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

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

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

The plant was set for closure by mid-2013.

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

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

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

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

Photo courtesy of Dylan Coker.

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“It’s disgraceful, but how about the heartless timing for Christ’s sake.”  — Australian Workers Union State Secretary Wayne Hanson said to reporters.

It’s not well known, but the majority of cast wheels and hubs for Harley-Davidson motorcycles are produced in Australia and shipped to Milwaukee.  Harley acquired Adelaide-based New Castalloy in 2006 when continuity of wheel supply was an issue.  The Australian subsidiary is New Castalloy and was a long-time supplier that was on the verge of bankruptcy of its then parent company, Ion.

Now Harley-Davidson plans to shift the manufacturing to China (according to South Australian Trade Minister Tom Koutsantonis) where it will save the motor company about $9 million a year.  The decision to cease operations  at New Castalloy will effect 183 employees and 29 contract workers. Harley expects to complete the transition to “outsourcers” by mid 2013.  The company estimated the related restructuring costs at $30 million, of which $10 million will be recorded in 2011 and $20 million in 2012.

South Australian Trade Minister Tom Koutsantonis said to reporters, “To tell a group of workers before Christmas they may not have a job is insensitive and I think quite silly.”  Mr Koutsantonis also stated that the motor company had given no indication to the government of the closure and as a result were unable to provide any assistance.  The South Australian Employment Minister Tom Kenyon stated that workers would get between $3K – $5K each in job training, but he was rather candid in that there was no place for them once we’ve got them through the right training.

The Australian manufacturing sector is bearing the brunt of global uncertainty (read layoffs) and high Australian dollar.  Ever the politically correct, President and Chief Operating Officer Matt Levatich said,  “The company’s decision on wheel production follows a review of the long-term fit and competitiveness of the New Castalloy business with our strategy and was not made lightly.”

As we know and have read many times, Harley has been recreating itself as a premium brand and smaller manufacturer while trying to grow its market share outside the U.S.

Made cheaper in China might be the new corporate mantra and correct decision based on pure Wall Street math, but there can’t be much pride in that choice.

UPDATE: July 10, 2013 — Harley-Davidson reverses decision to shutter the Adelaid plant (HERE)

Photo courtesy of H-D and New CastAlloy

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U.S. Ambassador to China - Jon Huntsman

In a heady display of “feel the vib” and “look at me” doing that pursuit of freedom gig, the political poster child for human rights, dares onlookers of the patriotic possibility and the fact it’s not just something special for the American people as he rides his signature Harley-Davidson RoadKing Classic through the streets of Shanghai.

Some might even call him showing off a bit since urban incomes average about $2,200 a year in Beijing where the bikes sell for $12K to $37K.  Harley-Davidson opened its first store in China in April 2006 and the allure of its citizen’s growing spending power means the motor company is unwavering in its commitment to extract dollars from the world’s most sought-after-market… who cares if in Beijing and Shanghai, motorcycles are largely banned from most major streets and highways.

In fact, Shanghai stopped accepting motorcycle registrations back in 2002 so, I wonder how Mr. Huntsman got that motorcycle registered?  Was it shipped over or did he buy it there?  In a country well know for reproducing (“copy”) everything, unlicensed Harleys have been smuggled in to the country for years so his would likely go unnoticed. Details, details…Don’t bore me with the details.

The mandarin speaking Mr. Huntsman will resign as U.S. Ambassador to China on April 30th and according to Politico reports he might make a run for the Republican nomination in 2012.  Adding fodder to this speculation is the fact he’s booked for a speaking engagement in New Hampshire in May shortly after his return.

Interestingly, if a deal can’t be made and the government shuts down in less than 30 hours due to what looks like near-fatal-distrust of the two parties… I wonder how Mr. Huntsman will get back to the U.S. — charge it?!

UPDATE: June 21, 2011 – Mr. Huntsman enters the 2012 Presidential race.  Reuters report HERE.

Photo courtesy of AP.

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The once-fictional Tru Blood beverage from the HBO hit series “True Blood” has come to life in bottle form this September.  It’s a blood-orange carbonated drink concoction with a 3-V mixture of Vodka, Vicodin, and Viagra… to bring out the vampire in you!

