has 195 personnel dedicated to piloting drones to conduct surveillance.  It’s primarily focused on flying in foreign countries, but there are many different drones in the Air Force’s inventory and the question about use as a law enforcement tool during the Sturgis motorcycle rally was recently floated.

Drone_cover_imageI’m talking about something less threatening than the MQ-9 Reaper in the Sturgis sky, but something that will include live-feed video cameras, heat sensors and radar.

Advocates claim they can be used to quickly respond and solve medical problems, help untangle vandalism incidents, protect the hundreds of thousands of dollars of cash that transact each night with vendors, catch illegal behavior, and provide documentation for law enforcement.

Is 2015 the year of aerial drone surveillance during the Sturgis Rally?

20130515_drone2_33Well consider the fact that Arial land survey by drone is already in process in South Dakota.  The South Dakota School of Mines & Technology is training students to use drones for rescue and hostage situations and South Dakota currently has no Unmanned Aircraft Systems (UAS) Legislation preventing the skies from being used for drone flight.

And then if you look just across the state border to North Dakota, a family was arrested with the assistance of a Predator drone.  Rodney Brossart was sentenced to three years in prison, of which all but six months was suspended, for a June 2011 incident in which police attempted to arrest him over his failure to return three cows from a neighboring farm that had strayed on to his property.  Mr. Brossart’s sons were located by a border-surveillance Predator borrowed from Customs and Border Patrol (CBP), which enabled local police to safely apprehend them, according to local newspapers or as reported by the LA Times.

Still skeptical?  Here are some additional drone facts:

  • Between 2005 and 2012, the amount in contracts the federal government awarded for drones: at least $12 billion.
  • Number of companies that are now in the drone business: more than 1,000.
  • Number of private-sector and government requests to fly drones that the Federal Aviation Administration (FAA) has approved since 2007: 1,428.
  • Number of police departments that have asked the FAA for permits to fly drones: 12.
  • Number of commercial drones that the FAA predicts will be flying in domestic airspace by 2017: 10,000.
  • Price of a drone-proof hoodie being sold by the British company Stealth Wear, which also offers drone-proof scarves and burqas: $481

The question of whether aerial surveillance requires a warrant is ambiguous, with some court rulings ­including a 1986 Supreme Court decision ­allowing warrantless surveillance, while other rulings have found it to be unconstitutional.

Unmanned-aircraft-Coming-to-a-sky-near-youThere was a time when aerial surveillance was so expensive that privacy was a minor issue. But now drones are relatively cheap and can be equipped with sophisticated sensors, so they can vacuum up large amounts of camera imagery and other data, in the same way that advances in computers and communications enable the NSA to collect huge amounts of data from telephones and the Internet.

Law enforcement will clearly advocate that drones support most all of the “unobjectionable” police raids.  However, how long will it be before networks of linked drones and computers “gain the ability to automatically track multiple motorcycles and bodies as they move around a city,” much as the cell phone network hands calls from one tower to the next. The authorities would then combine drone video and cell phone tracking to build up databases of people’s routine comings and goings—databases they can then mine for suspicious behavior.

drones-shropshire-gettyv2And here I thought states using federal highway safety grants to fund discriminatory Motorcycle-only checkpoints was government over reach.

Most people who ride and stay in Sturgis know they are being financially exploited and that today’s “hard-core” Sturgis rider is grayer, and is much better behaved.  None of this is new.  What is new, is the potential use of drone surveillance which is teetering on a privacy razor’s edge.

Note: Oregon’s HB 2710 defines a drone as an unmanned flying machine, not including model aircraft. The law allows a law enforcement agency to operate a drone if it has a warrant and for enumerated exceptions including for training purposes. It also requires that a drone operated by a public body be registered with the Oregon Department of Aviation (DOA), which shall keep a registry of drones operated by public bodies. The law grants the DOA rulemaking authority to implement these provisions. It also creates new crimes and civil penalties for mounting weapons on drones and interfering with or gaining unauthorized access to public drones. Under certain conditions a landowner can bring an action against someone flying a drone lower than 400 feet over their property.  In addition, Oregon was chosen as one of six UAS test sites by the FAA.   More UAS information HERE.

