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Harley-Davidson and The Man – an opinion…

Ordinary riders doing extraordinary things

Harley-Davidson and The Man – an opinion…

So-

To begin with, let’s just say that as of this post, there has been much a-cluck surrounding America’s #1 motorcycle brand for weeks now.

For starters, the rumors that the Motor Company was pursuing the sale of Ducati has had everyone in the motosphere at their keyboards and on the edge of their seats now for over a month.
We here at Creative-Riding speculated that something else was in the works, as it is not uncommon for some market chatter to arise right before H-D announces something that’s guaranteed to make stocks bounce like a rubber ball.

Roughly this time last year there was a mysterious rumor that global investment firm KKR was interested in buying Harley-Davidson, not once- but twice. This rumor slightly bumped stocks both times just months before the Motor Company was fined $12M for selling Super Tuners that the EPA considered “cheat devices” (we won’t get into deiselgate and VW). Shortly thereafter, Harley-Davidson announced slumped sales and workforce reductions.

The latest Ducati/Audi news has made people forget a few things from the last year or so:

The massive ABS recall; the Super Tuner debacle and subsequent DOJ/EPA run-ins; the 2015 announcement for repurposing of capital to the marketing budget; the conspicuous ‘fuzzy sales numbers’ for 2016; the promise 50/100 bikes in 5/10 years; and  quietly, the announcement that project Livewire will produce extant results within the next 5 years…

The list goes on, but it seems like Harley-Davidson can’t catch a break  lately. Whether on the track, on Wall Street, or in the courtroom, the Motor Company has absorbed its fair share of blows over the last 4-5 years.
Aside from a consistent slide in sales and market share, the largest financial woe that H-D is working through currently is the $12million USD fine levied by the Department of Justice last year.

The monetary sentence was handed down after H-D was accused of selling 340,000 “super tuners” (beginning in 2008) that polluted at a much higher rate than Harley-Davidson’s EPA filings reported.  On top of the $12 million USD civil fine, there was an agreement to pay an additional $3 million USD for a regional project that would also reduce air pollution from wood-burning stoves.

Finally, a break in the clouds?

Under Obama, off-highway vehicles along with Wisconsin’s finest suffered the wrath of an emissions-weary EPA. With the Orange One at the helm, the political machine has again presented few breaks for motorcycles in general.
Milwaukee CEO Matt Levatich met with President Trump earlier this year to discuss the ill-fated TPP before the President announced the U.S.’s withdrawal from the compact. That meant high tariffs on H-D products abroad would likely bar entry into Asian markets – Harley-Davidson’s fastest growing segment. Bad news for a company with increasingly saggy domestic sales.

Shortly after his appointment by Trump, United States Trade Representative Robert Lighthizer announced a 100% tariff on European motorcycles of 50cc -500 cc displacement as part of a ban on U.S. beef abroad. That means nothing to Harley-Davidson, but marques like BMW, KTM, Piaggio/Vespa, Aprilia, Husqvarna, and others will likely feel their share of the pain here.

Despite the past transgressions on the two-wheeled community, recent developments in Washington may mean that finally Harley-Davidson may get a much needed reprieve from Uncle Sam in its time of crisis.
According to Reuters, U.S. Attorney General Jeff Sessions recently barred settlements that require donations to be made to parties other than those directly affected by  federal investigations.  This means that the Justice Department is likely to drop the $3 million additional fine “agreement” that was to be paid to the American Lung Association of the Northeast.

Paving the way toward the future

It’s unlikely that changes in administration and attitudes toward climate change will offset the situation enough for the Milwaukee-based Company to stop worrying about it’s financial destiny.
It’s not only The Man’s rules that are contributing to the company’s losses. Sales figures have been slipping a little each year, and the motorcycle industry as a whole has not seen the days of milk and honey since the lead up to the Great Recession.
The nation’s economic recovery hasn’t helped much when compounded with H-D’s own aging baby boomer market, money spent on Project Rushmore and Milwaukee Eight programs and continuing development in over-seas markets.

I believe I’m bastardizing Lee Iacocca here when I say, “You can sell an old man a young man’s bike, but you can’t sell a young man an old man’s bike.” It’s important for the Motor Company’s plan to include new riders and capture a new generation that increasingly doesn’t value driving much less riding.
I don’t have the answers, but I hope that Harley-Davidson can pull it together with their 10/100 plan and solid leadership.
Both for the sake of American jobs and the preservation of a rich heritage and history that spans more than a century…I really hope they pull it together.

Scott Jones’ XLCH