Hardwire Strategic Plan — Mission Accomplished

Harley-Davidson reported better than expected quarterly profit today. Below are some of the highlights:

• Q2 had a profit of $206 million, GAAP diluted EPS of $1.33, up $1.93 over Q2 2020
• Q2 H-D, Inc. total revenue up 77 percent over Q2 2020; Revenue from Harley’s motorcycles and related products nearly doubled to $1.3 billion
  North America Q2 retail sales up 43% over Q2 2020 and up 5% over Q2 2019 and Worldwide sales were up 24%.
• Delivered strong Motorcycles and Related Products (Motorcycles) segment gross margin and operating margin driven by product portfolio adjustments
• Delivered Financial Services segment Q2 2021 operating income growth of $90 million over Q2 2020 driven by a lower provision for credit losses

Announcements in Q2 2021:

• The MOCO launched the standalone brand LiveWire and introduced LiveWire ONE™ – a new more “price friendly” electric motorcycle
• Rolled out the Sportster® S, a new Sportster motorcycle built on the Revolution Max platform
• Launched H-D1™ Marketplace, an online destination for pre-owned Harley-Davidson motorcycles in North America and enhanced by the Harley-Davidson Certified™ program.

The Motorcycle Industry Council reports that the demand for motorcycles continues to surge as new motorcycle sales climbed 37% in the first three months of the year. Year-to-date sales of dual-purpose motorcycles were up the most, by 47 percent. Off-highway sales were up 45.4 percent. Scooter sales rose 34.6 percent. And on-highway motorcycle sales increased 31.4 percent. The results are an indicator of continued and growing interest in riding among new and returning riders.

In other, somewhat more important news: Oreo announced a new “Protection Program,” it’s discreet packaging so you can hide them from the kids.  The spines make the Oreos look like: A cookbook . . . or a package of frozen vegetables!  Next up will be . . . the Harley-Davidson motorcycle owner’s manual . . . as a pack of t-shirts . . . so you always take it along on the next road trip!

Photos courtesy Harley-Davidson and Oreo

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Oregon Scenic Byways

Oregon Scenic Byways

You might have an image in your mind of what motorcycle riding through Oregon is like, and the truth is, it’s a compilation of adventures. The landscapes are incredibly varied from Martian-like vistas in the driest place to ecosystems with a staggering array of flora, fauna and fungi.

America’s Byways® is an umbrella term used for a collection of 150 diverse roads designated by the U.S. Secretary of Transportation. The road designation is typically based on their archaeological, cultural, historic, natural, recreational, and scenic qualities.  They are considered gateways to adventures where no two experiences are the same.

Oregon is fortunate to have 10 incredible roads as part of America’s Scenic Byways and whether a maiden voyage or seasoned adventurer, you can see a lot of Oregon from behind the handlebars.

Below are snapshots of each Oregon Byway:

Cascades Lakes

Cascade Lakes Scenic Byway — 66.0 mi
This byway cuts a path through the mountains, lakes, and forests of central Oregon. Volcanism and glaciation formed more than 150 lakes for which the region is well known. See outstanding examples of lava flows, alpine lakes, and meadows. Cross paths taken by such historic figures as Kit Carson.

 

Hells Canyon

Hells Canyon Scenic Byway — 218.4 mi
Journey from river’s edge to mountain top and down to valley floor. Savor panoramic views of rugged basalt cliffs and fertile fields, rimmed by snow-tipped peaks. Tour foundries, galleries, and museums. Touch the weathered track of the historic Oregon Trail. Watch the majestic Snake River tumble through North America’s deepest canyon.

 

Columbia River

Historic Columbia River Highway — 70.0 mi
Travel to magnificent overlooks that provide views of the Columbia River and waterfalls, including Multnomah Falls. Springtime has magnificent wildflower displays, including many endemic plants. The Columbia River formed the last leg of the Lewis and Clark Expedition and was part of the early route of the Oregon Trail.

 

McKenzie Pass

McKenzie Pass-Santiam Pass Scenic Byway — 82.0 mi
Experience dramatic views of the snow capped High Cascade Peaks. The panorama of lava fields and six Cascade peaks is made more striking by the contrast between the black lava and white snow. The mountains are mirrored in crystal-clear lakes, and the byway passes beautiful waterfalls, including Sahalie and Koosah Falls.

 

Mt Hood

Mt. Hood Scenic Byway — 105.0 mi
On this byway, volcanoes once erupted and mammoth floods scoured deep gorges. Discover geologic wonders, waterfalls, temperate rain forests and wild rivers. Explore pastoral valleys with farm-fresh produce. Experience the formidable last leg of the Oregon Trail, the Barlow Road. Enjoy this bountiful wonderland that the pioneers called “paradise.”

 

Outback

Outback Scenic Byway — 170.0 mi
“Outback” refers to land with a natural ruggedness. Though people come here seeking independence, they know each other’s first names. Community is paramount. Jonathan Nicholas, publisher of the Oregonian, said it is “a star-spangled landscape of marsh and mountain, of reflection and rim rock, of seamless vistas and sage-scented dreams.”

