Posted on 04/27/2010 11:50:48 AM PDT by BraveMan
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."
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.
were.... even much celebrated dealerships have been closed.
but can you name the ONE part made in france?
1984
It’s not employee owned, it’s publicly traded.
Check again. Bloor made some serious cuts in the Triumph labor pool, and like ALL brands, sales are seriously down since 2008.
The reason that they haven’t used the revolution engine in more bikes is that because bikers hate it. I wouldn’t touch one if it was free and came complete with free gas and a babe to put on the back. Simply, it has absolutely no business calling itself a Harley. It’s not, and it never will be. I’ve come to understand that those who don’t get it, simply never will.
I just got home about an hour ago, and twisting the throttle on the way home, I can’t help but think that this is how my father felt when he rode his first Harley in the 1940’s. Every time I ride, my Harley takes me there, and while I miss my father, it’s something we share even though he’s passed, and I haven’t yet.
I like Japanese bikes, and I’ve owned a bunch, but in all honesty, no import can take me to that place where my Harley can. Call it nostalgia, or call it whatever, it’s special, and no import has it.
Not really. That looks more like a classic cruiser. I prefer the feel of a naked sports bike with the upright seating position, inverted forks and mono-shock rear, pegs and controls in the middle. I like the aggressive street tires so you can really heel it over in the twisties. Even with all that just right, you are ready for a break about 50 to 100 miles. The cruisers with forward controls, foot boards and comfortable seats are better for long trips.
Compared to that mine was pretty primitive, but a pure workhorse.
Not exactly. They are doing extremely well allowing for market conditions - and more importantly, new and young riders are interested in their product.
Cover of HOG issue 001:
A man with no helmet, wearing an unarmored jacket, unarmored (and probably fashion weight) jeans, improper boots, no gloves, not even eye protection - ostensibly riding a Harley. But hey, he looks cool, right?
I call BULLSHIT on your assertion.
Your venom is kinda transparent, give it a rest, and wipe the drool off your chin.
We get it, you hate HD.
And nobody cares that you do.
Oh, it should also be noted that many of the problems Harleys (and Buells) had/have are due to the fact that traditional Harley engines generate a lot of vibration for no good engineering purpose.
There is a very good engineering purpose: Simple rugged reliability. Harley engines vibrate like a... well like a Harley because of the single crank pin. Smoother running Jap bikes have staggered crank pins that add complexity and weight, and reduce strength of the crank.
Since it takes 720 deg of crank rotation per cylinder to complete a four stroke cycle, a twin cylinder engine would run the smoothest if it fired every 360 deg. This is accomplished with the staggered pin crank of the Jap bikes.
The Harley sound is because the cylinders are 45 deg apart while the pistons are attached to a single point of the crank. With the single crank pin of a Harley and 45 deg cylinder separation, the engine fires alternately between a crank rotation of 315 deg and 405 deg.
This single pin design not only gives the characteristic Harley sound, it keeps it in line with their simple rugged design that includes air cooling and push rods. It's essentially the same engine as the Knucklehead of 1936. Don't fix what isn't broken!
Everything about the engine sticks to that principle. This vibration leads to both equipment damage and (this gets overlooked by a lot of riders) physical long-term damage to the rider
Earth to Spktyr: motorcycles are hazardous to your health. If you are that worried about it, maybe you should stick to something with four wheels.
and I have yet to see a Harley mounting system that successfully prevents of the vibration from being transmitted to the frame.
I've never had a motorcycle that could prevent vibration from being transmitted to the frame. Harley has two mounting systems for their big twins: rubber mount and rigid mount. The rigid mounted bikes (such as on my Softail) use the counterbalanced 96B engine and vibration is minimal. The rubber mounted ones (like the Dyna) use the 96A non-counterbalanced engine, and you can't even use the rear view mirrors while idling.
