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Posts Tagged ‘Management’

Recently it was reported that the typical CEO at the biggest U.S. companies received an 8.5 percent raise last year, taking in $11.5 million in salary, stock and other compensation, according to a study by executive data firm Equilar for the Associated Press.

Over the last 5-years, median CEO pay has jumped by 19.6 percent not accounting for inflation.  That’s nearly double the 10.9 percent rise in the typical weekly paycheck for full-time employment across the country.

It could be, but this isn’t a rant about the typical line worker vs. CEO wage-gap.

If we’re being intellectually honest, CEOs today are required to master a broader range of skills than in the past, when top executives might have climbed the ranks with just one discipline. Companies are bigger, more global and increasingly complicated, and there’s accelerating competition in countries such as China, India and Brazil. Executives must also adapt to quicker technological change, including shifts brought on by autonomous driving, electric vehicles and the widening use of mobile devices.  And then there is the Board, and the increasing requirement that CEOs push their stock price ever higher to collect their maximum possible payout.

So, who are those CEOs at Harley-Davidson, that made Harley-Davidson?  Below is a historical snapshot of the motor company leadership:

Matthew S. Levatich

Matthew S. Levatich — is the current Harley-Davidson President/CEO which he assumed in 2015.  Mr. Levatich was named COO during CEO Keith Wandell’s tenure.

Mr. Levatich, joined Harley-Davidson in 1994. Prior to becoming COO in May 2009, he held wide-ranging roles in the U.S. and Europe. Those roles included Vice President and General Manager of Harley-Davidson’s Parts and Accessories business, Vice President of Materials Management, and President and Managing Director of the Company’s former MV Agusta business. In addition to an undergraduate degree in mechanical engineering from Rensselaer Polytechnic Institute, Levatich holds a graduate degree in engineering management and an MBA from Northwestern University. He has served on the board of directors of Emerson, a St. Louis-based global manufacturing and technology company, since 2012.

Mr. Levatich is known as an avid rider and an engineer, that demonstrates a clear vision for the company and talks constantly about focus and alignment and helping the organization remain clear on what it is they’re here to do.  No longer is the motor company the “voice of the executive” rather it’s the “voice of the customer.

Interestingly, Harley-Davidson has evolved from platform teams. Dyna platform, Softail platform, which was largely modeled like the automotive industry. Each platform team was competing for the next big capital investment so they could say now it’s Dyna’s turn to have a major refresh. Or now it’s Softail’s turn. Or now it’s Touring’s turn.  And that doesn’t exist anymore.

In an interview with Cycle World Mr. Levatich stated: “We’re not really in the business of manufacturing motorcycles. We’re in the business of building customers.”  

Keith Wandell

Keith Wandell —  hired from Johnson Controls to serve as Harley-Davidson President/CEO in 2009 — retired May 1, 2015 — only 6-years later.

Credited for leading Harley-Davidson back to profitability by cutting jobs and making its production more efficient he transformed manufacturing through a restructuring plan that generated more than $300 million in annual savings.

Mr. Wandell cut millions of dollars in costs and eliminated several thousand jobs in the manufacturing plants. He brought a sense of urgency to the company, saying he did not want it to be like General Motors and the auto industry that had fallen into deep trouble.

Under his leadership, Harley made significant gains in reaching new customers through growth in international markets and sales to “outreach” segments in the U.S., including young adults, women, African-Americans and Hispanics.  Mr. Wandell also was credited with stoking excitement for a planned electric bike, called Project LiveWire.

Mr. Wandell has been the Non-Executive Chairman of Dana Incorporated since October 27, 2016 and served as its Interim Chairman from September 9, 2016 to October 27, 2016.

James Ziemer

James Ziemer — served as President/CEO from 2005-2009.  Retired in 2009.  Mr. Ziemer is a native Milwaukeean who grew up in the neighborhood next to Harley-Davidson’s original Milwaukee factory location on the city’s west side.

He started with the motor company in 1969 as a freight elevator operator while attending the University of Wisconsin-Milwaukee. He worked at Harley-Davidson for 40 years.  Upon earning his undergraduate degree in accounting at UWM, he joined the accounting department where he spent the majority of his career. He was named the Company’s Chief Financial Officer in 1990. In 2005, he was named President and Chief Executive Officer of Harley-Davidson.  When he retired, employees presented Mr. Ziemer with the original wood doors from the freight elevator he operated when he first was hired at Harley-Davidson.

As a sidebar, also in 2009, eleven years after being bought by Harley-Davidson, Erik Buell leaves the company to establish Erik Buell Racing.