 

Pacific Coast (North, Mid and Southern)

Pacific Coast Scenic Byway — 363.0 mi
Starting in Astoria and traveling south to Brookings, the Pacific Coast Scenic Byway provides views of amazing coastal scenery. The road winds by estuarine marshes, clings to seaside cliffs, passes through agricultural valleys, and brushes against wind-sculpted dunes. Charming small towns, museums, state parks, overlooks, historic bridges, and lighthouses ensure a delightful journey.

 

Rogue-Umpqua

Rogue-Umpqua Scenic Byway — 172.0 mi
From rolling, oak-covered hills to towering coniferous forests; from roaring whitewater rapids to incised inter-canyon lava flows; the Rogue-Umpqua Scenic Byway invites you to experience 172 miles of diverse river and mountain landscapes. Drive alongside the Upper Rogue and North Umpqua Wild and Scenic Rivers, both of which contain world-class fisheries.

 

Volcanic Legacy

Volcanic Legacy Scenic Byway — 500.0 mi
Explore the wonder and beauty of a dramatic volcanic landscape from Oregon’s Crater Lake National Park to California’s Lassen Volcanic National Park. Encounter ancient natural forces that shaped exquisite mountain lakes. Amid spectacular scenery, you’ll enjoy charming towns, abundant wildlife, world-class birding, and extraordinary recreational, historical, and cultural opportunities.

 

West Cascades

West Cascades Scenic Byway — 220.0 mi
This byway offers some of the best up-close views of thundering waterfalls, ancient forests, rushing whitewater, and cool, placid lakes. The drive begins in the historic logging city of Estacada, immersing you in an old growth forest. Continue and see snow capped volcanic peaks and the breathtaking Wild and Scenic Clackamas River.

Are you an owner of the new Harley-Davidson LiveWire and wanting a new perspective in sustainable travel?  Oregon is home to one of the largest and most robust networks of electric vehicle fast-charging stations in the U.S. You can download the Oregon Electric Byways map and guide HERE.

Information, maps and photos courtesy of Oregon’s Scenic Byways

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Harley-Davidson Electrifying COVID-19 Community Response

#500 “First Strike” Edition LiveWire – United Way Auction

Harley-Davidson, in conjunction with Bonhams, is auctioning off a one-of-a-kind custom motorcycle and donating the proceeds to the United Way Worldwide’s COVID-19 Community Response and Recovery Fund.

The Milwaukee motor company has previously stepped up in times of crisis; it has contributed to both U.S. and international relief efforts consistently over the years, from support for 9/11 first responders to donations of motorcycles in the Haitian earthquake restructuring. Now with the current COVID-19 pandemic health crisis, H-D is chipping in to raise funds for this moment.

The motorcycle being auctioned is an exclusive version of Harley-Davidson’s electric machine, the LiveWire®, which is customized with a one-off paint scheme and unique graphics package.  This bike wears a full array of carbon fiber accessories including carbon fiber Speed Screen Blade, Tail Section Cowl, and Tank Trim. To mark the historical significance, the never-to-be-replicated motorcycle on auction is number 500 of the 500 “First Strike” edition LiveWire’s and will be signed by members of the Davidson family.

The motorcycle winning bidder and a guest will also be treated to a unique delivery experience and a “behind-the-scenes” tour of the Harley-Davidson Museum, which includes all travel and accommodations to Milwaukee as well as a private, one-of-kind walk-through of the museum.

The auction started yesterday and is being held digitally by Bonhams to follow the CDC’s social distancing guidelines, and will close on May 26 at 4:00pm (EDT).  Bidders can find more information about the auction and prize package at bonhams.com/LiveWire, which is available for participants from the United States.

Thank you Harley-Davidson!

Photo courtesy of Harley-Davidson.

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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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Reactivate Keith Wandell And Mark-Hans Richer

Remember that outsider who kept Harley-Davidson on the road?

Keith E. Wandell (retired H-D CEO) grabbed the handlebars at the company in the heart of the economic crisis in 2009. Harley lost $55 million that year, as buying a motorcycle stopped being an option for many consumers.

Wandell made some big statements. “Don’t let Harley-Davidson become General Motors!” Look in a mirror, he told staff – Harley was already so far down that same path [as GM] “it wasn’t even funny.”

Wandell took bold action and made quick decisions to focused the company on doing what many say it does best: Making big, powerful, premium-priced cruisers.

Keith Wandell

Keep in mind, this was when the great recession and credit crisis sent shockwaves through Harley-Davidson. In less than one year, bike shipments dropped about 25 percent.

Wendell cut the workforce – at least 2,700 hourly workers and 840 administrative employees. The economy was in the tank, the motor company had a big union labor force and old manufacturing processes.  People were just churning and everything was upside down at the company.

