Harley in Big Trouble??

[clif02]

I thought everyone may find this interesting. Hard economic times seem to be impacting everyone and everything. Ride safe. Clif

The financial situation is bleak. But at least some consumers can justify buying new cars. Imagine the situation at Harley Davidson (NYSE:HOG), the manufacturer of the ultimate discretionary item.

By Andrew Snyder, TodaysFinancialNews.com



Baltimore – (TFN): If I were a General Motors (NYSE:GM) dealer, I would be holding onto every penny I have and praying it gets better. If I were a Toyota (NYSE:TM) dealer I would be saying, “So this is what it feels like to be from Detroit.”



But if I were a Harley Davidson (NYSE:HOG) dealer, oh boy, I would checking the value of my property and working my way into a new franchise. Even during a severe repression, consumers and businesses need new cars and trucks. But almost nobody can justify a must-have motorcycle.



Before I go any further, I have to tell you I hail from the town that hosts Harley’s largest manufacturing plant. And I have spent many nights studying the world of business and manufacturing operations with its engineers and managers. So I have the right to say what I am about to say.



Harley Davidson is in big trouble.



The Big Three may be getting the majority of the media’s attention, but the Milwaukee-based bike maker has many of the same problems. In fact, many of its problems, like demand for its motorcycles, are even worse.

First, Harley’s assembly line is filled with union workers. That means the same expensive labor costs and burdensome contracts that are destroying Detroit are pulling down Harley’s bottom line.



Sadly, if the company could afford to de-value its brand by moving operations offshore and cutting labor costs, I am positive it would have done it ages ago.



Borrowing a hog



We have all heard of the problems facing GM’s lending arm, GMAC. It is much the same at Harley, but bikes are even harder to finance and securitize. Lending is tight and the riders that do qualify for loans are paying higher interest rates.



Proving the difficulties of the current market, the company’s head of its financial services unit, Sy Naqvi, jumped ship last week and is headed for less stressful territory.



This news comes just less than a month after the company’s CEO, Jim Ziemer, announced he is leaving Harley. This turnover creates yet another major obstacle as the company moves forward.



All of this should be a sign that the world of chrome exhausts, leather jackets and oil puddles is not exactly revving up. As the Baby Boomer generation trades its bikes for wheelchairs, demand will slow even further.



The company has relied on its powerful brand for nearly a generation. As that brand power diminishes, shareholders will see the value of their company drop just as quickly.



Over the past 12 months, shares of the company have dropped from over $40 to under $14 today. The decline is not over. Just like a Honda at a Hog rally, this will not be pretty.

[tennesseecanefan]

clif02,
I know this all sounds like the country is going under, but we will rebound. I'm sure Harley was around during the depression, and found a way to survive. They were probably worse off during the AMF days. Yes, some people at HD will loose their jobs if things slow down as much as the article emplies and i'm sure the union contracts allow for that, but I think the company will survive this. I feel that our leaders if you can call them that, have allowed the financial industry to run us in the ground. We have lost billions if not trillions loaning money to people that don't deserve it. The idea of loaning money to someone that is not responsible is just irresponsible. I wouldn't do it with my money and they shouldn't have either, but our so called leaders not only promoted it but all but demanded it. It's the American way, they say. A home for every family, even if they can't afford it. As many Americans, I've lost half of my investments in the market, and will have to work another 10 to 15 years to recoop, if it's possible. Taking our jobs overseas or even North or South is just a bad idea. As for me, I'll keep my Harley and try and ride it out.

I agree Harley survived the great one they will survive again, dont jump ship

[Rocky]

BUY! BUY! BUY! Harley stock now because when we rebound you will pay a lot more for it, and your well spent money now will benefit you in the future. There will be a tomorrow unless something happens in the mean time and you must be prepared for it. Don't bury your head yet, it hasn't even got interesting.

[unclepsycho]

I was thinking the same thing!!!
The other voice in my head (one of them) was saying Success is not achieved by those who give up.

[shovelmike]

Y'all have got it right. Harley will survive. There will be some painful times ahead with some dealers losing those huge, expensive buildings the MOCO pushed them into building as their move to attract the upscale customer. Maybe the management will comprehend why motorcycle dealers of all brands occupied old service stations etc. instead of taking on such high overhead, the economy goes through booms and busts and the dealers have to ride them out.
The American can do attitude will win out.

[clif02]

Hey guys, I didn't say anything about jumping ship, or giving up...I just pasted this article I read for all to see.. You hear so much news about the big three having problems that I never thought of H-D having problems. They made it thru the AMF days and they will make it through this I'm sure. As we age and "trade or Hogs for wheelchairs" as the author put it a new group is right behind us. They'll be ready to dump the crotch rockets and cruise. Try as they may, the other manufacturers (Honda, Yamaha, Suzuki) can not match what Harley offers in the purest riding sense. I've rode all three and nothing matches an H-D. Have a great day and ride safe. Clif

[unclepsycho]

Oh yup, I was only applauding all us Harley folks for "not giving up" it is good to be associated with the Harley Family, we will all be there on the other end. One of my mottos is "Never Give Up" .
I have never bought stock before, but am really interested in investing in Harley at this time. I feel it is my small part in helping things getting back on the upswing. It may be a little selfish too since the intent is to make money, but it takes money to make money.

[PeterV]

Originally Posted by shovelmike

Y'all have got it right. Harley will survive. There will be some painful times ahead with some dealers losing those huge, expensive buildings the MOCO pushed them into building as their move to attract the upscale customer. Maybe the management will comprehend why motorcycle dealers of all brands occupied old service stations etc. instead of taking on such high overhead, the economy goes through booms and busts and the dealers have to ride them out.
The American can do attitude will win out.

Absolutely.
Boutiques HAVE TO GO!



Pete

[Rocky]

Hey Cliff, thanks for posting the article! I think we are pretty much on the same page here and will back the MOCO and the product as much as we can. I like the product way more than I do the others on the market and the dependability is 2nd to none in my book. Besides all that, investing in a company is what keeps it strong through the tough times.