Jeffrey L. Bleustein

Jeffrey L. Bleustein — retired as Chairman of the Board of Harley-Davidson in April 2009.  He was Chairman from December 1998 to April 25, 2009.  Previously, he served as CEO from June 1997 to April 2005.

He served at Brunswick Corp in many capacities and was President of Trihawk, Inc., a subsidiary of Harley-Davidson, 1984 to 1985. Remember Trihawks?

Mr. Bleustein was a technology consultant with American Machine and Foundry Co. (AMF).  In 1969, AMF merged with Harley-Davidson and in 1975, AMF assigned him to help reorganize Harley-Davidson engineering operations.  Led by AMA Hall of Famer Vaughn Beals Jr., and 11 other Harley-Davidson executives (including Willie G. Davidson), Bleustein helped execute an $81.5 million leveraged buyout of the company from AMF on June 16, 1981.

To commemorate the buy-back, approximately two dozen company officers, along with their wives and select motorcycle press, made a cross-country motorcycle trek from the production facilities in York, PA to Harley-Davidson’s main offices on Juneau Avenue in Milwaukee. This 900-mile independence journey was also a ride to support the Muscular Dystrophy Association, now the official charity of Harley Owners Group (HOG). The ride followed a host of ceremonies at York which included the signing of documents that marked the ownership change, and pulling the first “new Harley-Davidson” motorcycle off the assembly line. This 4-day celebration began a new chapter in the company’s “new” future.

Mr. Bleustein was responsible for notable engineering innovations which included the rubber engine mounts, redesign of the V-Twin and introduction of the Kevlar drive belts.

During Mr. Bleustein’s tenure (circa: 1998), Harley-Davidson bought Buell Motorcycle Company and named founder Eric Buell Chairman of Buell Operations. The first Buell’s hit showrooms in late 1999.

Rich Teerlink

Rich Teerlink  — served as Chairman and CEO until 1999 at Harley-Davidson until he retired.  Mr. Teerlink joined Harley-Davidson in August 1981 as CFO where he enjoyed great success over his 18-year career.  He started with the company just two months after the group of 13 Harley-Davidson managers had bought the company from its then parent company, American Machine and Foundry Co. (AMF), in a leveraged buyout.

Mr. Teerlink’s greatest accomplishment was establishing the Harley Owners Group (HOG) in 1983.  Mr. Teerlink joined the Vertex Board in 2002, and while serving on the Vertex Board, he also served on the Boards of Johnson Controls, Snap-on Tools and Quad Graphics.

Mr. Teerlink is also a notable author of More Than a Motorcycle, The Leadership Journey at Harley Davidson book.  Mr. Teerlink retired from the Vertex Board of Directors, effective February 4, 2015.

Mr. Teerlink was inducted to the AMA Motorcycle Museum Hall of Fame in 2015.  Mr. Teerlink was awarded an Honorary Degree, Doctor of Laws from Marquette University on May 22, 2005.

Vaughn L. Beals Jr.

Vaughn L. Beals Jr. — served as CEO of Harley-Davidson from 1981-1989 and as Chairman from 1981-1996.

In June 1981, it was a challenging time as American Machine and Foundry Co. (AMF) wanted to cut and run, but no one wanted to buy a company with a limited line of high-priced, obsolete products and a reputation for unreliability.  Vaughn Beals Jr., and 13-other** Harley-Davidson executives (including Willie G. Davidson), led an $81.5 million leveraged buyout of the company from American Machine and Foundry Co. (AMF).

Mr. Beals previously served as a research engineer for North American Aviation and Cummins Engine Company where he negotiated the purchase of logging equipment manufacturer Formac International as he was a minority owner and CEO.  This proved to be valuable during the AMF Harley-Davidson buyout.  He was named Harley-Davidson CEO after the buy-out option.

In 1982, the motor company won an anti-dumping judgment from the International Trade Commission (ITC). This led then-U.S. President Ronald Reagan to impose additional tariffs on imported heavyweight Japanese models, as allowed by the ITC.  The additional tariffs–45 percent on top of an existing 4.4 percent measure–were meant to decrease gradually over five years, until April 1988.

In June 1986, Harley-Davidson went public with a stock offering to raise capital to help pay off the buy-out option.  This was very successful increasing share price from $11 to $24.  Harley-Davidson  used some of the stock sale revenues to buy Holiday Rambler, a U.S. maker of recreational vehicles, for $150 million.  The Holiday Rambler sale pushed Harley-Davidson into the Fortune 500 category for the first time at number 398.  In March 1987 the company asked the ITC to remove the tariffs imposed on Japanese motorcycle imports a year earlier than scheduled.

