5/7/2009 | 3 MINUTE READ

No Guts, No Glory

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How Harley is addressing the crisis: Straight on.


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On Sunday March 29, the Detroit TV news stations were abuzz with the then-near, and soon dead-on, announcement that Rick Wagoner would, in response to a request from Obama Administration officials "step aside" as CEO of General Motors. In his statement, released the following day, Wagoner wrote in conclusion, "Most of all I want to express my deepest appreciation to the extraordinary team of GM employees around the world. You have been a tremendous source of inspiration and pride to me, and I will be forever grateful for the courage and commitment you have shown as we have confronted the unprecedented challenges of the past few years. GM is a great company with a storied history. Ignore the doubters because I know it is also a company with a great future." That, in a word, is classy.
Also on March 29, smack dab in the middle of the business section of the New York Times, there was a full two-page advertisement from Harley-Davidson, another company with a "storied history," as it is 106 years old. The main headline on the ad that appears to be an American flag: "You Can File Our Obituary Where the Sun Don't Shine." The tagline at the end of the ad states in no uncertain language: "Screw It. Let's Ride." That, in a couple words, is not classy. That, in another couple words, is spot-on.
Harley's situation is somewhat similar to that of GM-but not nearly as dire. Its 2008 results included revenue of $5.59 billion, down 2.3% from '07. Its net income was down to $654.7 million, down from $933.8 million in '07. And its diluted earnings per share, at $2.79, were off 25.4% compare with '07. To respond to that, Jim Ziemer, CEO, who announced that he'll retire this year after 40 years with the company, stated that there would be a three-part strategy to deal with the company's declining revenues and bike sales (there were 303,479 bikes shipped in '08, off 8.2% from the 330,619 units in '07). "Our strategy is focused on three critical areas: to invest in the Harley-Davidson brand, to get our cost-structure right, and obtain funding for HDFS [Harley-Davidson Financial Services] to help our dealers sell motorcycles and our retail customers to buy them."
As is the case with GM and other vehicle manufacturers, the lack of available credit is something that has kept buyers of bikes out of the showrooms. And as is the case with GM (and other vehicle manufacturers), there is the issue of adjusting the cost structure, which takes the form of consolidations and closings, in Harley's case being on the order of 1,100 jobs over the period of 2009 to 2010 (800 production; 300 non-production jobs). "We obviously need to make adjustments to address the current volume declines. But we are also determined to do that in a way that will make us more competitive for the long term," stated Ziemer.
And as GM and other vehicle manufacturers have been working to do, Harley is going to keep pushing the image of the company. Presumably like running ads like the one mentioned here. Bold ads aren't going to turn Harley around. But the bold thinking that is behind those ads-and behind designs of breathtakingly beautiful bikes like the V-Rod-will certainly have all the people of Harley, collars or not, working hard to get to where they need to be. Back in the '70s and early '80s, the company was on the precipice. But it came back strong with high-quality, appealing products. And the attitude that is being expressed surely indicates that that is what they are going to do-again. Detroit could use some of that swagger.