Photos courtesy of internet.

All Rights Reserved © Northwest Harley Blog

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Ride it to work!

Riding it to work!

On Monday, June 15th it is the 24th annual Ride To Work Day.

Some of you will leverage the day as a way to highlight the value of motorcycles and increase government awareness on the positive benefits.  But, most will ride to work because it’s just fun!

And speaking of government…  you may have missed that Oregon Gov. Kate Brown signed the state’s “dead red” bill (SB 533) into law, allowing motorcyclists and bicyclists to proceed through a red traffic signal if they have waited through a full cycle and the light failed to change. The bill passed both the state’s legislative houses on unanimous votes and takes effect January 1, 2016.  Oregon is the 17th state to pass such a law although each state has unique restrictions.

However, the Oregon House Committee on Transportation and Economic Development killed the BikePac initiated bill (SB 694) that would have made lane splitting legal in Oregon.

Lastly, the U.S. Department of Transportation has called for additional safety requirements for motorcycle helmets to reduce the use of “novelty helmets” that offer little protection in a motorcycle crash.  The DOT proposal includes standards for helmet thickness, compression ability and other features which novelty helmet are unlikely to comply.

As always be smart and ride safe!

Photo courtesy of RTW.

All Rights Reserved © Northwest Harley Blog

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Mountain-SnowBack in the “party like it’s 1999” days, ODOT estimated studded tires cause $50M (that’s millions!) of damage EACH year.

The lawmakers in Salem must have salivated at the ODOT estimates while using them as a recruitment tactic to advocate increased license fees or increase road taxes, or pushing legislation that would require those “freeloaders” who use studded tires to be penalized to help cover the costs.  There were even rumors of using Motorcycle fees to help pay for the damages.  There have been 17 attempts by lawmakers to ban or limit those devilish tires.  They debated a permitting system and complained about how there is no mistaking the sound these tires make on the roads… just hearing those sounds provides proof positive that irresponsible citizens continue detrimental road behavior.

Studs Report
Then last Friday, on what is one of the slower news day and largest travel day before the Christmas holiday – ODOT quietly released an updated studded tire report

It’s a miracle!

The costs of repairing studded tire damage is expected to decline.  The study concludes that the use of studded tires in Oregon has declined by half.  Well if that doesn’t just dig a rut into any lawmaker’s “tax ‘em heavy and often” way of thinking.

Yes, that new study of studded tire use in Oregon shows drivers have changed their habits. The study downgrades the current use of studded tires, the amount of pavement damage caused by that use and the cost of repairing the damage.  All good news!  A quick summary of some findings:

  • The number of vehicles using studded tires has dropped by 75%: A previous report published in 2000 determined that about 16 percent of registered vehicles in Oregon were equipped with studded tires; the 2014 survey found a reduction in that number to about 4 percent.
  • The study concludes that the use of studded tires in Oregon has declined by half since the previous survey.
  • The study found wide ranges of wear rates for different kinds of pavements, reflecting the many factors that contribute to pavement rutting.
  • Based in part on an overall reduction in the use of studded tires, the increasing popularity of all-wheel and four-wheel drive vehicles, and the increased use of non-studded winter tires, the research indicates the use of studded tires will continue to decline; therefore the resulting damage to Oregon’s highways, streets and roads and the costs of repairing studded tire damage are expected to continue to decline.
  • In 2012, studded tires caused an estimated $8.5 million in damage (that’s much different than the $50M!) to Oregon highways. This calculation was developed by looking at effective pavement damage—damage sufficient to require repaving before the pavement surface would normally be repaved.

The first question I have is whether we’ll see a proportionate drop in ODOT budget now that we know citizens are preserving Oregon roads?  Studded tires are no longer a tactic to raise fees/taxes across the state, so what’s next – for the Salem masters?