Willie G. Davidson, V.P. Styling (Left); Vaughn Beals Jr., CEO and Charles Thompson, President (Right)

Mr. Beals was inducted to the AMA Motorcycle Museum Hall of Fame in 2008.

Charles Thompson — served as President and CEO of the restructured Harley-Davidson after American Machine and Foundry Co. (AMF) buy-out option.

Mr. Thompson was a long-time Harley-Davidson employee, well-liked throughout the motorcycle industry and served as president and CEO of the restructured company until his health failed in 1982.

William Herbert “Bill” Davidson — was president of Harley-Davidson Motorcycles from 1942 to 1971.  He was the son of William A. Davidson who quit his regular paying job with the Milwaukee Road railroad in 1903 to get into the business of making motorcycles.

William Herbert “Bill” Davidson

Bill Davidson, started working on the Harley-Davidson shop floor of the family business in 1928 after attending the University of Wisconsin.  He won the AMA National Enduro Championship in 1930 and when he wasn’t winning motorcycle races, Bill worked his way up through the company, becoming a foreman, manager of many departments, and finally president of Harley-Davidson in 1942.

In 1963, Bill brought in his son William Godfrey Davidson (Willie G.) on to head up the styling department of the company. Willie G. would end up creating some of the company’s more popular designs, including the legendary Low Rider and the Super Glide which was inspired by the ideas of bike customizers.

In 1965 Harley-Davidson went public as the two families decided to give up control and put the company’s shares on the market.

In 1969, Harley-Davidson was bought by American Machine and Foundry Co. (AMF), a leisure equipment manufacturer.  The arrangement proved, at least initially, to be a good one for Harley-Davidson, for it was in the mid-1960s that the company experienced its first real competition after Indian went out of business. The financial resources and stability that AMF was able to provide helped the company battle Japanese motorcycle manufacturers, who had begun exporting their vehicles around the world, placing themselves in direct competition with Harley-Davidson.

Bill stayed on as president under the control of AMF reporting to it’s then current chairman and CEO Rodney C. Gott (Mr. Gott served as AMF president, starting in 1962, and chairman and chief executive, from 1968. He retired in 1978).  Mr. Gott was a Harley-Davidson rider and big motorcycle fan.  As a sidebar: In World War II, Mr. Gott was a decorated veteran who served in Gen. George S. Patton’s Third Army and on the staff of Gen. Lesley James McNair, chief of ground forces, and was also commander of the 79th Infantry Division Artillery.

In 1971, Bill Davidson was made Harley-Davidson chairman, but reported that he had little power while under AMF’s control.  It was noted that he was chairman of the Harley-Davidson board that never met.  Conflicts with AMF’s strategy and chaotic market conditions led to Bill Davidson’s resignation in 1973.

It was a period of high CEO turnover at Harley-Davidson.  During this time, AMF named John O’Brian and then Gus Davis as president, marking the first time someone other than a Davidson would sit in the company presidents chair.  Other Harley and Davidson family members continued on at the company under AMF’s ownership.  Bill Davidson’s son John was vice president of Sales, and then moved up to become president after Gus Davis.  William J. Harley was engineering vice president until his death in 1971.  His brother John Harley remained at the company until his death in 1976 as the last Harley at Harley-Davidson.

In 1975, AMF put Vaughn Beals Jr. at the head of Harley-Davidson, and Jeff Bleustein was named chief engineer. Bleustein was charged with making manufacturing improvements, which had  become increasingly necessary as production grew and quality declined.  A limited line of high-priced products and a reputation for unreliable motorcycles marked this timeframe in history.  AMF began to lose interest in keeping the struggling motorcycle business afloat.

Rodney C. Gott (Left) and John Davidson, President Harley-Davidson

In a bit of irony, (circa: 09/1977), the motor company unveiled a motorcycle museum in York, PA., that was named after AMF’s CEO — Rodney C. Gott Motorcycle Museum.  A video HERE.

In June 1981, to save the company, and to effect a turnaround, thirteen Harley-Davidson executives, led by Vaughn Beals Jr., put together a plan for a leveraged management buyout. With the financial support of Citicorp, the management team succeeded in taking control of Harley-Davidson from AMF on June 16, 1981, at a cost of $81.5 million.

