Harley-Davidson may leave Wisconsin if costs don't fall

By DINESH RAMDE (AP) – April 29, 2010

MILWAUKEE — Motorcycle maker Harley-Davidson Inc. warned its employees Thursday it could move its Wisconsin manufacturing operations to another U.S. state if it can't cut millions of dollars in costs.

A recent analysis found a number of significant "cost gaps" that must be filled for the company to remain competitive, Harley spokesman Bob Klein said. The largest gaps involved labor costs and scheduling flexibility, Klein said.

"We'll be talking with the unions about how to close those competitive gaps," he said.

One of Harley's largest unions, the Local 2-209 chapter of the United Steelworkers International Union, did not immediately return messages seeking comment.

The Wisconsin plants at risk include its powertrain operations in Milwaukee. Those operations, with about 1,320 employees, are already being consolidated, and company officials have said the move would result in an unspecified number of job cuts.

The other Wisconsin plant, in Tomahawk, makes components including motorcycle windshields. It has about 375 workers, Klein said.

Even while holding discussions with union leaders, the company plans to look at sites in other states, Klein said. He declined to say which states, or how many sites, were under consideration.

The announcement was first reported by the Milwaukee Journal Sentinel.

Milwaukee Mayor Tom Barrett pledged in a statement to do everything he could "to ensure Harley-Davidson remains a proud Wisconsin company for generations to come."

The Milwaukee-based company has been struggling with sluggish sales, particularly of its high-end bikes. It reported last week that its first-quarter profit plunged 72 percent from the same period last year, while revenue dropped 19 percent. Retail sales of its heavyweight motorcycles fell more than 18 percent worldwide, the company said, with sales in the U.S. falling by nearly a quarter.

In December, Harley and its union agreed to a seven-year contract at its main motorcycle assembly plant in York, Pa. Under that contract, Harley would shut down one of two factories there and lay off nearly half the unionized work force of about 1,950 employees.

Harley-Davidson has many factors working against it in the U.S., including an aging customer base and growing competition from rivals. The company has long said it is focusing more attention and investment in markets overseas, where it has more room for growth.

Harley shares rose 83 cents, or 2.4 percent, to close at $35 on Thursday. Shares have traded in a 52-week range of $14.99 to $36.13.

ABATE of Florida, Inc. Welcomes
May 2010 as Motorcycle Safety and Awareness Month

Deland, FL, April 29, 2010 – ABATE of Florida, Inc., Florida’s largest Motorcyclists’ Rights Organization (MRO), is continually trying to educate the motoring public of motorcycles’ presence on the thousands of miles making up Florida’s roadways.  Many of ABATE of Florida’s 32 chapters will be conducting additional functions throughout May, stepping up their efforts during Motorcycle Safety and Awareness month; educating the public that motorcycles are on the same roads as other Florida motorists.

The most recent statistics released from the Florida Department of Highway Safety and Motor Vehicles show that as of 2008, there were 649,210 motorcycle registrations in FL, an increase of 124% since 2000.  Luckily, Florida deaths per motorcycles registered have been on the decrease in recent years, but we ask that this fact does not minimize the attentiveness of those we share the road with.

We further ask that drivers of other vehicles please remember that motorcycles have the same rights as cars and trucks.  Distracted driving has become a conversational topic across the nation lately, and Florida is no exception.  Drivers paying extra attention when they see or hear a motorcycle may save a life.

Please offer motorcycles more following distance when driving nearby them, and never attempt to occupy the same lane of traffic as a motorcycle.

As in many years past, ABATE of Florida, Inc. has asked the Governor of Florida to declare May as the month dedicated to motorcyclists, in a combined effort to have motorcycle safety and awareness recognized nation-wide.  Recognizing the seriousness, Governor Crist has signed a Proclamation stating May 2010 as Motorcycle Safety and Awareness month throughout Florida.  Many of our chapters have followed suit with their local elected officials; the signed Proclamations are available on ABATE of Florida’s website at www.ABATEFlorida.com.