Full Disclosure:  Currently I do not, but I’ve owned multiple sets of studded tires in the past.

Photo courtesy of ODOT.

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IMG_4034Is it me?  Is it you?

I didn’t wear a hoodie for Trayvon. I didn’t march to Save Our Girls or Kony.  I didn’t do the “Hands Up, Don’t Shoot” march for Mike Brown in Ferguson.  I didn’t do the “Can’t Breath” march for Eric Garner in NYC.

You won’t see me out there. Nope.

While I can’t deny that I’m Caucasian, I can say that as a motorcycle enthusiast I’ve experienced law enforcement arrogance that allows an armed “professional” to be less responsible of my rights than a typical citizen.  And I’ll acknowledge up front that I can’t represent or fully appreciate any of the issues through a racial lens or what African-American people feel.

It’s not that I don’t believe in any of these causes.  I’m not in denial that there are aggressive LEO’s out there who push the limits with their actions.  Just this week an Oregon State Police detective was prosecuted for destroying evidence and lying about it.  And a Clackamas County Sheriff was fired for mishandling and then lying about evidence, forcing the dismissal of 10 cases!  Clearly an affront to all Americans.

It’s just that I’m not convinced marching in 2014 is really going to make a difference.  But, let’s back up for minute before I explain why.

About four years ago I attended a day-long training session at the Oregon Public Safety Academy (DPSST) on law enforcement using deadly force in making arrests. You can read about it HERE.  I was in “Tactical Village” – a sprawling complex with faux buildings, roadways, cars, buses and the typical neighborhood debris you’d find in any urban environment.  We had Glock’s that fired paint-pellet bullets and went through various training scenarios to simulate real-world incidents.  I spent several hours responding to chaotic, dangerous or unpredictable situations in an effort to serve others or as they say… “walk in a LEO’s shoes.”  Suffice to say that my lack of split-second decisions got me killed repeatedly and made me realize how we all should talk about citizen retraining, so critics will at least wait until they have all the facts of a case before calling in the high-profile, paid-to-incite activists.

So, why do I sit behind my computer and criticize some of the marching or protest efforts?  This isn’t 1960 when the act of sitting in a restaurant sparked a nationwide movement that changed some things. It’s 2014 and we live in a “right now for the moment” world or I prefer to call it a bandwagon, hashtag advocacy society.  People create protest hashtag campaigns faster than a drive-thru burger joint.  Then along comes the funky complementary graphics they believe it provides everyone a sense of solidarity.  If its trending, we’re hashtagging it. Get your hashtag t-shirt or beanie now!

But, once the thrill is gone, so are we.

Think I’m trippin?  What happened to the girls everyone wanted to save a few months back? Where are they now? How many of those hoodies everyone posed in put Zimmerman in jail or helped to pay for legal fees for Trayvon’s family?  Where have all the occupy chanters gone?  What’s changed in 3- years?  So, how are these new protests around the country stopping cops from killing or from spraying mace in the faces of the marching kids today or tomorrow?  If you can answer that then I may reconsider my position.

People lose interest when they realize the issue is more complicated than a hashtag.  They can’t sit still long enough to ensure change before racing off to the next hashtag driven controversy.

I’m disgusted by much of what I’ve seen – on both sides.  We have constitutional rights to a legal system that treats all equally and fairly.

But, the real work happens when there’s no marching, or when there’s no protesting.  Do we really need high-profile, paid-to-incite activists flying in on carbon-spewing private jets to rally the disenfranchised?  The real work happens at the polls during the primaries or a non-presidential election. The real work happens as members of your community-based organizations, at your local city council town hall and in our churches. The real work is not on social media and a race to the next crowd gathering. Social media is great for promoting a message, but not change itself.  Where is the solidarity to do the real and very difficult work?!

Marching for a few hours or a couple weeks is not going to change anything.

Photo taken by author.

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