The role of the new officers after the company buy-out option included: Charles Thompson, president and chief operating officer; Jack Hamilton, Chris Sartalis, Jim Paterson, Kurt Woerpel, Peter Profumo, Jeffrey Bleustein, Thomas Gelb, William Davidson, and Tim Hoelter, all vice presidents. The president of the various divisions were: John Davidson, golf; David Caruso, parts and accessories; Ralph Swenson, York; and David Lickerman, Harley-Davidson International.

Even though he was no longer actively involved with the company, Bill Davidson lived to see the renewal and success that Harley-Davidson enjoyed starting in the late-1980s.

Bill Davidson died in 1993.  He was inducted into the AMA Motorcycle Museum Hall of Fame in 1999.

Walter Davidson — was president from 1907 to 1942.  Bill Harley was chief engineer and treasurer. Author Davidson is secretary and general sales manager and William A. Davidson is the works manager.

In 1936, six sons of the founders are working at Harley-Davidson.  Walter Davidson’s sons Gordon and Walter C.; and William Davidson’s sons, William Herbert “Bill” and Allan; and Bill Harley’s sons, William J. and John.

In 1942 from his death bed,  Walter Davidson named his nephew William Herbert “Bill” Davidson as president and his own eldest son Gordon, as vice president of manufacturing.

Historical Principal H-D Subsidiaries: Holiday Rambler Corporation; Utilmaster Corporation; B&B Molders; Creative Dimensions; Nappanee Wood Products.

Article References:

Vaughn Beals Jr. – Wikipedia
Growing Up Harley-Davidson – Jean Davidson
Harvard Business Review – Harley Leadership U-Turn
Jeffrey Bleustein – Wikipedia
The Morning Call – Harley Is A Classic Turnaround Story
Rodney C. Gott Obituary
Gus Davis Obituary
Cycle World Magazine – Interview with CEO, Matthew S. Levatich
Cycle World Magazine – Rodney C. Gott Motorcycle Museum
Chicago Tribune – The Real Harley-Davidson Story
James Ziemer – Northwest Harley Blog
People – Buy Back Article
Rick Barrett – Journal Sentinel

Harley-Davidson (Buyout) Management Team

**The Harley-Davidson managers post buy-out option: left to right standing: John Hamilton, Dr. Jeffrey Bleustein, Kurt Woerpel, Chstopher Sartalis, and William G. Davidson.  Left to right, seated: James Peterson, Timothy Hoelter, David Lickerman, Peter Profumo, David Caruso, Ralph Swenson, Charles Thompson, and Vaughn Beals Jr.

 

Photos courtesy of Harley-Davidson

All Rights Reserved (C) Northwest Harley Blog

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BITW-HelmetAs I write this I’m reminded that I was flying home from Barcelona, Spain about this time last year after a long work week at an industry event and that every year in business is different.

A few years are easy, some are hard, and most are somewhere in between. Each year you face a different set of circumstances: changing economic, political, social and what’s cool in the billet industry.

We know from the Discovery Channel which scripted a mini-series project about the history of Harley-Davidson, that in the early years the company really struggled to survive. From month to month, they worked hard to keep from getting further behind and sinking further into debt.  There were the AMF years and then came the housing bubble.  Those of you who have tried or are establishing a little business of your own know that success is much harder than you envisioned it should be. Many folks think there must be “one big thing” they are missing that if discovered and remedied would turn things around and put them on the path to major prosperity.

Clearly, that isn’t the case, and over the course of a few startup years often you learn that rather than “one big thing,” there are many functions throughout the business that had to get established in good working order for the business to really succeed.

After 114 years, this still holds true for Harley-Davidson. There are no guarantees or shortcuts to success. There is only doing the hard work that needs to be done, doing it to the highest standards, and identifying the next area to establish or improve in order to build the next generation of Harley-Davidson rides and riders to control their destiny.

All of this became acute over the last week when Harley announced their Q4 and full-year 2016 financial results (HERE).

Words like “intense competition, flat market, soft sales, and earnings miss” ruled the day.

These are just words.  I’m of the viewpoint that how well any company performs is a key factor in how well they succeed compared to their competition.  Since we’re a few days before Super Bowl — a sports analogy is in order — how well a team executes ALL aspects of their game has everything to do with whether they win or lose.

Obviously taste in motorcycle brands, styles, or in paint schemes, is subjective. Some in the press have beaten down the overall market with reports that seem to indicate the riding “fad” has ended. Granted there’s been negative publicity with Polaris shutting down the Victory Motorcycle brand and overall motorcycle industry earnings not being great, but there are many very nice motorcycles being made, and WE the riding enthusiasts/public have lots of choices.

Why do I bring this up?

