| Author | Message | ||
     Lemonchili_x1 |
http://thekneeslider.com/archives/2009/11/19/harle y-davidson-and-buell-unfinished-business/ | ||
| Badlionsfan |
Very well written article. | ||
| Hex |
+1 | ||
| Court |
That pretty well sums it up, eh? | ||
| Mnrider |
Exactly how I feel about it. | ||
| Mndwgz |
"Some recent communications confirms the "Barracuda II" in development when Buell was shut down. It would have been, and still could be, an extraordinary motorcycle, perhaps finally fulfilling the promise of a world class American sport bike." I like the "still could be" aspect. Not to keen on the "Buell can be another pillar standing next to Harley Davidson" We know how that turned out, I'd rather see them standing next to Ducs, Triumphs, or KTMs, but he summed it up with what just about everyone has been hoping for... "To anyone at Harley Davidson who may be able to help this happen, ... stand up and let Buell go" | ||
| Reepicheep |
We need more articles like that, well done. Harley decides to get out of the Buell business? That's their business. Harley decides nobody can be in the Buell business? We have an issue. >  | ||
| Lemonchili_x1 |
Really good to see someone write a piece like this. I'll be posting it on facebook and sportbikes.net, it wouldn't hurt if people could post it on other forums  | ||
| Not_purple_s2 |
Thank you for the heads up. Great article. | ||
| Hughlysses |
Very nice. It jells all the thoughts we've been trying to put together here. | ||
| Smoke |
commented. you need to also! tim | ||
| Acgwolfe |
in the words of Frankenstien from Van Helsing "I just want to live".So come on HD give Buell a chance, if they fail then so be it, at least the company would go down fighting. | ||
| Moxnix |
Brilliant argument. I'm now officially boycotting the MoCo until we learn if this is just a "New Coke" ploy. If Buell is door nail dead, the boycott is permanent. | ||
| Badlionsfan |
Yeah, just think if this is the most brilliant marketing move ever. HD shuts down Buell. Even Buell haters step up to defend Buell. Spy photos of 2011 model leaked, Buell gets even more positive press. Uproar continues in support of Buell. HD comes out months later and says that due to consumer demand, we're bring back Buell for the 2011. Motorcycle fans and press 'round the world rejoice. They're voices were heard by the higher ups at HD. | ||
| Hughlysses |
Well, they're either complete idiots or complete geniuses.  | ||
| Lemonchili_x1 |
I read in a book about Vietnam a long time ago "It's either a conspiracy, or a cockup. If the Australian Army's staff is involved, it's a cockup." Substitute "management" where appropriate  . People wouldn't be looking for jobs if this was all planned | ||
| Mndwgz |
I would rather see Buell as far away from the moco showrooms and service departments as possible. The ones that didn't give a shit anyways. Sure, keep the required 7-10 years of parts & service, but I personally would prefer to shop somewhere other than the chromatorium. | ||
| Hughlysses |
And of course "Brad" has to chime in on the Kneeslider with his "the 1125 was a failure" chant. That guy is a freaking broken record that won't be swayed by facts to the contrary.  | ||
| Chadhargis |
Here's a deal for the MoCo from my non-MBA point of view. Just plain old horse sense: 1) Sell Buell (name, IP, marketing rights, etc) 2) Sign a contract with the new owners to supply parts for 7 years (which they are already on the hook for, but selling parts to the new owner would generate revenue) 3) New corp would contract with Rotax to continue the 1125 motor 4) New corp would contract with the other vendors to continue buying parts. Given that the vendors are not getting any money now, then may negotiate to sell the parts for less money. 5) New corp sells franchises. 6) If the new corp wants to continue the XB platform, then can source the engines from HD just as Buell did the Rotax motor. Harley wins, Buell wins, customers win, employees win. So why isn't this being done?? | ||
| Methed |
What Chad said. How long can egos and lack of foresight take precedence over bottom line at the MoCo? My guess is until they lenders stop handing them money, after which comes bankruptcy, both on short order at the current rate... | ||
| Ft_bstrd |
So why isn't this being done?? Because there are a group of 5 or fewer ulcerated scrotums with a hard on for Erik Buell who feel that they can kill Erik, Buell, and his dreams and that no one will know about it. | ||
| Ferris_von_bueller |
