Shocking news - Buell ordered to shut down

[RhadamYgg]

Wow - and I really like two of their current big sport bikes - they look even more alienesque than my B-King...

I wonder why they didn't look in to selling the brand first.

Oh, and that video is just heartbreaking.

RhadamYgg

[jstark47]

Quotes from H-D management:

Harley CFO John Olin says, "We have not quantified the benefits of increased focus on [the] Harley-Davidson brand as a result of discontinuing Buell nor included any potential savings in our restructuring estimates."

So they're shuttered Buell, and they haven't even figured out how that would benefit their bottom line? WTF??

"We are intent on extending the Harley-Davidson brand by leveraging our unique strengths," says CEO Keith Wandell. "What do we mean by extending the brand and leveraging our unique strengths? Well, the Harley-Davidson brand is one of the most powerful brands in the world but we also have great conviction that there is much more that we can do to tap in to the power of that brand and expand it even further."

What are they going to sell now? H-D branded cornflakes??

When Wandell goes into specifics, he reveals that nothing that radical is on the cards, "We are focusing on leveraging our leadership of the custom cruiser and touring segments playing to our natural advantages with the objective of out growing our competitors in each of these segments everywhere in the world. We will continue to own and to define the customization and personalization which is another one of Harley-Davidson's unique strengths......We will build off our unique expertise to develop relevant products that attract even more young adults, women and other new customers in to the Harley-Davidson brand. We will expand the brand through related products and services like Screaming Eagle performance parts or finding new ways to enhance the HOG experience and broaden it to more riders or creating apparel collections designed specifically for the needs and preferences of outreach segments."

So their strategy is to do more of the same - more chrome bling, more H-D branded tee shirts and ashtrays - and this is going to attract more young people and women to buy more 800lb cruisers??

Umm...... whatever you think of their bikes, I always thought their management were astute businessmen. Now I'm not so sure. Biz school undergrads would get a failing grade if they turned a "plan" like this in as an assignment. And to not even have a projected RIO for shuttering Buell?

Well, I don't own H-D stock, so I guess it's all good.....

[RhadamYgg]

Their facebook wall is chocked with anti-HD pissed off Buell owners... Holy Crap. I tried to post on the wall but it didn't work. Here is what I would have posted:

I think that HD's decision to eliminate the Buell brand is a poor one. The vast majority of people that want cruisers, or HD cruisers, own one. You have some new riders every year and some riders exiting the market every year. You can only grow at the expense of the other cruiser manufacturers - which is hard to do when your prices are slightly higher than the competition's. The Buell brand was an expansion in to the sport bike market, but unfortunately, it lacked low end bikes with the exception of the Buell Blast - which was a little strong for all beginners.
Instead of focusing on its core brand - HD needs to expand in to new areas - expanding overall sales. You don't need to focus on your core brand - you pretty much have that down pat.
Something I don't understand is the decision to kill the brand, rather than sell it. That is 125 million dollars that is lost in killing the brand as opposed to money earned in selling the brand to someone else.
And as an aspiring engineer and scientist (I'll never make it) - its tough to swallow that someone who is hugely successful, able to innovate, highly intelligent able to market and sell his bikes - and then show that with all this - it still isn't enough. There is just something wrong with that.


RhadamYgg

[Gummiente]

You people need to stop looking at the situation from a rider's point of view and start seeing it from a business point of view if you ever want to understand this. Harley is, first and foremost, a business. That means their mandate is to make as much profit as possible to keep the shareholders happy. This mandate holds true whether a business makes motorcycles or missiles, the bottom line is always about profit.

Harley is losing money - just as every other business is - due to the downturn in the economy. Steps had to be taken to keep the company afloat and continue to make money; for this to happen you need a businessman at the helm, not an enthusiast. So appointing a CEO who does not own a motorcycle makes perfect sense from a business standpoint. And while canning Buell and selling off MV Augusta may not be popular decisions, they are ones that will help the business stay afloat while restructuring takes place.

Harley has one strong selling point that is the dream of all other businesses - their name. It doesn't matter where you are in the world, everyone knows what Harley is and what they make. A bean counter would be insane not to use that to an advantage, so if that means they are going to market HD Corn Flakes to make a profit, then that is what they are going to do. And it doesn't matter what all the enthusiasts and non-enthusiasts think of this, the bottom line is that it will be done if there is a chance it will make a profit.