Actually I made up that 3-V mixture part, it’s just a premium priced slightly tart and sweet flavored drink.  Much better tasting than the two-ounce bottle of “Gulf Water” priced for $9.99 at oilspillwater.com!

But, speaking of bottling up the motorcycle elixir of life, and drinking the water,  long-time Sturgis rally veteran Tom Brandy had a dream to bring the Black Hills of South Dakota motorcycle rally to the rest of the world and now that will happen with the first event set in South Korea on September 17-21st.  In addition to having the common “South” in the festival city name many of the motorcycle events will be similar to the long-standing rally in the U.S.

Mr. Brandy is catering heavily to locals (website is in Korean) and it’s anticipated there will be large groups of motorcyclists from China and Japan in attendance.  There will be hill climbs, entertainment along with a broad set of custom bike builders (Ness, Perewitz, Trotta) in attendance.  No word yet on who from Harley-Davidson will be in attendance and whether they plan to scout potential manufacturing plants?

Harley-Davidsonesque Scooter (photo taken in Tokyo)

I can visualize an Asia blog post reflecting on the event already…

“For kilometers, the bikers have been overtaking the little KIA cars. Gleaming low-slung motorcycles with fat tires and riders settled into the seats, sometimes a pillion person too (i.e. “bitch”). Most built with a Harley-Davidsonesque Hog image, but instead sport two cycles.  Some of the riders nicknamed their Korean bikes the “Kimchi Piglet” as it has the porcine image but still hasn’t properly grown up yet. With legs stuck out in front so they’re nearly parallel to the outstretched arms operating the controls, booted feet pointed at the sky — riders rushed past an artillery range with the world’s most fortified border, breathing semi-toxic pollution and dodging kamikaze pizza-delivery scooters. Sturgis ASIA welcomed riders to the land of Kimchi, beautiful Asian girls and the home to a surprisingly strong motorcycle culture.”

Wouldn’t it be something if Sturgis ASIA surpassed Sturgis U.S. in attendance records?!  Japan is really the big custom motorcycle scene, however, when I was in Seoul, South Korea a few years ago they didn’t want anything to do with Japanese and likely explains why the event is not held in Tokyo.

Water bottle photo created.  Logo courtesy of The City Of Sturgis Rally Department and Sturgis ASIA web site.

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Ice Racing -- Franky Zorn

Yes, it’s been ten years!

Magazines and newspapers with decade-ending rankings have started to appear.

Over the next month, we’re going to be deluged with statistics.  Telling us who the winners were.  People who provided fodder for the system, that you consumed, and forgot.  Best movies, best athlete, best TV shows, best songs, best companies etc.  So, I thought it would be good to go back and compile highlights on the Harley-Davidson decade.

It wasn’t all good news—marked by the roughest economy since the Great Depression.  In pulling together the data I was reminded of a song by James McMurtry’s “We Can’t Make It Here”.  It’s a favorite and one I would vote as the “best” song of the twenty first century, yet it never seems to get air play.  But, this isn’t a rant about how they killed radio and now have us anesthetized in front of the flat screen, selling us products we don’t need, that we put on credit cards that charge 29%.  Sure, McMurtry’s lyrics are poignant, but there’s a hypnotic groove that hooks the listener.  It makes me want to play the song again and again.  But, I’ve moved a little off topic… here is a look back:

2000 — The Softail Deuce is introduced.  All 2000 Softail models have the Twin Cam 88B engine, a counter-balanced version of the Twin Cam 88.

2001 — The V-Rod is introduced for the 2002 model year. Inspired by the VR-1000 racing motorcycle, the V-Rod is H-D’s first motorcycle to combine fuel injection, overhead cams and liquid cooling.  It delivered 115 horsepower.

2002 — The all-new Buell Firebolt is launched.

2003 — Buell launches the Lightning XB9S.  More than 250,000 people come to Milwaukee for the final stop of the Open Road Tour and the H-D 100th Anniversary Celebration.

2004 – The Sportster family models receive rubber engine mounting, a new frame, and a wider rear tire. The Road King Custom is introduced with a low rear suspension and wide handlebars it brings a beach cruiser look to a classic motorcycle.