Jensen Beeler 11.19.09 at 3:13 pm I try to keep my opinion on this subject to writings on my own site, rather than committing the taboo of disagreeing with someone else on their own platform, but found it too hard to stay silent this time around. Paul, while I have always admired your work here, and respect you for your thoughtful opinions on the motorcycle industry (despite the fact they usually differ from my own), this post grossly misconstrues the events surrounding Buell’s closure. I’ll preface, that I have no special insight into the inner-workings of Harley-Davidson, just an M.B.A., and experience sitting on a company’s board of directors, managing subsidiary groups. So I’ll share my point-of-view, which like everyone else’s, should be filed under the appropriate title of “comments from the peanut gallery”. Let’s talk about Harley-Davidson, Inc. Note, this is not Harley-Davidson the cruiser manufacturer, or Harley-Davidson the American brand that we know and love. Harley-Davidson the company owns three active motorcycle brands, (HD, Buell, and MV Agusta), all of which are part of different segments in our industry. Despite this, Harley-Davidson (the brand) contributes the lion’s share to Harley-Davidson’s (the company) yearly balance sheet. Also, let’s also recognize the fact that Harley-Davidson, Inc. owes nearly $1B in debt with interest rates around 15%. A huge financial burden in its own right, that when coupled with the disastrous sales that followed from the economic slowdown, creates a situation where not only does the company have a sizable monthly tab to pay down, but also is finding it harder and harder to maintain the cash flows that supported the decision to take this financial obligation on in the first place. Add into this the affects of a credit market that has completely collapsed, thus making it harder for customers to purchase motorcycles unless they have the lump sum in hand (does anyone want to take a guess on how many motorcycles are bought through financing options?) and the situation turns dire rapidly for the company from Milwaukee. So that’s the situation facing the board of directors, which you’ve correctly stated owe their shareholders a great deal. In fact, they owe their jobs to the shareholders, who legally should be their first and foremost concern at all times. Let’s role play for a minute, and assume you are sitting on the Harley-Davidson board. Your company is teetering on the edge (net income is down 71% from last year), you’ve ousted the CEO that got you into this mess, and you’re facing the distinct possibility that your American motorcycle company could be following in the footsteps of the American auto manufacturers…except there is no bailout in sight. In this situation, the options are limited. You need to reduce expenses, and raise cash quickly to pay your debts. This means cutting costs, and selling off anything that isn’t bolted down to the floor…it also means focusing on the products that bring real revenue into the company, namely Harley-Davidson the brand. This is corporate triage at its finest hour. The decision to sell MV Agusta is a simple cash equation. HD, Inc. needs money, and you can get that needed revenue from selling the sport bike manufacturer, bonus points for the fact the Italian company never really made sense with HD ownership in the first place. But what to do with Buell? As I’ve read too many times, Buell enthusiasts believe the company should have been spun-out of HD, Inc. just like MV Agusta was/will be. But what would a standalone Buell Motorcycles look like? Any purchaser of Buell Motorcycles would face the following problems with their purchase: - No functioning supply/support-chain (Buell piggybacks off the suppliers and carriers for Harley-Davidson, as well as HD’s distribution points) - No way to finance purchases (Buell is financed under HD, Inc’s credit arm) - No points of sale (Buell’s are sold inside HD dealers) - Problems with the XB line, which uses an HD power plant and common parts bin Because of the previous mentioned problems, Buell on its own would not be a viable company, and was likely only ever profitable because it could use the infrastructure already set in place by the Harley-Davidson line of motorcycles. With all these problems, only a company who was able to invest a great deal of capital, or had similar efficiencies of scale could realistically purchase Buell. Who would that be? Immediately rule out any other motorcycle manufacturer. The industry has been hit too hard by the financial crisis to acquire anything. These companies have slashed all of their budgets to nothing, even the company rugby squad (Yamaha). Not that these companies would be eager to take on the Buell brand in the first place. But even if they were, realize that these are the only purchasers that could take on Buell, without having to invest millions of dollars to set up the necessary structures that Harley-Davison currently provides Buell. This leaves institutional investors as Buell’s only hope. For them, the same problems still apply. These are groups that are feeling the financial crunch, and very few of them are going to be able to get the loans needed to make a serious purchase/investment like Buell. Let’s not even get into the discussion of whether or not Buell would be a good investment for these investment groups (companies based on customer discretionary goods are a hard sell in the VC/PE/I-Bank world), and instead focus on what Buell “for sale” would look like. A purchaser would get a brand that has questionable value, a small factory in East Troy, and thousands of outstanding warranty obligations. There isn’t a lot of value in a company that looks like that, and Harley-Davidson, Inc. knows this. You cannot remove Buell from Harley-Davidson, Inc. and have a meaningful company be the result. Buell the company