Buell was not making a profit. Buell, despite being co-located with Harley in dealerships, is just not as strong in name and brand recognition - nor does it turn out a product that is accepted by the vast majority of the HD demographic market in sales. So why hang on to it when you can make more money in tight economic times concentrating on making the bikes that do sell? You don't branch off into new marketing areas in the middle of an economic slowdown, you trim the fat and do what needs to be done to stay afloat.

Don't get me wrong here - I like Buell and MV Augusta and believe that had the economy not tanked that it would have grown over the years to the point where Harley truly would have a lineup that reflected ALL the different styles of bikes that EVERYBODY wanted to buy. Maybe some day that will happen, but in the mean time it is "survival of the fittest" and that is exactly what Harley is trying to do.

And if you don't believe me, check out the stock prices... immediately after the Buell and MV Augusta announcements on Thursday, HD stock rose $1.46 a share and is holding steady in the $27-$28 range. Why? Because the shareholders are happy - and that is what business is all about.

[Graunke]

Excellent point. It is hard to leave the emotions at the door sometimes. Buell has been struggling for years, although the product is good, it was not cracking the desired markets as they hoped. In time, I'm sure we will see another form of these motorcycles hitting the streets.

[jstark47]

You people need to stop looking at the situation from a rider's point of view and start seeing it from a business point of view if you ever want to understand this. Harley is, first and foremost, a business. That means their mandate is to make as much profit as possible to keep the shareholders happy. This mandate holds true whether a business makes motorcycles or missiles, the bottom line is always about profit.

If you make a major move like shuttering a division, and you can't even articulate, in dollars and cents, what you hope to accomplish by doing so, you're not running a business..... you're engaged in random acts fueled by blind hope. Their CFO can't even lay out a business case for closing Buell. And their CEO can't seem to articulate a plausible plan for sustained profitability, at least not in his remarks to date. Stock prices are as mercurial as women's fashions (sorry, ladies)- up one day, down the next. You don't achieve long term growth by only looking as far as the next quarterly earnings report. My comments above weren't about evaluating H-D as a motorcycle company, but as a business.

[RhadamYgg]

This is a good business decision - for he short term.

The fundamental problem of stock market based businesses - opinion is formed and stock value is determined based on short-term profitability.

MV Augusta sale isn't a bad one - they are selling it - and getting dollars for it. It might have been bad to buy and have to sell and they'll lose money, but that happens.

But Buell, I would say is similar to research and development in many US companies - and to increase profitability most companies (especially public ones) are abandoning R&D to concentrate on today's problems and profitability.

Buell - is the research and development for HD. Their core product, doesn't really need a whole heck of a lot of R&D. But to break in to new markets and make new products you need R&D.

Basically, by concentrating on their core products they limit their future growth and securing a market that frankly they are hugely successful at and they probably don't have to put a whole heck of a lot of effort in to continue to dominate it.

But.... This is a pattern of American businesses. It is why most of the really cool stuff in the future - isn't going to come from the US or US based companies. I can't really go after HD on this - almost all the US companies are or have done this same pattern of behavior because - it works.

RhadamYgg

[king robb]

Just amke a good business decision as an enthusiast and run out and buy an Buell 1125 and park it in a bubble for 20 years. between one year of production and the fact that it is a highly competitive machine...it is almost an instant collector.

[XB08]

I am happy I have my Buell , will never sell it. My dealer thinks by what they are saying , there will still be Buells , but the name on it will be Harley and not Buell. But who know what's going to happen.

[RhadamYgg]

Just amke a good business decision as an enthusiast and run out and buy an Buell 1125 and park it in a bubble for 20 years. between one year of production and the fact that it is a highly competitive machine...it is almost an instant collector.

Ahh if I had unlimited cash ( or a heck of a lot more than I do now) and more garage space, I'd buy 2, one in stasis for who knows how long and one to ride like crazy...

Wife won't let me buy a 1125R or 1125CR, even trading my Suzuki. So, goddess has spoken.

Of course, this would continue my track record for picking bikes that are horribly impractical for my purposes.

RhadamYgg