Imagine…

I’m not talking about celebrities’ filming themselves singing John Lennon’s ‘Imagine’, from their multi-acre estates and whining about their COVID-19 pandemic isolation.  Never has disproportionate privilege been so apparent and I for one am really fed up with their self-serving need to be in the public spotlight with style-over-substance videos.

But, I digress…

Mark-Hans Richer

It is equally important to recall Wandell’s right-hand “stunt man” — you may remember him as that over-the-top marketing genius who had women screaming, grown men crying and Oprah jumping up and down, chanting: “Everybody gets a car!”

I’m talking about Mark-Hans Richer, who was Sr. VP, Chief Marketing Officer at Harley-Davidson, prior to his 2015 departure. Granted, Richer is currently employed at Fortune Brands, but with the mass exodus at Harley-Davidson and salary decreases across the executive staff it’s plausible to pull him back into the H-D team.

Richer, generated the most bankable kind of publicity: controversy.  He made the difference between a motorcycle brand being a rock star versus more employees working in the rental lot.

He’s the charismatic dude that dropped a Dyna Super Glide on Pope Francis at the Vatican.  Then turned around at a press briefing and said, I would be really upset if you felt our strategy was about “meeting the nicest people on a Harley” because I can tell you that ain’t the strategy.  Later he pontificated that a Harley costs less than “another tattoo, a parking ticket, a gas station burrito, and a lip ring” in an appeal to what makes millennials tick.  In 2002, he helped the company get named Company of the Year by Forbes magazine.

110th Anniversary Celebration

In a university commencement speech, he stated: “Everything I ever learned from business, I learned from Willie the Wildcat stuffed animal,” a business he started right out of college.  Richer secured the first major worldwide sports sponsorship for Harley-Davidson at UFC and was instrumental in X-Games marketing.

No, I don’t have a man crush.

Richer was a key contributor of the “Ride Home” anniversary events.  Do you remember when returning to the mecca of motorcycling in Milwaukee was truly an EVENT i.e. the 110th Anniversary festivities featured 60 bands, including Aerosmith, Kid Rock and ZZ Top.  Remember that 3 ½-hour set by Bruce Springsteen and E Street Band at the 105th Anniversary?   How about when Foo Fighters, Dave Grohl, committed a major sin on stage by cracking open a Coors in Miller Town?

100th Anniversary Celebration

There was the surprise headliner (Elton John) and outright disaster for the centennial anniversary. Musical highlights included Billy Idol, Kid Rock, Joan Jett, Poison, REO Speedwagon, the Doobie Brothers and Tim McGraw for the 100th anniversary so, people booing and walking out might have been overstated in the media.

Then came 2018 and time to celebrate 115 years of the open road.  Harley-Davidson CMO, Heather Malenshek tells the media the event is all about returning to its roots with a focus on the motorcycle, not the entertainment.  Huh?!  It was an unmitigated flop for entertainment.  She very quietly departs the company in October 2019.  Coincidence?

Indian is challenging Harley’s cash cow, the Road Glide.  BMW has market segment share in the ADV or “adventure motorcycle” sector and recently introduced the new R 18 touring, cruiser configuration to compete head-on with Harley-Davidson and Indian.  Rumors started circulating recently that Honda is introducing a new 1100 Rebel to compete directly with Harley-Davidson.

Pan American

Harley needs more than anything a fast start for a new model to become a breakout hit.  Is that the Pan American, ADV?

The ADV segment is crowded and entrenched with BMW, Honda, KTM, and newcomer Ducati, among others with decades, of dirt-tested refinement.  Harley doesn’t have the luxury of burning up stacks of cash on a another “vanity project.”

The Milwaukee motor company has a very narrow window to establish that hit. Gone are the days when a slow seller can be nurtured into a hit.  Here’s looking at you LiveWire and the “Field of Dreams” marketing of distressed or stigmatized merchandise!  I truly wonder if acting president and CEO Jochen Zeitz or Harley-Davidson management really understand why the LiveWire product is failing?

It’s logically time to recall Mr. Wandell and “CMO head-honcho,” Richer back from spending their days taking lunch at the Polo Lounge and crank up the H-D buzz machine.

What the media’s hourly drumbeat of “panic porn” on the COVID-19 trauma has shown us, cannot be unseen.  A motorcycle-less Los Angeles.  Coyotes wandering on the empty Golden Gate Bridge.  A quiet New York, where you can hear the birds chirp in the middle of Madison Avenue.

We’re in it. Stores are closed. Restaurants are empty. Streets and multi-lane freeways are barren.  Body bags in tractor trailers.  The Oregon beach is an eerie ghost town.  The economy has collapsed and a devastated 22+ million Americans have lost their jobs in four weeks.  It’s a dark feeling of rust, rot and ruin.

“Illegitimi non carborundum.” The Latin phrase loosely translates to, “Don’t let the [COVID] bastard get you down.”

Motorcycle enthusiasts are the ones who understand why dogs stick their heads out the window.  In the famous words of a previous H-D CEO, Jeffrey Bleustein, “We (Harley) have to pretend ten fiery demons are chasing us at all times,” and “make the right bikes, at the right time, and get them to the right place!”

