Harley says it must cut $54 million in local manufacturing costs - Chicagoland Sportbikes
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post #1 of 21 (permalink) Old 04-30-2010, 09:09 AM Thread Starter
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Harley says it must cut $54 million in local manufacturing costs

Not that they have produced a bike in Wisconsin for some time now...interesting where this company will be in 3-5 years. Wait in line and over MSRP gravy days will never come back.


Harley says it must cut $54 million in local manufacturing costs

Determined to slash manufacturing costs, Harley-Davidson Inc. says its Wisconsin factories could be in jeopardy if belt-tightening measures aren't successful.

Would the iconic company really stop making "Milwaukee Iron" in factories not far from the shed where Bill Harley and Arthur Davidson built their first motorcycles in 1903?

Thursday, Harley executives said there were significant "cost gaps" that must be filled at the plants in Menomonee Falls and Tomahawk that, combined, employ more than 1,400 people.

Employees were told that Harley wants to slash $54 million a year in costs from its manufacturing here.

"Our preference is to keep the production operations in Wisconsin, but as part of due diligence we will also explore alternate U.S. sites" if necessary, company spokesman Bob Klein told the Journal Sentinel.

Union officials worry that Harley is following the same strategy it used last year in York, Pa., where about half of the production employees lost their jobs as the result of cost reductions. Under duress, the International Association of Machinists accepted a seven-year contract in York that eliminated nearly 1,000 jobs but kept the York factory from being moved to Kentucky.

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 restructuring has come as sales and profits have plummeted. As recently as 2006, Harley had a profit of $1 billion, compared with a $55 million loss in 2009.

In Wisconsin, "We are looking at labor costs and operational flexibility as some of the key areas where cost gaps exist," Klein said.

The company's contract with its largest union here, the United Steelworkers, expires March 31, 2012. Management has not asked to reopen the contract, but union members say they could be asked to accept concessions or face plant closures and the loss of work to nonunion plants.

"If you look at the York contract, the company went after health care benefits and work rule changes. It was a pretty crappy deal," said Mike Masik, president of Steelworkers Local 2-209 in Milwaukee....



http://www.jsonline.com/business/92418964.html

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post #2 of 21 (permalink) Old 04-30-2010, 09:22 AM
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Ohhh boo hooo. It was a pretty crappy deal for the union.....go fuck yourself. Get fired, or take a pay cut, I don't understand why everyone else in the free world understands this except unions.

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post #3 of 21 (permalink) Old 04-30-2010, 09:23 AM
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so is some of this a result of the new health care bill?

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post #4 of 21 (permalink) Old 04-30-2010, 09:31 AM
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As a minor stockholder, I'm not surprised. There are a lot of factors that put HD in this position. They're holding a lot of bad paper from customers who financed and defaulted. Too bad no one has crystal balls...hindsight is 20-20 and they should never have gone into the loan business....AND...Just like GM and Chrysler, fat union contarcts are weighing heavily in this economy.
This company has survived 2 world wars and the great depression and being owned as a loss leader write off by AMF. I expect it can survive now but it's going to take a few painful adjustments...including a hit to stock value. At least they're not asking the government for a bailout (yet).

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post #5 of 21 (permalink) Old 04-30-2010, 09:37 AM
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I imagine blowing 3 times that to kill off a brand didn't help either
fuck Harley Davidson.
I hope that shitty move does hurt them as a company.
Shame the reality is they are just using it as a bargaining chip to screw over all those below C level management.
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post #6 of 21 (permalink) Old 04-30-2010, 09:40 AM
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I wonder what they think about the mandated facility upgrades on the dealerships now. Those poor bastards are sitting on massive retail stores with what has to be huge mortgage/rent payments..........with no one buying. Suddenly the smaller scale facilities look a lot better.

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post #7 of 21 (permalink) Old 04-30-2010, 09:40 AM
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just stop manufacturing harley helmets and leathers, its not like the people who ride em wear the gear.

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post #8 of 21 (permalink) Old 04-30-2010, 09:52 AM

 
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Truth is up until this last manufacturing down turn alot of companies had no real idea how fat they were.

I'll bet motor company can cut 54 million and then produce a more afordable product to boot.

See the big deal is the cuts must be made in management and spending. The big wigs make more of a big deal out of it when it's their head being cut off.

They should have been running the shop as lean and productive as possible all along.
Running a lean machine shop is my business.Which has become the #1 priority in business survival.They should have been on this 15yrs ago.

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post #9 of 21 (permalink) Old 04-30-2010, 10:39 AM
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Originally Posted by OldTimeBiker View Post
As a minor stockholder, I'm not surprised. There are a lot of factors that put HD in this position. They're holding a lot of bad paper from customers who financed and defaulted. Too bad no one has crystal balls...hindsight is 20-20 and they should never have gone into the loan business....AND...Just like GM and Chrysler, fat union contarcts are weighing heavily in this economy.
This company has survived 2 world wars and the great depression and being owned as a loss leader write off by AMF. I expect it can survive now but it's going to take a few painful adjustments...including a hit to stock value. At least they're not asking the government for a bailout (yet).
I know that I read somewhere that they were planning on asking for govt. money. Maybe they did. I can't find the article rite now.
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post #10 of 21 (permalink) Old 04-30-2010, 11:06 AM
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I wonder what they think about the mandated facility upgrades on the dealerships now. Those poor bastards are sitting on massive retail stores with what has to be huge mortgage/rent payments..........with no one buying. Suddenly the smaller scale facilities look a lot better.
Yep- my father and I were looking into trying to buy a dealer ship in NC two years ago (He was the funding source) - Thank god we didnt. The crap they incorporate into the contract just to be able to put a Harley sign on the building is ridiculous. I am surprised ANY of them stay in business.