I’ve notice in my travels that many successful companies have a sense that they are masters of their own fate; their success is within their control. They know it’s a myriad of little things done well that add up to their success. And no matter what their size, they realize that a company always has the resources at hand to take their next step. Isn’t that really the “art” of it: to creatively employ existing resources to advance the ride, the employees and the company?

Most of us know the answer to a problem is rarely found outside the company; it usually comes from within.  I’m confident that Harley-Davidson will find the answers and simply function better as an organization.  I predict they will do a more thorough job of performing the functions a successful motorcycle company needs to and roll out compelling new products that will be industry hits.

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belushianddanThe Baby Boomer generation is a source of trends, research and discussion of and by people born from 1946 – 1964.

The “Boomers” are a key demographic, with plenty of disposable income and make up a major share of people who buy and ride Harley-Davidson motorcycles.

So, it’s rather ironic when Dan Aykroyd yesterday wrote to his fans online that he had offered to have the Blues Brothers open for Kid Rock at Harley-Davidson’s 110th anniversary celebration, but executives apparently told him that they were “too old for (their) desired demographic”.

Huh?  Really H-D.  REALLY!

This ranks right up there as the biggest marketing no brainer in the history of no brainers, but H-D exec’s say no and then add a shameless insult that is deliberately offensive to the aging hipsters and largest customer segment for the motor company?!

aykroyd-FBHere is the actual text:  Offered Blues Brothers to open for Kid Rock at Harley-Davidson 110th anniversary.  H-D execs. say B.B.’s too old… fb.me/27MHI7iYw — Dan Aykroyd (@dan_aykroyd) May 10, 2013

You might recall that Kid Rock is scheduled as the headliner for the event’s third and final night on Saturday, Aug. 31 in Milwaukee.

The Blues Brothers formed in 1978 and featured Dan Aykroyd and John Belushi as part of a musical sketch on Saturday Night Live. Their debut album, “Briefcase Full of Blues”  went to number 1 on the Billboard 200 chart.  In 1980, John Landis directed the “Blues Brothers” movie which according to Box Office Mojo, remains the 13th highest grossing film in both the ‘Musical‘ and ‘Comedy – Road Trip‘ categories and likewise ranks as having the 13th highest box office earnings for films opening in limited release.

Hey Harley-Davidson…  ever hear of Bikes, Blues and BBQ?  How about The Blues Bothers Ride?  You don’t stop riding because you get old; you get old because you stop riding!

Is it time for a public apology and to make a truly informed decision rather than sending out open insults to your customer base?

Photo courtesy of Facebook and meoutfit.com.  Rawhide video HERE.

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The first stop in Detroit of Sheen’s My Violent Torpedo of Truth/Defeat is Not an Option variety ‘warlock’ show occurred this past Saturday night.  According to reports thunderous applause at the start, but in about an hour “fans” walked out wanting their money refunded.  Ultimately the conclusion of the first show being — let’s just call it un-winning?

Charlie Sheen made the mistake of thinking the audience was on his side.  That’s what happens when you descend from your showbiz perch, step out of the television and enter the realm of the common man, you find out we’re all equal.  And that if you don’t give a great presentation, we’ll tear you down from your peak.  Don’t think that just because people paid to see you, they’re on your side.  You’re no longer at the mercy of the critics, you’re at the mercy of the public.  A $100 ticket member of the audience is no longer passive, they’ll provide an opinion not only through catcalls and boos, but will tweet and blog as those who care will follow along from home.

For Sheen to play to fewer people over the next 19 cites with even less attention would not only be a PR disaster, but devastating to his pride so, one can only assume there will be some show cancellations.  But, the big story of the past six months is that the people rule.  It happened in the Middle East, it’s happening here.  How long do you expect people to overwork just to make ends meet while an “undeserving” upper class gets to live in an alternative universe?  According to Wikipedia, a humble person is “someone who does not think that he or she is better or more important than others.”

Is there a H-D motor company lesson here?

If you’re one of the privileged, don’t intersect with the public.  Fly private, live behind a gate or a guard, avoid publicity.  Because the little people are there, waiting to pounce on every misstep?  Then again, what if the motorcycle world is ready for a true leader, who knows all this, who is not beholden to the public so much as cognizant of the landscape and willing to march forward into the future.

Does that describe Harley-Davidson?

Jim Collins, who has spent double digit years researching how certain companies are able to sustain superlative performance and identified a key ingredient — having a Level 5 leader — an executive in whom genuine personal humility blends with intense professional will was essential to take a company from good to great.  Transforming a good company into a great one also included getting the right people on the bus (and the wrong people off the bus).  In other (my) words, true professionals don’t equate attention with talent.  They don’t equate notoriety with a career.  They don’t equate an initial demand with longevity.  They don’t set themselves up for ridicule because the smell of a stunt stinks worldwide and people (motorcyclists) know what is good.