Let’s all take a deep breath and get ready for a potential Harley-Davidson tsunami. What is about to be unleashed will be the greatest campaign ever created to get you to feel normal again.  Every brand will come to our rescue, dear consumer, to help take away that darkness and get life back to the way it was before the crisis.

The great American return to normal is coming and you won’t be able to ignore that deafening motorcycle exhaust noise.

Photos taken by author and courtesy of Harley-Davidson and Wikipedia.

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Harley-Davidson’s Entrepreneur and New Mastermind

Jochen Zeitz — Harley-Davidson interim President and CEO

The ultimate maverick has been hired to preserve and renew the freedom to ride.

I’m talking about Jochen Zeitz — the entrepreneur and new mastermind in charge of Harley-Davidson until he is offered the position permanently or a recruitment committee finds a replacement CEO.

So, what do we know and who is this man?

• Speaks seven languages — five spoken fluently including Swahili
• Has his own charitable foundation
• Owns unpublished Hemingway letters and collects robust amounts of African art.
• Owns a luxury tent-camp in Kenya’s Masai Mara game reserve close to the confluence of the Sand and Keekorok Rivers
• A published author: one book is a dialogue with Benedictine monk Anselm Grün called The Manager and the Monk: A Discourse on Prayer, Profit and Principles
• Co-funded ‘The B Team‘ with Sir Richard Branson
• Awarded the Financial Times Strategist of the Year award — three times
• Honored by the fatherland and awarded the German Federal Cross of Merit
• Sits on the Kenya Wildlife Service (KWS) board
• Formed the Zeitz Museum of Contemporary Art Africa (Inside: Zeitz MOCAA)
• Founded ‘The Long Run,’ an organization that grades sustainable tourism projects
• Purchased a 50,000-acre Kenyan retreat — Segera Retreat Lodge — to develop a new type of tourism leveraging “the 4Cs”
• A pilot and travels across Kenya in his 1929 Gypsy Moth biplane that was used in the Oscar-winning movie, Out of Africa
• Wears t-shirts, no socks, meditates, likes to run and became a guitar virtuoso in 5-years — professional percussive technique

Jochen Zeitz at Segera Retreat Lodge

As a slacker who would debate a good life is better than a good job, paint me truly inspired for that list of accomplishments!

Talk about an extreme producer with a missionary zeal!  And, I haven’t mentioned the best part… a profile of his “day job” achievements.

Mr. Zeitz represents qualities too good to be true and the idea of him shilling for some corporation to hawk motorcycles deflates the “HERO” excitement.  It’s clear, Mr. Zeitz won’t be satisfied until he has done everything to promote his vision of a new, better world.

LiveWire — Jochen Zeitz — Milwaukee, WI

With his multi-millions in fortune, Jochen Zeitz is likely the richest person in history to run Harley-Davidson as interim president and CEO.

So, again, who is the 57-year old sandy-haired, 6’1’’ athletic build of a man?

Mr. Zeitz was born in Mannheim, Germany, in 1963, to a gynecologist father and dentist mother.  He grew up in a time when the Green Party and the anti-nuclear movement were enjoying strong support in Germany.  Along with the time he spent at the family’s lodge in the Odenwald forest, the outdoor exposure planted seeds of interest in environmentalism.  He was educated at Karl-Friedrich Gymnasium, Mannheim, south-west Germany, and then international marketing and finance at the European Business School of Oestrich-Winkel near Wiesbaden.

Jochen Zeitz and wife Kate Garwood

Mr. Zeitz began his professional career with Colgate-Palmolive in Hamburg in 1986. He then moved to Herzogenaurach in the Franconian countryside to work for sporting goods manufacturer Puma (Bio) in 1988. From there, he rose rapidly though the ranks to become head of marketing in 1991 and vice president — international and head of the global marketing and sales department.  In 1993, at the age of 30, he became chairman of the board of Puma, making him the youngest CEO of German firms with commercially traded stock. He dramatically reduced staff numbers, took production to Asia, made English the corporate language, started sponsoring African football teams and was credited with turning around the near-bankrupt business into one of the world’s top three sports brands.

The Zeitz Museum of Contemporary Art Africa (Zeitz MOCAA) — Cape Town

In 2003, he insightfully signed 16-year-old future Olympic champion sprinter Usain Bolt to Puma.  In 2007, he was appointed to the Board of Harley-Davidson.

Puma was acquired by luxury goods conglomerate Kering in 2007, and a few years later Mr. Zeitz served as Kering’s Chief Sustainability Officer.  In 2011, he set up a sustainability committee for Harley-Davidson, which he also chaired.

Also in 2011, he wanted to step back and focus on his environmental work and resigned as CEO of Puma.  He became a director of parent company Kering and chairman of the group’s sustainability committee.  He co-founded ‘The B Team’ with Sir Richard Branson in 2013.  That same year he launched the Kenyan Segera Retreat with a focus on his foundation’s 4C philosophy for sustainable tourism.