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With almost 8,000 members, ABATE of Florida, Inc. is Florida’s largest Motorcyclists’ Rights Organization, and the fourth largest nationwide.  ABATE of Florida members consist of all types of motorcyclists.  Our missions include educating the public about motorcycle awareness and continuing to fight in Tallahassee for the rights of every motorcyclist and the public in general.  To aid in these ends, we have an exclusive lobbyist and have founded the Motorcycle Safety and Awareness Program, both with the intentions to help make the roads safer for everyone. 

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Contact:
David “Lockdown” Rich
Public Relations Trustee, ABATE of Florida, Inc.
386.490.4821   FAX: 396.490.4482
statepr@abateflorida.com
www.ABATEFlorida.com

Wandell slashes costs, cuts jobs in effort to save motorcycle firm

Having climbed aboard an American icon at one of the most difficult points in its history, Keith Wandell has been driven by an overriding thought:

Don't let Harley-Davidson become General Motors.

Now, nearly a year into the job, Harley's chief executive officer has cut millions of dollars in costs, eliminated thousands of jobs and brought a sense of urgency to the world's largest maker of heavyweight motorcycles.

Some of the changes, particularly the job cuts, have been painful. But in his first extensive interview since taking the reins, Wandell told the Journal Sentinel last week that the actions he took were necessary and designed to keep Harley relevant and profitable in the long term.

"There is not one of us who wakes up in the morning and says, 'Wow, this is another opportunity to ruin someone's life,' " Wandell said. ". . .  But you cannot turn your head and look the other way when there are issues that are going to ruin the company. I wish we could be totally clear about that."

Given that the global economy was in a tailspin a year ago, Wandell was a logical choice for Harley's top spot. In his previous job as president and chief operating officer at Johnson Controls Inc., he was responsible for controlling costs and answering to Wall Street. He had testified in Congress, along with Detroit auto executives, when the automakers were seeking federal loans to keep them out of bankruptcy.

So after joining Harley-Davidson, he absolutely did not want the 107-year-old Milwaukee manufacturer to behave like General Motors. And he was taken aback by Harley employees who worried that his experience at an auto-industry supplier such as Johnson Controls might be a bad thing - a close tie to an industry that had fallen into deep trouble.

Look in a mirror, he told them - Harley was already so far down that same path "it wasn't even funny."

"We had too many dealerships, there was too much inventory and we had driven down the residual value of our products. Doesn't all of that sound familiar?" he told the Journal Sentinel.

During the past 11 months, though, "Everything we have done has been just the opposite of that," he said.

Stock analysts have praised Wandell for showing aggressive leadership.

"You only have to look to the auto industry for evidence that if you don't make changes early enough, it could be really bad for the company and the employees, long term," said analyst Robin Diedrich with Edward Jones Co.

Since January 2009, Harley has announced the closing of two factories and a distribution center. The company also has announced cuts totaling about 25% of its workforce - at least 2,700 hourly workers and 840 administrative employees.

The labor union at its plant in York, Pa., grudgingly accepted a seven-year contract that eliminated more than half of 1,900 jobs but kept the York factory from being relocated to Kentucky. Work has been outsourced so that Harley can focus on its core competencies, such as making motorcycle frames and engines, and painting and assembling bikes.

"We are never going to be as efficient or as competitive as outside suppliers" on other things, said Wandell, who took over at Harley last May 1.

Harley's expansion plan in Milwaukee was placed on hold, largely due to the economy. The plant on Capitol Drive is closing, with the work sent to the Pilgrim Road factory, and a distribution center in Franklin is closing and being outsourced.

Buell Motorcycle Co., an East Troy bike manufacturer that won accolades on the race track but was not profitable for Harley, its owner, was eliminated during Wandell's first six months.

"We were selling seven, eight, maybe 10 (Buell) bikes a day worldwide," Wandell said. "This was a business that had been looked at repeatedly by the board of directors. But what was different this time was the depth of the recession."

Harley decided to sell its MV Agusta motorcycle division, which it had acquired in 2008 for $109 million but did not live up to expectations.

"We were allocating our limited resources to different brands and were starving the Harley-Davidson brand," Wandell said.