One of the most common causes of failure once people (or companies) achieve significant success in business is an out of balance ego.

Photo courtesy of Flickr

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MV Agusta - F4

I’m not sure who said it, but there’s an old saying about Harley-Davidson, that goes something like: “if I have to explain it, you wouldn’t understand.

So, on the day I left for Sturgis (August 6th), Harley-Davidson announced it had concluded the sale of its subsidiary, MV Agusta, to Claudio Castiglioni and his wholly owned holding company, MV Agusta Motor Holding, S.r.l.   You may recall that in October 2009, under the new leadership of CEO Keith Wandell, H-D announced its intention to sell MV Agusta as part of a NEW corporate strategy and to focus resources on the Harley-Davidson brand.  In fact, Mr. Wandell was in route to Minnesota on this announcement day so his handlers undoubtedly had everything all wrapped up prior to his departure ride to Sturgis.

The divesting announcement came 2 years (almost to the day) after it completed the $108M purchase acquisition of MV Agusta on August 8, 2008.  Then CEO Jim Ziemer said of the purchase:

“We are thrilled to welcome the MV Agusta family of customers and employees into the Harley-Davidson family of premium motorcycle brands,” … “Our primary focus with this acquisition is to grow our presence and enhance our position in Europe as a leader in fulfilling customers’ dreams, complementing the Harley-Davidson and Buell motorcycle families.”

The divesting announcement didn’t include the sale price but its 8-K filing with the Securities and Exchange Commission revealed the company essentially paid MV Agusta’s former owners to take it back.  In the filing Harley stated it “contributed 20 million Euros to MV as operating capital” that was put in escrow and is available to the buyer over a 12-month period. The buyer was Claudio Castiglioni, who, with his brother Gianfranco, ran MV Agusta for years before selling it to Harley two years ago.  In the filing Harley also said it received “nominal consideration” from the buyer. In a subsequent interview the company said the specific amount it received was $3 Euros (~$3.98 USD)

In 2008 most of us were stymied by the purchase of MV Agusta.  As a maker of expensive and exotic, high-performance sport bikes at minimum it overlapped with the Buell products and even worse was the company never explained how MV could attract younger buyers to H-D.

Here are my questions.  How many laid off workers equal the cost of this poor decision and why hasn’t the Board of Director’s been held accountable for one of the worst business decisions in H-D history?  Yeah, they’ll likely tell me “if they have to explain it I wouldn’t understand…”

I previously blogged about H-D going Italian HERE.

Footnote:  There is a certain level of incompetence from the old time management at H-D and they should-have-known-better.   It’s not the first time Harley-Davidson has had a hard time with an Italian acquisition. In the 1960s it bought a stake in Aermacchi, a maker of small off-road bikes as a way to expand into new markets. Eventually it bought the whole company, but that move also eventually failed and Harley sold Aermacchi in the late 1970s. The sellers and buyers: the Castiglioni brothers.

UPDATE: September 11, 2010 — Not previously made public, but buried in the Sale and Purchase Agreement filed with the SEC is a provision that H-D retains control of any press releases and statements about the sale for a year from the August 6th closing date.  Why?  Maybe the fact that H-D forgave a $103M Euro receivable… basically money it had loaned MV Agusta for operations.  The sale agreement specifies that the receivable transfers to Castiglioni for $1 Euro!!  Shareholders need to hold the board and management responsible for this “BARGAIN:”  H-D paid $108M, then put $20M Euro in escrow for Castiglioni when they “sold” it back; forgave $103.7M Euro’s lent to MV Augusta and wrote off $162.6M on the company.  Q3’10 will include more losses due to tax liabilities…does it ever end?

Photo courtesy of MV Agusta.

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As Thanksgiving approaches and families prepare to gather around the table to share turkey and stuffing, the Northwest Harley blog editorial team (me), decided it was time to look back at the announcements and decisions from the motor company that made news this past year for all of the wrong reasons.