In 2020, he was hungry for something much more and became Harley-Davidson’s interim president and CEO.

Jochen Zeitz — 1929 Gypsy Moth Airplane Photo credit: Eric M Rojas

On a personal level — he divorced his first wife Birgit Jöris in 2012 following an 18-year marriage.  He is currently married to LA-based producer Kate Garwood‚ 41‚ producer of the 2016 movie “Race”‚ about U.S. track star Jesse Owens.  They have two children; 4-year old Jesse born September 2017 and a three year old. He keeps homes in Switzerland, Santa Fe, Los Angeles, a 50,000-acre ranch in Kenya and has property in west London.

When researching material for this blog post, I was blown-away on the amount of information published about Mr. Zeitz.

In a 2013 interview with the International Bar Association, he stated no plans to marry again, although at the time he was in a long term relationship with Kate Garwood. He was adamant about no intention of having children. ‘No, definitely not,’ he stated emphatically. ‘Never say never, but it’s very unlikely. It’s not something that fits with my daily life and I’ve never believed that having children without a father around is a good idea. It’s not really something I would get excited about.’  Just a short four years later both occur.

Jochen Zeitz at Segera, his 50,000-acre ranch. Photo credit: David Crookes

In recent press interviews, he’s stated the joy of his decision to have children late in life, because now he can see them grow up versus having such a busy schedule in running a company and traveling for 10 months in a year.  An interesting side bar: Speculation swirled that Jesse, their first child, was named after the 1930s athlete and fueled by the fact that Jessie Owens was provided with shoes for the 1936 Olympics by the Dassler brothers‚ who went on to found Adidas and Puma. 

But, I’ve digressed and want to return to connecting the Harley-Davidson dots… Mr. Zeitz’s experience at Kering was a critical influence and the driving force behind Matt Levatich’s (the recently fired Harley-Davidson CEO) pivot to sustainability that led him to think much more about environmental profit and loss at Harley-Davidson.  Mr. Zeitz had devised an environmental profit-and-loss account method at Kering which, put a figure on what a company’s air pollution, land use, water use and carbon consumption cost the planet.

Jochen Zeitz’s Favorite Thing — A Scottish Bailey — Photo credit: Charlotte Haden

While Mr. Zeitz — wealthy, world-view philosophy, competitive, over-achiever and relatively young — has the luxury of carving out grandiose, acronym-fueled sustainable ‘visions’, that struggling businesses like Harley-Davidson, desperate to increase motorcycle sales, might find distracting or even an irritant.

We’ll have to read the biography when ex-CEO Levatich publishes the book, but as an outside observer, one distraction example is: it took eight years, millions of dollars and the work of over a thousand engineers to fully realize a product that few want — the Harley-Davidson LiveWire — the Milwaukee company’s first premium electric motorcycle to go on sale in September 2019.  As a long-serving Harley-Davidson board member, Mr. Zeitz convinced executive management to focus not just on the moral justification for electric engines, but on the needs of Harley-Davidson customers to have healthy natural landscapes in which to ride. The logic behind this claim, was that “what every rider loves about the ride – it’s the environment they’re riding in, isn’t it?”  Soon afterward, the marketing and brand alignment teams marched in unison to support sustainability as a major part of the brand.

Segera Retreat — Laikipia, Kenya

The result?  A new mission, twisting the brand’s historic celebration of freedom into a desire “to preserve and renew the freedom to ride” and TWELVE quarters of sales decline.  Along with a $2,152,500 million severance payment to Matt Levatich.

Mr. Zeitz believes and is on record, stating there is more to corporate life than the relentless pursuit of profit. Wait, what?!  Isn’t profit what got Matt Levatich fired?

I’ve watched “An Inconvenient Truth” and the sequel. The oceans are heating and the poles melting, but color me skeptical of environmental groups with sustainable-for profit-business interests.  We’re all too aware of what the world needs: another multi-millionaire telling others how to behave better once they have made their own fortune while flying private and choppering into a rich man’s playground.

Jochen Zeitz GQ Article — in German

The motor-head scholars, bankers, real estate agents, lawyers and fashion designers who gather not to drink cheap brew, but to sip $15 “born to be wild” martinis and straddle $40,000 motorcycles might pontificate on the value of sustainability, but I just don’t see grizzled leather-clad loyalists describing Harley-Davidson as the world’s most sustainable manufacture over a beer at the Sturgis rally.

But, sometimes there’s a man. I won’t say a hero – ’cause what’s a hero? – but sometimes there’s a man – and I’m talking about Jochen Zeitz here – sometimes there’s a man who, well, he’s the man for the time and place.

A man who will improve the brand that is unique, exciting and one that gives value to it’s riding customers.