Why doesn't Harley just rubber mount a 96B so dainty little Jap riders don't hurt their hands? Maybe because Harley builds a bike for a certain market, and that market apparently wants a bit of vibration. I know someone that bought a Dyna a few months after I bought a Softail and when I asked him why a Dyna over the Softail, the first thing he said is he likes how Dynas vibrate. Go figure.
V-Twins don’t have to shake like paint mixers. (Case in point, my Honda Pacific Coast, an 800cc V-Twin that’s so smooth many people can’t tell when it’s running.)
I think Harley knows a little more about selling bikes than you do. They have the largest share of the heavyweight market (750cc and up) in the world. They sell 50% of the heavyweights in the US and 33% in the world.
If Harley is so backward, then why do the Jap brands copy them? Why did Yamaha go from liquid cooled 90 deg OHC V-twins and V4s in their cruisers to air cooled 48 deg pushrod V-twins? Could it be because Harley was cleaning their clock?
Or how about when Honda went out to make a factory chopper (the Fury), why did they chose their single pin 1300 cc engine instead of their 1800 staggered pin engine? Maybe so it would vibrate and sound more like a Harley? Hell, they even tried pretty hard to hide the radiator.
In fact, Harley got Porsche to design them one - the Revolution engine
The Revolution is based on the VR1000, and like that engine, Porsche didn't "design" the Revolution anymore then Lamborghini designed the Dodge Viper 488. Porsche has been a consultant of Harley's racing efforts for quite some time.
but they don’t use that engine in most of their bikes; instead they keep trying to get yet more mileage out of that same old V-Twin that has its roots back in the Silent Gray Fellow bike of the nineteen-teens.
They get so much mileage from their old school V-twins because that's what the people want. There are already a slew of liquid cooled OHC motorcycles out there. As Harley sales show, not everyone wants a Jap like cookie cutter bike.
Odd. This is the exact opposite of my experience. Old and young alike flock to my Harley. Not so with my Honda RC51. Young people like Harley's so much it used to piss me off when I could only afford Kawasakis and Suzukis. So much so that I went through an anti-Harley period for a while. Then I rented one in Arizona to see what it was all about. I bought one four months later.
Harley desperately needs to pull their head out of 1947
That would be 1936. The Panhead came out in 1947, but it was the Knucklehead of 1936 that debuted the same engine architecture (air cooled 45 deg OHV V-twin) that exists on Harley's to this day.
and get with the program if they want to survive - in hard economic times, nobody will shell out to buy a ‘lifestyle’, but if you have solid competitive motorcycles as a product people will buy it.
Who has the largest share of heavyweight motorcycle market in the world? Oh yes, that would be Harley by a wide margin. And here's a news flash: we're in a recession. That's why Harley is having trouble. What's next, are you going to give #1 auto manufacturer Toyota advice on what cars to build because they posted their first loss (ever or in in a really long time?) during this recession?
The occasional new Evolution? Pretty impressive considering the Twin Cam replaced the Evolution in 1999.
Holy Crap! That guy looks like a heavy set version of my dentist. I kid you not! lol.
Looks like in frame 2 he locked up the front. Maybe Harley should give advanced riding lessons as well.
V-Rod fuel injectors?
LOL. No amount of safety gear will make riding motorcycles safe. You sound like a guy, that while banging a prostitute in Thailand, is yelling at a guy across the room to wear a condom.
The Evo is still in production today, courtesy of S&S and others. Even Harley has acknowledged that S&S
Also, regarding your commentary on me hating everything American - not so. I’m not anti-American (in fact, I’m about to buy a Ford to replace a Nissan) but I’m anti-stupid.
If you want most of the ‘features’ of a Harley, but don’t want the bullshit or the ‘lifestyle’, go look at a Polaris/Victory - which, by the way, at last count was made with MORE American made parts than the Harleys are. They also seem to have discovered the radical concept of a counterbalancer, so that carpal tunnel doesn’t keep their owners from riding them as long as they draw breath. (Carpal Tunnel Syndrome eventually means ‘you can’t ride any more, ever.’ Thanks, I’ll pass.)
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