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post #11 of 21 (permalink) Old 04-30-2010, 11:20 AM
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H-D has put a major burden on those dealerships...very difficult to weather storms like this with bills and overhead like that every month.

Talk about short-sighted business plans.

Tom

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post #12 of 21 (permalink) Old 04-30-2010, 11:26 AM
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H-D has put a major burden on those dealerships...very difficult to weather storms like this with bills and overhead like that every month.

Talk about short-sighted business plans.
not to sound sarcastic but they seem to be doing a lot better than the other dealerships.
Have you ever seen the profit margins on all those t-shirts and other nick nack bullshit? Most of those dealers make more on that crap than they do bikes - hell the harley dealer downtown doesn't even sell bikes (they own another dealership that does though)

I have a friend who owned a rather large multi line dealer and he was telling me about the #'s harley dealers turn - (a local harley dealer bought a jap dealership for a relative to give him a job - is how I heard what I heard)

Right now a lot of people can't afford to buy a new bike, but they can afford to buy some t-shirts and a dog collar or some nice harley thongs for their wife and their girlfriend

They aren't dealerships, they are boutiques.
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post #13 of 21 (permalink) Old 04-30-2010, 11:33 AM
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^^^ A lot of HD dealers are doing OK with used bike sales as well. They're keeping the doors open by selling used bikes (HD's) at fair prices and the dealers that take foreign trades are selling those off at discount prices and keeping the cash flow going.

I don't really feel all that sorry for the dealers...it's the guys who worked at Buell and in the plants that are taking the hit the hardest. As mentioned, retail dealers have options, mid management and labor don't.

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post #14 of 21 (permalink) Old 04-30-2010, 11:37 AM
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Wonder if AMF is available for advice.
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post #15 of 21 (permalink) Old 04-30-2010, 11:50 AM
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not to sound sarcastic but they seem to be doing a lot better than the other dealerships.
Have you ever seen the profit margins on all those t-shirts and other nick nack bullshit? Most of those dealers make more on that crap than they do bikes - hell the harley dealer downtown doesn't even sell bikes (they own another dealership that does though)

I have a friend who owned a rather large multi line dealer and he was telling me about the #'s harley dealers turn - (a local harley dealer bought a jap dealership for a relative to give him a job - is how I heard what I heard)

Right now a lot of people can't afford to buy a new bike, but they can afford to buy some t-shirts and a dog collar or some nice harley thongs for their wife and their girlfriend

They aren't dealerships, they are boutiques.
You're missing my point, it's the overhead. I understand they make money on the merchandise (well, they did) but I'd say the monumental losses reported by Harley in the last 12 months speak to the contrary. I can tell you first hand that it's been the huge buildings/rental space that have put formerly profitable companies over the edge. The dealerships were basically forced into a much bigger/more expensive space if they wanted to keep their sales rights. That was when times were booming. Having such large fixed overhead makes it very difficult to deal with hard times.

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post #16 of 21 (permalink) Old 04-30-2010, 11:51 AM
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Quote:
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Wonder if AMF is available for advice.

Tom

Quote:
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In a state where corruption abounds, laws must be very numerous.
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post #17 of 21 (permalink) Old 04-30-2010, 12:03 PM
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Quote:
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You're missing my point, it's the overhead. I understand they make money on the merchandise (well, they did) but I'd say the monumental losses reported by Harley in the last 12 months speak to the contrary. I can tell you first hand that it's been the huge buildings/rental space that have put formerly profitable companies over the edge. The dealerships were basically forced into a much bigger/more expensive space if they wanted to keep their sales rights. That was when times were booming. Having such large fixed overhead makes it very difficult to deal with hard times.
I know I am just saying they are more well placed to deal with this than most dealerships, as they sell an image first and motorcycles second (i realize there is no way to type that without tone - I don't mean that as a knock I mean it as a fact)

I grew up knowing Moeller HD in Hammond and I was around for some of their forced shut down - when they forced the Harley legends business out of business because they were trying to shed their biker image and go for the new more upbeat lawyer and accountant image (wow i realize all this sounds bitter.. I'm typing it with a smile.. sadly no matter how I type it - that's what happened)

The guy who they gave Hammond Harleys franchise to now owns I believe 5 of the area HD's

While I agree with you for the most part that high rents hurt etc.. Harley dealerships are doing a lot better than kawisuziyammie dealers - the Harley dealer who talked to my friend made more money in non-moto acc than my buddies dealership GROSSED a day and that's including motorcycles. The profit margin on a gixxer 1k is nowhere near the profit margin on a t-shirt or a jacket.

Sportbikers for the most part don't accessorize like the harley guys do, and it's not even just the harley guys - how many people do you see decked in head to toe harley who've never even ridden a bike?

I think the large amount of every other type of dealership we have seen go down recently and the fact that I can't think of a single Harley dealer that went down goes a long way towards proving my point.
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post #18 of 21 (permalink) Old 04-30-2010, 12:13 PM
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i hope that this does not effect the price of the $40 dollar back tee shirts.

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post #19 of 21 (permalink) Old 04-30-2010, 12:21 PM
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well i guess those 1%er's gotta ride rockets now.

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post #20 of 21 (permalink) Old 04-30-2010, 12:35 PM
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Greg, all I'm saying is that the Harley Dealerships, as they stood 10-15 years ago, would have been in a much better position to deal with the current economic climate. They sold the same items then, they just didn't do it in a 10,000 sf building! Harley mandated those changes, they're paying for it now.

I'm not sure how much Harley is helping the dealerships, but left to their own accord, they're in big trouble.

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post #21 of 21 (permalink) Old 04-30-2010, 12:42 PM
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my company built about 4 harley dealerships in the chicagoland area in the past 4 years. They weren't no cheap rinky dinks.

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