But wait, there’s more… An incentive if he kicks a field goal… according to the company 8-K regulatory filing, the interim Harley-Davidson, CEO Jochen Zeitz, is eligible and will receive a $3 million bonus (in the form of restricted stock units (RSU’s)) that would vest one year after the grant date and become payable if his employment continues to the date of the installation of a new CEO.  That $3 million would come on top of the annual base salary of $2.5 million he is receiving now after taking over for Matt Levatich. I don’t think this will be too difficult since Mr. Zeitz has served on Harley-Davidson’s board since 2007.

UPDATED: April 17, 2020 — Due to the ongoing COVID-19 pandemic and sales impact, Harley-Davidson announced that its acting president and CEO Jochen Zeitz and the company’s board of directors would forgo any salary or cash compensations. As mentioned above, Zeitz currently has an annual base salary of $2.5 million.

Photos courtesy of Harley-Davidson, Jochen Zeitz, Twitter, Eric M Rojas, David Crookes, and Charlotte Haden

Information Source & References: IBA, Independent,Wired,Business Daily Africa, Milwaukee Business Journal, Adventure Rider, Infosys, Telegraph, Financial Times, Angama Blog

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The Harley-Davidson Paradox

The motor company gets beat down by critics for lack of technology advancements and then they’re pummeled on social media by customers every time they sway off from tradition.

In this category, the rock and hard place are A) the need for change and B) the danger of following the buzz.  And, in an increasingly social media driven world it is easy, and tempting, to mistake the buzz and savvy social pundits for a real business opportunity.

Simultaneously, the Wall Street view of Harley-Davidson’s move into electric motorcycles being an enduring trend will likely come up dry.  Then the industry analysts believe the U.S. motorcycle market is in terminal decline and are not influenced by a “fun appliance” and the More Roads to Harley-Davidson plan.

But, for many riding enthusiasts, the motor company has introduced so many changes over the last few years its difficult to know where to start.  I’m not talking paint colors, rather engineering developments, i.e. water-cooled engines, Reflex Linked Brakes with ABS,  Reflex Defensive Rider System (RDRS), subscription-based cellular connectivity, advanced electronics with Bluetooth connectivity, voice recognition (microphone/headphone fitted to the rider’s helmet), text to speech technology, sophisticated GPS navigation system, wind tunnel designs to reduce head buffeting, LED lights, revised manufacturing processes, 131 cubic inch Screamin’ Eagle® Crate Motor and the first great-looking electric motorcycle (LiveWire) along with a large number of smaller updates.

The list goes on and on….

Other than the fact that the motorcycles are not inexpensive and in several instances most everyone would consider as very expensive, there’s not much else really to grumble about.

Yet, Harley-Davidson stated yesterday in the Q4 2019 and year-end financial report that its motorcycle sales slipped again!  Despite multiple new models, electrification, expanded overseas operations and Brand strategies to resuscitate demand.

The 4th quarter 2019 net income was $13.5 million on consolidated revenue of $1.07 billion versus net income of $0.5 million on consolidated revenue of $1.15 billion in the fourth quarter of 2018.  That brought full-year 2019 revenue to $5.36 billion, compared with $5.72 billion in 2018.  For 2019, earnings were $2.68 a share, compared with $3.19 in 2018. Adjusted earnings for 2019 were $3.36 a share, down from $3.78.  Harley-Davidson sold 7% fewer units in Q4’19 than a year earlier. The U.S. dealers which account for half of worldwide Harley sales, saw their retail sales fall 3%.

CEO Matt Levatich tried to curb the narrative numbers skid (12th consecutive quarter of U.S. retail sales decline!) in the company’s announcement, saying, “Our performance in Q4 and the full year was in line with our expectations and indicative of increased business stability.”

I am reminded that in matters of business, it’s often the case that the most vehement of corporate assertions are at 180 degrees to inconvenient facts.

The freedom of the open road is all very well, but remaining in the marketplace and growing is key. The motor company should avoid “stooping to compete” with the rest of motorcycling (i.e. chasing buzz).  Harley is iconic because, instead of treating motorcycles as a commodity, it recognizes them as a basis for a lifestyle and a shared set of attitudes

Photos courtesy of Harley-Davidson

UPDATE: January 30, 2020 — added: 12th consecutive quarter of U.S. sales decline.

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Harley-Davidson Vehicle Vulnerabilities

Nobody ever thinks it will happen to them or their systems.

I’m talking about building a digital defense and cybersecurity vulnerabilities.

Heads up Harley-Davidson!  The more connected motorcycles become, the more likely they are to get hacked.  Each new “connected” motorcycle feature introduces greater complexity, and with complexity inevitably comes vulnerability.

Motorcycle enthusiasts have spoken and Harley-Davidson listened.  Riders want increased connectivity not simply for productivity’s sake, but also for convenience.  It’s easier to, for example,  interact through the head unit and display an interactive map as the motorcyclist drives towards their destination, versus putting the address into the user’s cell phone’s app and trying to watch the map on the phone and drive.  So, riders use apps for Android and iPhone (Apple CarPlay), that leverage the smartphone for the head unit (HU) display.

