105th Celebration – Day 1

I noticed tents, generators, porta-potties, and the usual detritus of a bike “event” in the parking lot of my local H-D dealership this morning. Sure enough, it is Day 1 of the 105th Celebration.

I’ll start out by noting that in many respects, Harley has learned a lot since the 100th Celebration. and not only in terms of hiring an actual American rock star to headline their party. Some things I noticed:

1) Juneau Avenue. Last time thousands of bikers showed up at Harley’s headquarters, which is located in a decidedly downmarket part of the city, and found nothing to do. No chance of getting a peak inside. This time they actually are conducting tours of an annexe building (“Harley-Davidson University”) where they train technicians. Supposedly quite interesting. Still no getting inside the actual headquarters building, but thats not much of a loss, since its really just six floors of cube farm.

2) Signage: Ride around town, and there are actually signs on the freeway pointing you to various Harley-orientated facilities and events.

3) Length: For the 100th, the celebration lasted a whole week. Too much for most vendors, too much for most residents, and too much for most visitors. Four or five days is plenty.

4) Web Info.: Much, much better information available on the web than before.

One Swallow Does Not a Summer Make?

Financial blog Seeking Alpha reports some encouraging news from a survey of Harley dealers:

Also, promising was that 64% reported that business was up from a year ago

The survey sample size was pretty small (28 dealerships) – but the results are encouraing, to say the least, all the more since all of the dealers queried were in the US.

Biker Bookshelf

Anyone hoping to understand the success (and odd failure) of Harley-Davidson over the past thirty years would do well to read Brock Yates Outlaw Machine.

I first encountered Brock Yates’ writing in the pages of Car & Driver – and found him entertaining, informative, and sometimes provocative. Yates book about Harley-Davidson, the company, and the place it’s machines have in American history and culture is (in my experience) without equal. As but one example, his vignette on the notorious 1947 Hollister “bike riot” and the accuracy of photographs in depicting “reality” is certainly thought provoking. Published in 1999 the book provides a great thumbnail history of Harley-Davidson.

On a somewhat darker note, former Hell’s Angel Motorcycle Club President Ralph “Sonny” Barger compiled a volume of biker stories – Ridin’ High, Livin’ Free. I’d not really recommend this book on its literary merits. The prose is turgid, at best, and most of the characters come across (in my eyes at least) as unpleasant. With that said, the book does have merit in helping understand the biker point of view.

One book that often gets mentioned in online discussions of “biker literature” is Zen and the Art of Motorcycle Maintenance – a citation that always makes me smile, since it is usually pretty obvious that the person making the recommendation has never read the book. While the book does have some descriptions of a motorcycle trip, it really has little to do with either Zen or motorcycle maintenance. Now almost thirty five years old, I’d say that while the concepts of quality and metaphysics explored in the book are timeless, the prose and style have not held up particularly well.

Harley Marketing Supremo Hits the Road

Harley’s VP of Marketing, the Dickensian-named Marc-Hans Richer, is sharing his experiences on The Ride Home on his personal blog on the HD Website.

From the photos it looks like Marc-Hans is riding a 2009 model VRSCF “Muscle”, equipped with saddlebags (and copious amounts of Mexican dust.)

I’ll be honest – reaction among many existing V-Rod owners to the introduction of the plastic-bodied Muscle has been less than positive. And, if looking for culprits to blame for the egregious (if not to say laughable) name for the bike, Mr. Richer ranks pretty high on the list of suspects. But if so, then at least he’s putting his butt, literally, on the line by riding the thing the 2000 or so miles from Mexico City to Milwaukee.

The blog will make interesting reading over the next few days. One might glean clues of Harley’s future marketing plans from such gems as

without even scratching the surface of the passions for Harley-Davidson in India and China. I hope to ride there one day too, and hang out with people as cool as the Mexicans I met

although I’m not sure his description of

two hombres who were leaving Friday to ride to Milwaukee – on Sportsters!

is what I call a ringing endorsement of either the comfort or reliability of the oldest model in the Harley lineup.

Stay tuned for more…..

Harley to 105th Visitors: Rumble Not Roar

Concerned about too many loud bikes has prompted Harley-Davidson to work with local communities to encourage bikers to to “cruise politely” through neighborhood streets during the upcoming 105th Celebration.

According to a story in today’s Milwaukee Journal-Sentinel the company has printed up signs welcoming riders, but also “Thanks for the Rumble, Not the Roar” and “Throttle Down in Town.” These have been distributed in neighborhoods including Story Hill, near Miller Park. A billboard at Wisconsin Avenue and 45th Street says “Please Don’t Rattle the Cages.”

Actually, Harley has been concerned for some years about the level of noise created by some bikers.