is too intertwined and too dependent on its parent company for its business survival. End of story. Could we see Buell come back as a company when Harley-Davidson is more financially sound? Maybe, it certainly is an option if the company chooses to pursue that avenue. But seeing Buell live on right now under another company’s umbrella, or on its own? Not going to happen, and any attempt to do so would be a waste of Harley-Davidson, Inc’s. resources and finances, which the company knows before even crunching the numbers. While I understand that many enthusiasts don’t want to see Buell and what it stood for die, you’re misleading yourself and your readers postulating that anything but this outcome could have occurred. Harley-Davidson, Inc. faced a simple choice, and made a simple decision: lose their entire company, including THE biggest brand in American motorcycling, or sell/close two companies that took resources away from their largest money-maker. That choice, for a board of directors, is an easy one to make, and is done with the best interests of shareholders in mind. | ||
| Ferris_von_bueller |
Cole 11.19.09 at 4:00 pm Jensen – you embody the severe problems with American business…but you didn’t read that in your MBA program. “…they owe their jobs to the shareholders, who legally should be their first and foremost concern at all times.” No, a solid, strong company has an equal balance between good investors and the long-term plan. It is this type of short-sided staunch belief/trust in Wall St. that contributed to the financial collapse. “This is corporate triage at its finest hour.” ha! unimaginative, short-sided talking head | ||
| Hex |
What Chad said, 'cept he left out number 4a: 4a. New corp would renegotiate all employee contracts. Given that the employees are not getting any money now, and their job prospects are slim in this economy, they may negotiate to rehire for less money and benefits.  | ||
| Court |
That's more accurate than you know. I am still amazed that Dale Frank's Blog . . . (FIVE WEEKS PRIOR TO THE ANNOUNCEMENT) . . was DEAD ON ACCURATE . . . and mentioned not once any business case or financial reason. Here is a sampling of the reasons listed. . .
Note . . . that not once are Buell sales or profitability mentioned. | ||
| Gregtonn |
Jensen Beeler sounds like the kind of guy who, if you ask him for directions, would insist, "You can't get there from here." G | ||
| Methed |
Then what of it Court, everyone? Can the members of this forum--scratch that; can this congregation of passionate enthusiasts really have a meaningful role in not only calling Goliath out to the fight, but also in gathering stones for David? And is David ready to get the sling a-swingin'? Can this be done? Are we all really ready to step up, and is everyone who has a voice (and a namesake) at the little motorcycle company in East Troy willing to go to battle for the umpteenth time to save this cause? Just asking the questions... If you can allude to the positive, then count me in. After I've written my letters, how can I be of use? | ||
| Elvis |
Methed, I can't speak for Court, but I absolutely believe we can make a difference. There are many different things that can happen and many degrees of what can happen. There are things Harley can allow that may not be everything we'd ideally want, but Erik may be able to get some things and the more we keep the drum-beat up, the more the board may be willing to placate our unruly mob and soften our resolve. Keep in mind, there are many people on the board and all of them have different positions and all of them can be swayed to varying degrees. If we can get just one board member to believe it's better for Harley and Harley's image to give us something that will make us less vocal, that could make all the difference. And while I believe we can make a difference I also firmly believe that if we hadn't done what we already have done and if we don't do the things that we will do, Harly would have been very content to sweep Buell under the rug never to be heard from again. I'm betting there are many people on the board who never expected this kind of passion or this kind of response and the work we are doing may very well make them do things that they didn't think they would have to do a month ago. I would imagine, if they have any sense, the Harley executives do not want to see large groups of people on SpeedTV at Daytona wearing "Free Erik Buell" T-shirts. | ||
| Elvis |
. . . Think about this: Why is Harley refusing to make any statements or talk to reporters about this? Answer: They don't want people talking about these things. They are making a lot of effort to keep things quiet, so the more we talk about it, the more power we are gaining. | ||
| Elvis |
. . . and one more thing, and I personally think this is very important. Let's be very careful to be respectful to Harley riders and try to get them on our side whenever possible. This is all about a few suits on the board, not about Harley riders. If we allow Harley riders to consider it with an open mind, I think they will side with us. But if we're not careful, we'll make them defensive and they may look at us like enemies. |