All told, Harley expects its restructuring will cost $430 million to $460 million and will lead to annual savings of $240 million to $260 million when finished. For 2010 alone, restructuring will save $135 million to $155 million.

"I don't really have any misgivings," Wandell said. "That is not meant to be self-serving, but I can honestly look you in the eye and say I don't know that I would have done anything a whole lot differently."

Shipments falling

Harley said shipments of its bikes to dealers in 2009 fell 27% to 223,023. For 2010, it expects shipments to fall another 5% to 10%, to between 201,000 and 212,000 motorcycles. That's a big drop from 2007, when the company shipped about 350,000 motorcycles.

Going forward, Harley-Davidson will be a smaller but more focused operation, said Diedrich, the Edward Jones analyst.

Like many companies, it needed to shed some pounds, according to analyst Ned Douthat with Ockham Research. Things would have been far worse if Wandell had not taken aggressive actions, he said.

This will be a challenging year for Harley on many fronts, given lingering uncertainty in the economy and cautious consumer spending. Still, there have been encouraging signs such as a sales increase in Europe and cost savings from restructuring.

The company has launched several new motorcycles, including a three-wheeler aimed at older riders and a macho Sportster aimed at a younger crowd but with styling from the 1940s.

The latter has become one of Harley's hottest-selling bikes, along with another Sportster where more than half of the buyers are under age 35 - a pivotal demographic as the company attempts to lure younger riders.

Harley knows it must get better and faster at developing new products while not offending loyal customers who have treated the brand with reverence.

"We are not naïve about that," Wandell said. "I believe that as long as we don't change those products that our customers love, they are OK with us going outside of the boundaries a little bit to bring new riders in."

The company can't afford to start 10 product design projects and hope that three of them reach the marketplace, Wandell said. There's going to be a "rifle shot" approach to new ideas rather than a wasteful "shotgun" approach.

Looking ahead, his mettle will be tested by contract negotiations with the United Steelworkers in Milwaukee and Kansas City.

It's a difficult time for organized labor, said Mike Masik, president of United Steelworkers Local 2-209 in Milwaukee.

"Right now, it doesn't seem to matter if you are hourly or salary, everybody is getting banged," he said.

Putting on the miles

Meantime, Wandell is answering critics who say he does not have enough grease under his fingernails to understand the Harley culture - since becoming CEO, he has put more than 5,000 miles on his Road King bike, including a trip to the Sturgis, S.D., motorcycle rally last summer.

Not long ago, Harley could sell every bike it manufactured and then some. As recently as 2006 it had a profit of $1 billion, compared with a $55 million loss in 2009.

The boom times ended in the recession, but Wandell is determined to restore the critical balance between supply and demand, keeping Harleys as hot items in the marketplace.

"We have to find ways to make sure this company is as great going forward as it has been in the past. And those ways are different now than they were 10 or 15 years ago," he said.
Deep heritage

Wandell is aware that Harley's heritage runs deep and that its brand has incredible staying power, partly because previous management had not tinkered too much with the winning formula. He is the first Harley CEO to come from outside the company since at least 1986, when the company became publicly traded.

But he is not going to let tradition get in the way of setting a new course for the company, one that includes cutting costs, attracting younger customers and strengthening the value of the Harley brand in non-traditional ways.

"I give it everything I got. And I honestly believe in what we are doing," he said. "I am probably the last guy in the room who wants to see us imitate what the auto industry has done."
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Wandell's moves

• Shut down Buell Motorcycle Co., a specialty sports bike manufacturer based in East Troy.

• Decided to sell Harley's MV Agusta motorcycle division, which it had acquired in 2008 for $109 million.

Since January 2009: Harley has announced the closing of two factories and a distribution center and announced cuts totaling about 25% of its workforce.

(reprinted from JSOnline)

Motorcycle deaths unaccountably plunge after long rise

After rising steadily for nearly a dozen years to set a record in 2008, the number of people killed nationally in motorcycle accidents dropped dramatically last year, according to a report issued Thursday.

The report by the Governors Highway Safety Association found that fatal crashes declined nearly 16 percent in the first nine months of 2009, compared with the same period the year before.