In 2004, Harley-Davidson started urging dealers to stop selling modifications to mufflers to make their bikes noisier, using so-called straight pipes. In Wisconsin, they’re against the law. And in 2006, the company changed the bikes’ design to make popping on a loud muffler more difficult

Harley Recalls some 2008 Model Bikes

According to a news story at US Recall News, Harley is recalling almost 50,000 2008 model bikes due to a problem with fuel filter housings cracking. They include FLHP, FLHPE, FLHR, FLHRC, FLHRSE4, FLHT, FLHTC, FLHTCU, FLHTCUSE3, FLHTP, FLHX, and FLTR models – Road Kings and Electra Glides mostly. The problem can cause loss of fuel pressure and possible stalling. Harley dealers will replace faulty fuel filter shells at no charge.

MV Agusta: What is Harley thinking?

The rumors were flying thick and fast for over a month before Harley announced its plans to buy Italian sportbike maker MV Agusta. It’s hard to keep any such acquisition totally secret, but H-D does its best.

The question now, is: What does H-D plan to do with its new acquisition. The stock answer, rolled out in front of analysts and investors by CEO Jim Zeimer:

“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,

Whatever that means. Ignoring the fluff about customers’ dreams and enhancing positions, the only word in that statement that is important is “Europe.”

Europe has been the one bright spot in Harley’s sales figures over the past couple of years. While US sales have stalled, or actually declined, European sales have increased at double-digit rates. To pull just some numbers from H-D’s financials: In 2004, Second quarter US sales were $1.06 billion, International were $264 million. Just four years later, and US sales have actually declined to $1.02 billion, while International has more than doubled to $550 million. International is on track to make up more than a third of Harley’s revenue.

Now, “International” means more than Europe. But Asia/Pacific and Latin America are, at best, opportunities for the future. Regulatory and cultural forces make it unlikely that H-D will ever have much of a presence in Japan. And Harley only recently opened its first dealerships in China. So – if there are profits to be made, they are several years down the road. Executives, however, live and die by next quarter’s results. So they need to do something now.

What did H-D get for its $108 million? MV Agusta sold about 5,000 bikes in 2007. Generally pricing is at the upper end of the market (a spot Harley is comfortable with) – with the MV Agusta F4 RR312 selling for about $28,000. But compared with the Ducati 1098S, which sells for $7,000 less – and is in many ways a superior bike – then you begin to see some of the problems Harley is facing. Harley already has a sportbike maker (Buell) that is a market laggard that loses money. Why did they think they needed another one?

Certainly the Agusta name has a cachet among European riders that Buell will probably never achieve. And many of Agusta’s problems in the past could be traced to quality and design issues that Harley can apply engineering resources to fix.

But will this be enough to turn Agusta into a source of revenue and profit growth for the Motor Company?

Harley has appointed Matt Levatich as Managing Director. Previously Levatich had been VP of Parts & Accessories and CVO, and before that VP of Materials Management. Important jobs, definitely, but quite different from being the MD of a European sportbike maker.

Harley losing market share – On purpose?

Financial blogger Saj Karsan, writing at Seeking Alpha analyzes Harley CEO Jim Zeimer’s comments during the most recent conference call.

Karsan believes that Zeimer’s comments indicate that Harley has taken a different approach to such competitors as BMW, Honda. etc.

They have cut prices and offered financing in order to clear their inventory. Rather than follow suit, management at Harley believes they are taking the better long term approach for their premium product,

Karsan’s blog includes an interesting graph that shows Harley’s US market share dropping from approx. 49% in 2004 to just over 44% in the first six months of this year.

By refusing to cut prices, Harley is looking at the long term value of the brand (to say nothing of customer’s bikes.) But as Karsan says at the end of his article:

Whether this was the right decision is open to debate, but clearly HOG is focused on maintaining its image as a premium product, and is willing to forego a few extra bucks to do so.

PTO – Takin’ Care of Business

If there is one aspect of Harley culture that seems strangely absent from the Museum it would be any reference whatsoever to the production acvitivities of the Company today. There are mentions of the factories in Pennsylvania and Kansas City, but very little information about how the bikes are actually produced.

For Milwaukee visitors who are interested in learning a little more about how their bikes are made, the Powertrain Operations facility on West Capitol Drive is well worth a visit. Tours there are free(!) and are conducted most weekdays (tours are suspended during maintenance schedules and model changeover periods.)

The Capitol Drive facility was purchased by Harley from A.O. Smith, which had used the factory during WWII for the manufacture of aircraft propellor blades. Nowadays the factory makes the company’s Evolution engines (the V-Rod’s Revolution is made in Kansas City.) And while not widely known, PTO is the only manufacturing still performed by Harley in the Milwaukee area.

You won’t see too many finished bikes at Capitol Drive (unless you count the employee ones in the parking lot.) The tour takes about an hour, with tickets distributed on a “first come, first served basis. If you plan on taking the tour during the 105th – it would be well advised to check on ticket availability first, as “free” is going to be one of the best deals in town that week.