Harley Davidson Financial Woes

[RhadamYgg]

HOG sticker symbol for Harley Davidson - indications that it might not weather the current financial storm.

RhadamYgg

[TEvo]

BAILOUT!

[ceemes]

The last time HD ran into major financial difficulty back in the 80's, they went running to Washington and got massive import tariffs placed on Japanese bikes with displacements of 750 CC's or higher. How much you want to bet that will happen again against all imports of all sizes?

[RhadamYgg]

I don't know about bailout in the environment right now. These problems aren't just happening now - but when the auto execs were present asking for money.

If they had asked for help with the auto manufacturers - they might have had a chance. Now... People are revealing a lot of the bailouts have - and with traceability of where the funds are going and things like that.

Now you've got the popcorn industry spoofing everyone by publicly asking for money....

Then again, in this political climate people are desperate to keep American businesses alive.

???? Who knows, but this article sounds like what they were talking about one of the companies I worked for a few years back... Just when they stopped having enough cash flow to pay me and my co-workers.

RhadamYgg

[RhadamYgg]

The last time HD ran into major financial difficulty back in the 80's, they went running to Washington and got massive import tariffs placed on Japanese bikes with displacements of 750 CC's or higher. How much you want to bet that will happen again against all imports of all sizes?

I don't know if they'll have enough pull to pull that off this time. I don't know if tariffs would be effective except against specific bikes.

Although I do wonder if I could have gotten a V-Rod for $8500 - if I'd actually got up the nerve to go to one.

RhadamYgg

[Gummiente]

Pundits have been gleefully forecasting the death of Harley for decades and it has yet to happen. I doubt it will in this instance, too. Keep in mind that it is the FINANCIAL arm of Harley pulling down the profits, not the lack of sales from the motorcycle manufacturing arm. And keep in mind that all motorcycle manufacturers have shown a decrease in sales since the economy went sour.

As for their successful bid to have tariffs applied to all motorcycles over 750cc back in the early 80's, this was done to buy time for the complete retooling necessary to launch the new Evolution motors. It had the effect of not only buying the time that Harley needed to stay in the market, but it also resulted in the Japanese finding and exploiting the loophole of the highly successful 600cc sportbike genre. And, what most people don't know, is that Harley applied to have the tariffs dropped TWO YEARS before they were due to expire.

Whether or not the whole issue of tariffs was fair play can be debated incessantly but, Mr RhadamYgg, let me put it to you this way... let's say you worked for a company that made widgets. And let's say your company was in danger of going bankrupt because of a flood of cheap foreign widgets on the market. Would YOU be opposed to your company applying for tariffs against foreign widget makers until your company could retool to stay in the game... or would you rather watch your company and job disappear?

[RhadamYgg]

Pundits have been gleefully forecasting the death of Harley for decades and it has yet to happen. I doubt it will in this instance, too. Keep in mind that it is the FINANCIAL arm of Harley pulling down the profits, not the lack of sales from the motorcycle manufacturing arm. And keep in mind that all motorcycle manufacturers have shown a decrease in sales since the economy went sour.

As for their successful bid to have tariffs applied to all motorcycles over 750cc back in the early 80's, this was done to buy time for the complete retooling necessary to launch the new Evolution motors. It had the effect of not only buying the time that Harley needed to stay in the market, but it also resulted in the Japanese finding and exploiting the loophole of the highly successful 600cc sportbike genre. And, what most people don't know, is that Harley applied to have the tariffs dropped TWO YEARS before they were due to expire.

Whether or not the whole issue of tariffs was fair play can be debated incessantly but, Mr RhadamYgg, let me put it to you this way... let's say you worked for a company that made widgets. And let's say your company was in danger of going bankrupt because of a flood of cheap foreign widgets on the market. Would YOU be opposed to your company applying for tariffs against foreign widget makers until your company could retool to stay in the game... or would you rather watch your company and job disappear?

There are some differences I think between their current status and previous forecasts of their demise. One clear warning sign is borrowing money in order to stay afloat - when it isn't clear when sales will pick up again.

It is a good thing that they removed the tariffs earlier, but tariffs (and other trade barriers) in general - never are good for the end consumer. They artificially raise prices and often the local manufacturer will raise their prices as well - offering often an inferior good for the new higher prices. (not saying this about HD necessarily, in general).

There are different kinds of economics. Macro economics and Micro economics.

In general, it is good for specific people to save money. This ensures they have a secured future regardless of what happens to their current job or financial environment.

But apply this to large populations - if nearly everyone were to save money at a higher rate than they do now - this results in an economic contraction and an overall less secure future for everyone.

So, specifically, if I worked for a widget company and we were being attacked by foreign interests who had a better product at a lower price I would be fighting for tariffs and other limitations on number of widgets imported and etc.

It is up to the government to understand that doing so is a bad idea for everyone in the country while benefiting a few - that are employed by the widget making company and its investors.

You would be far better off giving the widget company money and managerial help to develop cheaper and better products than setting tariffs.

RhadamYgg

[Gummiente]

Thanks for the economics lesson, it took me right back to all those long, boring hours spent in the classroom when I took it in school. The point I was trying to make is that the majority of people have misinterpreted Harley's recent profit loss and current financial state as being based solely upon a downturn in sales, when in fact the majority of that loss comes from the financial arm of the company.

As for the whole widget thing, I said a cheaper product, not a better one. Whether we're talking motorcycles or particle beam accelerators, a "Made in the USA" tag does not always mean an inferior and/or overpriced product.

But, specifically with regards to Harley, at the time they applied for tariff protection they did have an inferior, over priced product. However, the company turned around in a short time and began to rapidly improve their quality and reliability issues to the point where today's bikes are vastly superior to the AMF era ones. Whether or not you or anyone else feels they are inferior to any other brand is a whole other topic, but consistent sales totals of over 300,000 units per year is not the mark of a company that wasted it's time, money and effort under the protection of a tariff on their competition.

[jstark47]

The point I was trying to make is that the majority of people have misinterpreted Harley's recent profit loss and current financial state as being based solely upon a downturn in sales, when in fact the majority of that loss comes from the financial arm of the company.

Mike- no argument there. But loss is loss, it all affects the bottom line. I'm just wondering if HD Financial Service's woes are bad enough to pull down the whole company? We don't need to lose any more industry down here.

I also wonder if they're now regretting the $109M they spent on MV Agusta last summer?

[Gnarlyroad]

Don't think they need a bailout. They're complaining cause they only made 65 million in profits for their investors last year. The poor buggers. I wish I'd only made 65 million last year.