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Harley Cuts Workforce by 500 - Concentrates on Big, Expensive Models

exgman

exgman

Active member
A Wall Street Journal article in the 10/26 edition notes some big changes in progress at Harley-Davidson. New CEO will change strategy, drop small bike production, and concentrate on big, expensive, profitable bikes. Also, 500 workers will be cut, many of them overseas. Here's the headline from the paper:

Screen Shot 2020-10-26 at 9.08.04 AM.png
 
“...as [Harley] abandons plans to appeal to younger riders.”

Hard to believe that could be a winning strategy. But as my son and his friends often say, “isn’t Harley Davidson a clothing company that also sells some motorcycles?” So maybe H-D is just recognizing insurmountable market forces?
 
Well, the guys at the top have information we don't have to make this decision, but on the surface, it would appear they are dooming themselves.
 
In the last 20 years Harley seem to waste more money on projects that cost them more money than they make on them. If the want to make different a smaller bikes they going to have to make them more competitive instead of relying on there name to sell them like they do on the bike bikes.
 
ExGMan said:
. New CEO will change strategy, drop small bike production, and concentrate on big, expensive, profitable bikes.
Click to expand...

Probably a smart move as the small bikes have not done well for them.
Anyone know the number of Harley employees worldwide ?

Edit: Google says 5,600 employees globally.
 
Lee said:
Probably a smart move as the small bikes have not done well for them.
Anyone know the number of Harley employees worldwide ?

Edit: Google says 5,600 employees globally.
Click to expand...

I know their US plants are now limited to York, PA, Menomonee Falls & Tomahawk, WI. The Kansas City plant was closed in May 2019.
 
Regarding the reduction in personnel, here's what the article says:

"Harley’s workforce is getting smaller, too. The Milwaukee-based company has laid off 500 workers globally, or around 10% of its workforce, and, according to people familiar with the matter, that group included some on product teams developing new motorcycle models."

And here's a statement about the closing of dealerships:

"Mr. Zeitz aims to reduce the number of Harley dealership locations by at least 100 in the U.S., out of about 700 currently, said dealers and a Harley investor familiar with those plans. They said the company is paying dealers hundreds of thousands of dollars to close underperforming stores.

“They are weaning out dealerships that are just getting by,” said Happy Craig, an independent sales representative for Harley dealerships."
 
vark said:
“...as [Harley] abandons plans to appeal to younger riders.”

Hard to believe that could be a winning strategy. But as my son and his friends often say, “isn’t Harley Davidson a clothing company that also sells some motorcycles?” So maybe H-D is just recognizing insurmountable market forces?
Click to expand...

It's a finance company that sells clothing that advertises their motorcycles. Some time back I read an article that said their main source of income was the interest loans people took out to buy the bikes. Buy a $25K bike, finance it, they give you $20K when you trade it 2 years later for a $26K bike. They sell the used one for $24K, so you've paid principal and (mostly) interest on a ~$22K? loan while losing $4K, they sell 2 bikes and keep the income stream.
 
Investors seem to like Jochen. H-D stock has doubled in price since April 3 (From $15/share to $30 (close last Friday)).
 
wbrownell9 said:
It's a finance company that sells clothing that advertises their motorcycles. Some time back I read an article that said their main source of income was the interest loans people took out to buy the bikes. Buy a $25K bike, finance it, they give you $20K when you trade it 2 years later for a $26K bike. They sell the used one for $24K, so you've paid principal and (mostly) interest on a ~$22K? loan while losing $4K, they sell 2 bikes and keep the income stream.
Click to expand...

Not quite true. The main source of profit perhaps, but not income.

Right from HD's 2019 financial report.

In the twelve months ending in December 31, 2019 Harley had income of roughly $4.5 billion dollars from motorcycle and related products sales. For the same period they had roughly $780 million dollars in financial services revenue, or about 5.7 times the income from motorcycle sales. Now for the profit part of the equation. For 2019 the company had $289 mil in profit from motorcycle sales and $265 mil in profit from financial services. The financial end can be much more profitable percentage wise.
 
jgoertz said:
Investors seem to like Jochen. H-D stock has doubled in price since April 3 (From $15/share to $30 (close last Friday)).
Click to expand...

For the same period, comapre HOG to Ford, GM or Fiat-Chrysler. All, about the same.

Now, do I believe the stock market means anything about the financial health or viability of company? Not really.
 
ExGMan said:
And here's a statement about the closing of dealerships:

"Mr. Zeitz aims to reduce the number of Harley dealership locations by at least 100 in the U.S., out of about 700 currently, said dealers and a Harley investor familiar with those plans. They said the company is paying dealers hundreds of thousands of dollars to close underperforming stores.

“They are weaning out dealerships that are just getting by,” said Happy Craig, an independent sales representative for Harley dealerships."
Click to expand...

Part of "getting by" would seem to include having inventory to sell. HD announced a few months ago, in part due to production interruptions blamed upon the pandemic, most dealerships would not be receiving any new inventory the remainder of the calendar year. Here in Las Cruces, Barnett HD El Paso, once the largest dealer in the nation, closed its daughter store on Sept 30. After 30 years in business, Kimberly Barnett said, "The pandemic won."
 
36654 said:
For the same period, comapre HOG to Ford, GM or Fiat-Chrysler. All, about the same.

Now, do I believe the stock market means anything about the financial health or viability of company? Not really.
Click to expand...

Lose 75% of the stock value and get half of it back. It is a lot like our most recent surge in "job growth". Lose 22 million jobs. Then get half of the laid off workers back to work and call it job growth. Sheesh!
 
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