2005 — The XL 883L Sportster 883 Low brings a lowered seating position to the Sportster line.  H-D and the Muscular Dystrophy Association (MDA) mark the 25th anniversary of their partnership.

2006 — The first of the 6-speed transmissions are made available on 2006 model year Dyna motorcycles. The 2006 model year includes the all-new Street Glide, a lower profile touring motorcycle. H-D appoints Beijing Feng Huo Lun (FHL) as the first authorized H-D dealer on mainland China.

2007 — Union rejected a proposed new collective bargaining agreement for employees and went on a strike at its final assembly operations in York, Pa.  H-D launch the Sportster XL 1200N Nightster. The H-D Foundation and the Disabled American Veterans (DAV) Mobile Service Offices (MSOs) launched the Harley’s Heroes Tour.  H-D celebrated 100 years of Police Motorcycle Sales.

2008 – H-D teamed up with the Ultimate Fighting Championship (UFC).  H-D holds its 105th Anniversary Celebration and the H.O.G. 25th Anniversary.  H.O.G. launched the Million Mile Monday ride. A H-D Softail stars in the new Indiana Jones movie. H-D acquires MV Agusta Group expanding presence in Europe.  The H-D museum opens to the public. H-D introduces the 2009 Tri Glide Ultra Classic motorcycle (3-wheel).  For 2009 touring models H-D introduces the all-new frame, swingarm, engine mounting system, wheels and tires and new chassis.   The H-D XR1200 is launched in the U.S.

2009 — CEO James Ziemer retires and is replaced by Keith Wandell. H-D reports decreased revenue, net income and diluted earnings per share and provides a new strategy and restructuring update. Buell named Official Pace and Safety Bikes of AMA Pro Road Racing. H.O.G. set a 5 Million Mile Monday goal, but falls just short of the goal. H-D launched the Ride Free II Guarantee program.  H-D rolls out nine new motorcycle models for 2010 across six model platforms. H-D formally enters the motorcycle market in India. H-D unveils long-term business strategy after poor Q3 revenue and announced the discontinue of its Buell product line and plans to divest its MV Agusta unit.  Erik Buell leaves the company to establish Erik Buell Racing.  H-D announced it will keep its motorcycle operations in York, Pa., that includes a restructuring plan which eliminates almost 50% of the workforce.

H-D Revenue: 2000 = $2.24 Billion (2000 was the 15th consecutive year of record revenue); **2009 = $4.08 Billion (back-to-back yearly declines — in ’06 revenue = $4.55B)

H-D U.S. & Canada Market Share (651+cc): 2000 = 45.9%; **2009 = 45%

H-D Gender:  2000 = Male (90%); Female (10%); **2009 = Male (89%); Female (11%)

H-D Median Age: 2000 = 44.2; **2009 = 48.1

H.O.G. Membership: 2000 = 582,400; **2009 = 1.3 Million

Unit Shipments: 2000 = 204,592; **2009 = 225,000

(** indicates estimates as final results not tabulated/reported and subject to change)

From record revenue and income to record downsizing and decline.  I didn’t mean to get you reaching for the Prozac, but it’s not all that bad.  Just like ice racing in winter months can be slippery with the occasional crash, H-D will continue to modify, adapt and adjust to come out on top.

Photo courtesy of Rutger Pauw;  Statistical Sources: H-D; H-D Investor; Google Finance and various analyst estimates.

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By this time you’ve already heard that our President, Barack Obama, a man who ran on a platform of hope and change, is getting us deeper into Afghanistan.  Isn’t Al-Qaeda in Pakistan?  And, if the Soviets couldn’t win there, why can we?  A country owned by China with disastrous financials (that’s us, in case you didn’t recognize your homeland).

If you join the armed forces to serve your country, to pay your bills, you’re entering Hotel California.  It seems you can never leave.  You jumpily wait for people to attack you or detonate IEDs.  Coming home to a country that pays you lip service, but doesn’t give a rip because people can’t find a job.  If you come home at all.  And if you do return, you’re likely traumatized.