This is my list of the top H-D turkeys over the last 18 months – clearly the ideas and business strategies didn’t live up to expectations or were so poorly executed that they flopped with the consumers. Between the economy, the shutdown of Buell, cuts in production, the credit crunch, a transition to a new non-motorcycle-riding CEO, management departures, adding a new CFO and Mango’s for distribution rights in India, to an abrupt about-face on MV Augusta… it’s been an ugly, yet busy year-and-a-half!  Here is a recap with a couple winning moments highlighted (Bold):

  • Harley-Davidson to cut jobs, ship fewer motorcycles (April 17, 2008)
  • Harley getting burned by loan crash (May 2, 2008)
  • Harley-Davidson to buy Italian motorcycle maker (July 11, 2008)
  • With acetylene, Harley-Davidson opens museum (July 14, 2008)
  • Harley-Davidson profits down 23 percent (July 17, 2008)
  • Harley-Davidson officially kick starts celebration (August 28, 2008)
  • Harley-Davidson profit down 37 percent (October 16, 2008)
  • Harley CEO Ziemer to retire in 2009 (December 15, 2008)
  • Harley-Davidson to cut 1,100 jobs, most in Milwaukee area (January 23, 2009)
  • Harley-Davidson sets $600M debt sale to fund finance arm (February 3, 2009)
  • Harley-Davidson sales down 13 percent in 2009 (March 5, 2009)
  • Harley-Davidson names Johnson Controls’ Wandell as next CEO (April 6, 2009)
  • Harley-Davidson reports sales, profit declines (April 16, 2009)
  • Harley-Davidson completes funding plans (May 1, 2009)
  • Harley-Davidson’s CFO resigns (May 4, 2009)
  • Buell plans to consolidate operations in East Troy (May 12, 2009)
  • Buell scraps East Troy consolidation plan (May 19, 2009)
  • Pennsylvania may offer aid to keep Harley in York (May 22, 2009)
  • Harley-Davidson to cut 1,000 more jobs; 480 in Milwaukee area (July 16, 2009)
  • Harley scouting four sites for new factory (August 19, 2009)
  • Buell to temporarily shut down East Troy plant (September 8, 2009)
  • Harley names Olin permanent CFO (September 18)
  • Harley-Davidson to end Buell line, cut 180 jobs (October 15, 2009)
  • In general it was a tough year for the motorcycle industry. H-D has made some pretty large missteps. They ranged from products that simply did not take off, to entire business plans that went awry. Clearly, some of the turkeys are bigger than others. In the face of this adversity, H-D management decided the future of the company is based in large part on cost takeouts.  I think the company should shift away from that thinking or  obtaining large union concessions and to focus on innovation and growth initiatives.  Mr. Wandell has to know the Strategic Inflection Point is real and that you cannot save your way out of a recession.  Growth based on innovation, new products and the emotional connection with customers will help turnaround the company.

    I know it’s never nice to point out the faults and failures of others, but I’m hopeful by bringing a spotlight on these H-D management will learn from the struggles. While this list is by no means exhaustive, it does include some of what I believe are the bigger flops.  As always, I welcome your comments.

    Photo courtesy of Exploratorium

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    wandell_letterQuestion — Does the CEO of a multi-billion dollar motorcycle company need to be a motorcycle enthusiast?

    The newly named Harley-Davidson CEO, Keith Wandell, sent a letter to the approx 1400 independent dealers opining his excitement in joining the motor company.  I was able to obtain a copy.  What did it say? But, more important what can we learn about this “motorcycle buff” who is set to grab the handle bars?

    The Good:

    1. He’s thrilled to be part of the “family”
    2. Achieved operational results in a global business (read – he’ll always be welcome in the finance dept!)
    3. Strong manufacturing experience
    4. Loves the brand and the Marketing department likely increased their ad budget for brand awareness
    5. Switching from “tee times” to “riding times”

    The Bad:

    1. Never used Harley products
    2. An old hand from another industry
    3. Comfortable with slash-n-burn restructuring…comments: “assure your long-term vitality and ours”
    4. Unclear track record in the often brand fickle consumer retail market
    5. Not a motorcycle rider, yet, but did “borrow” his brother’s motorcycle a couple decades ago and was “thrilled.”

    What do you think?  Do you want a CEO lurking in the design center or doing lunch with the bean counters?  Do you think a “motorcycle buff” is someone who polishes your chrome or a visionary in the motorcycle industry?

    The full text of the letter follows:

    Dear Dealer, 

    First things first. I want you to know how excited I am to be joining this legendary company. One thing I’ve admired over the years, while living here in Harley-Davidson’s hometown of Milwaukee, is the tremendous power of the brand, and the many ways it touches lives and makes emotional connections with customers from around the world. I have especially loved taking in the anniversary celebrations – three of them now in the time we’ve lived here in the Milwaukee area – not only because they are just plain fun, but also because everyone is welcome to join in and be a part of the celebration and the Harley-Davidson family. I’ve also gotten a great sense of the power of the brand over the years from my older brother Mike, an avid Harley rider and active member in his local HOG chapter in my home state of Ohio. Believe me when I say how honored and thrilled I am to be coming into this very special family. 