At what point does the motorcycle become a data center on two-wheels?  Any part of the motorcycle that talks to the outside world is a potential inroad for attackers. And malicious actors have been incredibly productive, creating immense numbers of threats world-wide.

Do you think I’m ‘inflating’ this out of proportion?

Car versus motorcycle hacking makes great headlines and let’s take a look at a few recent vehicle examples: a moving Tesla Model S is hacked and the hacker remotely controls the brakes (Tesla was forced to develop and distribute a software update to resolve); a Jeep Cherokee was remotely accessed via the UConnect entertainment center from a laptop miles away and disabled it’s transmission (Fiat Chrysler, was forced to recall 1.4M vehicles); a 100M Volkswagen vehicles can be unlocked by hacking the signals from their keyless entry fobs; and then there was Hyundai’s Blue Link, a cell phone application for users to interact with their vehicle.  Users are able to lock, unlock, start and stop the air conditioning or heat, and start the vehicle from a remote location. In addition, the app allows for stolen vehicle recovery and vehicle health reports to be emailed to the user and other parties for scheduling service etc.

SOUND FAMILIAR?

Consider that earlier this year the Harley‑Davidson™ App and the H-D™ Connect service launched which allows owners to connect remotely to select 2020 Touring and LiveWire motorcycles.  The H-D Connect service provides cellular connectivity that can link a Touring and LiveWire owners with their motorcycle through their smartphone using the Harley-Davidson App. H-D Connect allows owners to connect remotely to their motorcycles and allows for viewing of key vehicle health information as well as stolen vehicle recovery and other parties for scheduling service etc.

A computerized motorcycle’s main defense against hacking used to be the fact that all of its systems were separated from any network. But with the rise of telematics systems, connected apps, and onboard WiFi, that’s no longer the case. Harley-Davidson owners now face similar security issues to computers or smartphones and, like those devices, “ironclad” software is the main line of defense and will be as susceptible to attack, just as the user’s home and office PC are.

I’ve previously posted about the larger Internet of Things (IoT). Basically, this means everything in your home that connects to the world wide web. Smart TVs, digital assistants, smart watches, fitness trackers, home security devices, thermostats, refrigerators, and even light bulbs are all on the connected list. Add to that all of the fun stuff: remote-controlled robots; games and gaming systems; interactive dolls; and talking stuffed animals … the list is endless.

And now we have connected Harley-Davidson motorcycles.  What do all of these have in common?   They send and receive data.  The essence of the Harley-Davidson digital transformation is interconnectivity. Interconnectivity is about more than the connections between devices — it is about the connections between customers, partners, and suppliers.  But, do you know how that data is collected, where it is stored, for how long and where it is going?

It’s not clear how serious Harley-Davidson takes the threat of potential cyberattacks on their motorcycles. Given the concerns of hackers doing a “drive-by” on your digital life and the number of malicious actors I’d like to see more transparency from them in regards to motorcycle digital defense — or we risk ending a road trip before it really begins.

Harley-Davidson Privacy Policy – HERE
Harley-Davidson Information Sharing Policy – HERE
FBI 2018 Internet Crime Report (PDF) – HERE

Photo courtesy of Cyber Defense Magazine and FBI

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Harley-Davidson And The Decline Of Aquatic Habitats

A motorcycle braking system’s primary function is to adequately dissipate heat in order to increase the fade resistance and stop the vehicle.

The Italian company, Brembo, and their brake systems dominate the legendary circuits of the MotoGP and Superbike World Championships.

Solid Block of Aluminum

Brembo has recently introduced a new braking system for the Harley-Davidson flagship models as well as the new LiveWire with distinctive elements of performance, lightness and style.

It all starts with a solid block of aluminum, a material with extraordinary properties that not only have eye-catching surface finishings, but is able to combine low weight and stiffness.

The new radial monoblock caliper with 4 pistons (30 mm) boasts a unique design and the result takes full advantage of the material characteristics.

Motorcyclists know that caliper changes, even for an object of this small size may seem insignificant, but calipers are unsprung weights: even a few hundred grams more increase the braking distances, reduce the acceleration and make changing direction less stable/smooth.

New Radial Monoblock Caliper

Brembo manufactures braking components to ensure constancy of performance and that lever response is immediate with adjustable deceleration in any riding condition. Clearly, Brembo leveraged their 40-years of MotoGP success, to help improve the Harley-Davidson braking systems.

Another distinguishing feature of Harley-Davidson or Brembo’s OE braking system is the use of color.  Call it Italian creativity, but it is appreciated for its high quality standard, attention to detail and the importance of the braking systems’ aesthetics.

But, more to the point of aquatic habitats.

The Pacific Northwest is well known for its beer distilleries, marijuana shops, and hipster-forward culture (and lots of beards). It’s an attraction for foodies, coffee bean experts, hikers and features a diverse landscape of twisty back roads just outside the metro areas for wind in the face relief.