Meanwhile, Goldman Sachs is paying record bonuses and their Chairman Lloyd Blankfein says the firm is doing God’s work.  Huh?  What deity does Mr. Blankfein pray to who wants to see the populace suffer?  Used to be Wall Street helped build America, now traders just profit off exotic investment instruments.

But there is good news (sarcasm alert!).  The enormous financial outlay of the 8+ year war has brought into sharp focus Bagram Airfield, where off-duty soldiers can obtain everything from Kyrgyz massages to purchase a BK burger.  Including a Harley-Davidson motorcycle.  According to AFP reports, the dealer for those away from the front lines sells about 4 motorcycles a month to U.S. servicemen.  With another 30,000 troops being deployed, and most of them set to take off or land on Bagram’s runway in route to fight the Taliban it means H-D should expect a sales increase proportional with the troop surge.  In fact, I just read a post on the H-D forum from a soldier who bought a 2009 Night Train yesterday.  Congrats Army_Train85 and thank you for your service!!

Obama’s speech wasn’t all that inspirational for me, but he did state (you can read the full text of his speech here) that sending the extra troops will cost the U.S. military $30 billion dollars this year — or $1 million for each newly deployed soldier.  That’s high-finance and hard for me to wrap my head around it.  In fact, it’s difficult for me to understand the cost ($28 a head) of each and every meal prepared for U.S. soldiers on the base cost more than most Afghans earn in a month.  That alone might explain the attraction to the Taliban-linked narco-terrorists.  Sigh. I wish there was a better way…

At any rate, as Bagram turns into a military “boom-town”…H-D is poised to take advantage.

Photo courtesy of Corbis/Shaun Schwartz.

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Meetings.  Talking.  Meetings.

We’re always being reminded that political leaders, policymakers and industry leaders are “gathering” to hash out ideas on how to get the mojo back and what the key is to unlocking innovations and jobs of the future.  We’re suppose to feel good, but from my vantage there is little visible in the way of action.

The White House has made a quiet but extensive effort to reach out to corporate executives in a series of dinners and lunches at the White House with President Barack Obama.  Attendees have largely been kept secret or at minimum very quiet… until now!

Politico.com states Keith Wandell (Harley-Davidson CEO) had dinner with Obama’s chief of staff Rahm Emanuel and other top White House officials.  Another comprehensive list is available HERE.  It’s not clear if it was at an off-site local restaurant or something more elegant in the White House.  Given the state-of-the-states, I seriously doubt the motor company will be creating any new jobs soon. In fact, the recent ratified agreement calls for a drawdown of nearly 50% of the employee’s base at the York, PA operations.  Asia or India look like expansion alternatives and I suspect it won’t be long before we hear about plants being set up there.  So, what did Mr. Wandell share w/ the White House chief of staff?  Would H-D coming to the government to offer ideas on how they can help be a startling conversation changer?  Does H-D have eyes and ears on future trends that they can grab and then be able to exploit?

I’m not sure, but do you think the U.S. is still the world’s center for innovation, or is it falling behind countries such as India and China?  Fueling the debate is a new poll on innovation published by Newsweek. One interesting finding: while 82% of Chinese citizens believe the U.S. remains a technologically innovative country, only 74% of Americans feel the same way.

At any rate,  the other industry officials who joined Mr. Wandell at the June 16, Rahm Emanuel dinner were:

Penny Pritzker, CEO, Pritzker Realty
Mark Gallogly of Centerbridge Partners
Mike Fascitelli, CEO, Vornado Realty Trust
Klaus Kleinfeld, CEO, Alcoa
Dave O’Reilly, CEO, Chevron
Richard Smith, CEO, Realogy
Mike Ullman, CEO, J.C. Penney
Keith Wandell, CEO, Harley Davidson

I’m not attacking or implying that only favor-curriers are “sitting at the presidents table” but I’m not reading a lot about how the voice of the average lower and middle class American are being heard.  As the White House National Economic Council Director Lawrence Summers has recently urged attendees at these dinners to “think about what your institution should be called on to do, not in its own interest, but in the broader national interest.”

Photo courtesy of Presidential inauguration.

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