    I am looking forward tremendously to this opportunity to take what I’ve learned over the years about driving growth, developing and motivating talent and producing strong operational results in a global business, and together with you and the entire team at Harley-Davidson, help take a highly successful Harley-Davidson to an even brighter future. 

    You probably have a number of questions about the moves that Harley Davidson has announced. Over the coming weeks and months, one of my top priorities is to spend time with dealers, where we can talk face-to-face, I can listen and learn about your businesses, and you can learn more about me and my priorities and vision for this company. I also know you have questions about the leadership change at the top of Harley-Davidson Motor Company, where Matt Levatich has been named President and Chief Operating Officer, succeeding Jim McCaslin. I know that Jim has worked closely with the dealer network and will continue to do so. And those of you who know Matt, know him to be a great guy and a highly skilled leader. Look for a note from Matt this week about his new role and thoughts he has about working effectively with all of you on behalf of Harley-Davidson Motor Company. 

    For now, I’ll pose a few questions that I bet are on your mind: 

    – “What does this news of Keith’s appointment mean for me as a dealer?” 
    – What does Keith know about Harley-Davidson and why is the Company bringing in a newcomer to lead the organization?” 
    – “And who is this guy, ‘Wandell’?” 

    Let’s start with the first question. It is crystal clear to me through the many discussions I’ve had during the interview process that Harley-Davidson has the best motorcycle dealer network in the world, bar none. The nearly 1,400 independent Harley-Davidson dealers worldwide live and breathe Harley Davidson in your communities, and I am keenly aware that you are key to our mutual success. I also know that Harley-Davidson has a great group of highly motivated and talented employees who are incredibly passionate about their work and continue to dial it on every day. 

    My job is to help the team of dealers and our employees harness and enable all the energy and passion that’s evident in this enterprise, as we work together to reach our mutual full potential and success. As for what I know about Harley-Davidson and why the Company is bringing in a newcomer, my overarching priority is to assure your long-term vitality and ours. We will do that through new products, technologies, demographic markets and global markets, and at the same time through our ongoing strong commitment to traditional markets and core customers. I understand and appreciate the importance of growing in ways that are true to the Harley-Davidson culture – always remembering where we came from but always ready to explore new horizons. 

    One of the key ways that I am going to learn about the business is to get around the Company, meet with dealers as I mentioned, go to rallies and H.O.G. events where I can get to know our customers better and see as much as possible firsthand. I’m going listen carefully to dealers and employees, and get your perspectives about the business. I’m going to ask lots of questions. What do we do well? What can we do better to grow and serve our mutual customers well? Frankly, I can hardly wait to get started. 

    Now let me tell you a little bit more about myself. I’m a family guy who’s been married to my wife Deb for 27 years and have five children – two working, two in college and our 16-year-old daughter who is still at home with us here in Milwaukee. I love to play golf, although I’m pretty certain I will be switching some of my “tee times” to “riding time” in the very near future. 

    I’ve had a great 21-year career at Johnson Controls, which among other things is one of the world’s largest automotive suppliers. And I really wasn’t looking to make a move, when I got a call one day asking if I would be interested in interviewing for the CEO position at Harley-Davidson. Johnson Controls is an outstanding organization and I have had a very fulfilling career there. I can assure you I wouldn’t have given that call a minute’s consideration if it wasn’t Harley Davidson. I believe in building strong relationships and in the importance of developing talent. 

    You’ll find that I’m an open person and that I place a high priority on integrity, building teams that work well together and inspiring them to win. And no – I’m not a rider just yet, although I vividly recall the adrenaline rush and sense of unbridled freedom from the occasions that I “borrowed” my brother Mike’s motorcycle as a teenager. I’ve got my eye on a Screamin’ Eagle Softail and I’m looking to sign up for a Rider’s Edge course very soon. I’ll then be able to join Mike and all the other members of the extended Harley-Davidson family of riders – including dealers – out on the road. 

    Finally, just a note about the road ahead. We all know and appreciate that Harley-Davidson has a uniquely powerful brand and a record of market leadership. 

    While every business has its share of extra challenges right now – and I am acutely aware of what many of you are going through in this economy – I firmly believe Harley-Davidson has limitless possibilities to grow, develop and build on our remarkable record. By working together, I am confident that we will be a powerful combination and achieve great success in the years ahead. 

    We’ll be in touch again soon, 
    Keith

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