Salmon and the Pacific Northwest go hand in hand, but did you know that every time you grab and engage the brake lever, minute amounts of copper from brake dust is chemically degrading aquatic habitats, often in the form of toxic stormwater runoff which contributes to the killing of coho salmon?  It’s true.  Multiple studies demonstrate that stormwater runoff is unusually lethal to adult coho that return to spawn each year in watersheds.  The Washington State University study is HERE and the Ecological Society of America study is HERE.

To be fair, urbanization along with polluted runoff from automobile (268+ million in the U.S.) brake dust poses a greater challenge to fish species conservation, but motorcycle braking contributes to toxic stormwater runoff and recurrent coho die-offs.

Brembo Colors

I should’ve produced a truck load of “Save a Salmon, Don’t Brake” t-shirts hoping to get wealthy, but didn’t.

Are you looking for a way to get involved?  It’s expensive and not very practical for Harley-Davidson, but upgrading to carbon ceramic brakes don’t produce the same amount of toxic dust.

Motorcyclists can plant trees along the network of streams and rivers.  Or build rain gardens (vegetated basins or depressions which capture and absorb runoff) at their homes or neighborhoods to intercept stormwater that would otherwise flow onto city streets then to the rivers with polluted runoff — the main culprit for the decline of urban salmon populations.

Photos courtesy of Brembo and Harley-Davidson

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Can Harley-Davidson Stay Relevant With Pan America and Bronx

Pan America™

At the EICMA (Esposizione Internazionale Ciclo Motociclo e Accessori), motorsports show in Milan, Italy, earlier this week — Harley-Davidson debuted two new bikes.  Important to note is the difference in the terms “launch” vs. “debuted.”

The Milwaukee MoCo has aimed one of motorcycles at a market segment in which Harley-Davidson has never really participated.

It’s my view that Harley-Davison is slowly trying to build higher walls to keep “enemies” (competitors) from invasion. Marketing types call this “relevance” and “barriers to entry.”  Multiple financial reports from the company clearly indicate a struggle to fire up a new generation of riders.  The growing presence of electric vehicles is undeniable, but the premium-priced electric (LiveWire) motorcycle — is a non·start·er in terms of revenue!

And at the same time, there’s been an invading army (BMW, KTM, Triumph, Yamaha, Honda or Ducati counterparts) of adventure touring bikes (ADV).  Importantly, this segment is where customers seem particularly excited to buy new models year-after-year.  Even Italy’s floundering boutique bike builder, Moto Guzzi, has had to double the workforce in its Mandello del Lario plant to keep up with demand for the new V85 TT adventure bike ($12,990).  It’s simple.  A fresh new design, a fresh new motor, and a capable around town, comfortable on freeways and durable enough for off-road riding gets customers excited to put down money!

We could have a long-debate on why Harley-Davidson spent millions of R&D dollars much too early as part of their electrification strategy and if the mainstream motorcycle market is ready to encourage motorcyclists to switch to electric vehicles.

But, lets return to the point at hand.

The first new motorcycle is an adventure touring bike (ADV) called the Pan America™.  Astute readers are likely to have déjà vu as it looks very similar to the Pan America concept motorcycle teased out back in 2018.

The Pan America has a new liquid-cooled 60-degree V-twin engine labeled the Revolution Max that displaces 1,250-cc and is reported to make 145 horsepower and more than 90 pound-feet of torque. Impressive stats, especially for the MoCo, which typically has built larger displacement engines with less power and more torque.  The new ADV motorcycle differs from traditional Harley models.  The first item, is exchanging the belt-style final drive for a chain drive that allows simpler gearing changes and improves on the ability to repair if something goes sideways on the trail.  The ADV also leverages a rear trellis-style subframe for strength and reduced weight, which allows motorcyclists to mount different types of adventure-isk luggage to it.

Other advancements include new radial monoblock four-piston caliper brake system developed in collaboration with Brembo and an inverted fork setup, which is common on ADV bikes.  From a styling perspective, you’ll either love the bird-beak nose and squinty cyclops-like headlight or not.

Harley-Davidson® Bronx™

The second new motorcycle is a middleweight class and called the Harley-Davidson® Bronx™. It’s reported to have a smaller 975-cc version of the Pan America’s Revolution Max engine and produces 115-horsepower and 70 lb.-ft. of torque.  Style wise, the Bronx looks somewhat cookie-cutter in this crowded “streetfighter” market segment.  From press photos the motorcycle appears to be belt-driven.  Both motorcycles will roll on new co-branded Michelin tires.

Harley-Davidson says that it’s aiming to have both the Pan America and the Bronx in showrooms by the end of 2020.

Huh?!  A year away?

I like the adventure touring bike (ADV) lineup, but if I was in the market to purchase, it’s unlikely that I’d stall buying for a year to purchase an unproven ADV motorcycle.  I also think it will be a mistake if the MoCo expects its Harley-Davidson name to garner an ultra-premium price in this new segment as it has in the EV market with the LiveWire.

The Pan American should launched and be in showrooms in March 2020, not “late” 2020.

Photos courtesy of Harley-Davidson

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