There was no ready explanation for the drop, a year after the 5,290 motorcycle fatalities set a record. The speculation included that the economy was keeping motorcyclists off the road, that a 42 percent drop in new motorcycle sales last year resulted in fewer novice riders and that publicity about deaths had heightened the awareness of both motorcyclists and motorists.

The number of fatalities dropped 38 percent in the District, by 26 percent in Maryland and by 13 percent in Virginia, the report said.

"It's good news that fatalities are decreasing, but I really don't have a clue as to why," said Samir Ahmed, an Oklahoma State University expert who is leading a four-year, $3 million research project on the cause of motorcycle accidents. "I really don't see anything that would cause that, unless people are just not riding."

During the nine-month period of the comparison, the District and 38 states reported a drop in motorcycle deaths, and 12 states recorded an increase. California had 133 fewer deaths, Florida had 111 fewer and Ohio had 48 fewer. Only two states -- Hawaii and Rhode Island -- had double-digit increases. Once numbers for the final three months of 2009 are factored in, the report projects, the annual fatality decline will be 10 percent.

Ahmed cautioned against reading too much into data from a nine-month period.

"The fact that there was a blip from one year to the next won't really tell us that much," he said. "The upward trend has been going on for 12 years. Show me several years of downward, and then we have something."

Making choices

In soliciting the data in the report, the GHSA also asked state safety agencies to articulate the reasons for the decline.

Several responses pointed to the economy and underscored that a significant portion of motorcycling is for recreation rather than transportation.

"If you have a choice between paying your mortgage or your motorcycle insurance or payment, go with the mortgage," one respondent said.

Others suggested that high fuel prices and the independent image of motorcyclists had previously caused a temporary surge in ridership.

(reprinted from the Washington Post)

Harley-Davidson changing rally locations, leaving Rapid City

Rapid City will not host Harley-Davidson during the 2010 Sturgis motorcycle rally.

After more than 20 years, the motorcycle company is moving its corporate presence from its usual location at Rushmore Plaza Civic Center to Sturgis, according Brian Maliski, the civic center’s general manager.

Harley-Davidson is under new management and has refocused its vision, Maliski said. Company officials want to be closer to their customers by bringing the company to them instead of having the customers come to the company, according to Maliski.

“My understanding was that the new Harley CEO wanted to be in Sturgis itself,” Maliski said.

A phone call to Harley-Davidson corporate headquarters was not returned Sunday.

The company told the civic center administration after last year’s rally that 2010 would be different, according to Jayne Kraemer, civic center assistant general manager. On Thursday, Harley-Davidson told the civic center it would be moving to Sturgis this year. The company is considering a site near the Sturgis Community Center, according to Kraemer.

Civic center officials say the move will cost them about $31,000, since Harley-Davidson is a mid-level vendor. (The Rapid City Rush and the Black Hills Stock Show & Rodeo are the civic center’s top vendors.)

“Financially, it’s not going to be a travesty to the civic center, but Harley has been one of our partners for over 20 years, and when you lose that, it’s sad,” Maliski said.

In previous shows, Harley-Davidson has showcased new models, parts and accessories at the civic center during the Sturgis rally.

In its heyday, Harley-Davidson had a large presence -- spending about $100,000 per show and bringing in as many people -- but the company started shrinking its show in 2005 and pushed it entirely outside the civic center building last year.

Maliski said the civic center lost its advantage with the company when it moved outside. With 4,000 parking spaces, the civic center excels at indoor events with about a half-million square feet of inside space, Maliski said.

The local Harley dealership, Black Hills Harley-Davidson, was not a part of the discussion between corporate headquarters and the civic center, according to Terry Rymer, general manager of the local store. He said the dealership set up at the civic center each year so customers could buy Harley-Davidson products; the corporate show only displayed merchandise but did not sell it.

As a franchise, Black Hills Harley-Davidson is free to make its own decisions about its rally venues. Rymer said his store hasn’t formalized plans for this year’s rally yet.

(reprinted from the Rapid City Journal)