Well this isn’t good. When a company has to consolidate it can only mean one thing. Business isn’t going all that good. While other companies are starting to prosper from the new tax cut going in effect Feb 1st, motorcycle companies are finding it hard to find customers to buy their product. These past years haven’t been all that good to Harley Davidson. Most of their base is starting to retire out of the Biker Lifestyle and bringing in the younger generation has been hard to do, thus shrinking the market in which Harley Davidson has to compete against brands such as Honda, Yamaha and Suzuki.
When I penned that article “Harley Davidson is no longer king” things were already looking bad for Harley. The bigger foreign companies were already eating away at the market share that usually was solid Harley Davidson territory. Harley has failed to recognize the shift in the market, by time they do, it might be too late for them to reverse the trend.
The shift in the market started happening when the three foreign companies started making better looking bikes, more reliable bikes, and most important, more affordable bikes. It has taken Harley to recognize just in the last few years it must have a mix up on it’s over 60 year old model line up. Those who ride motorcycles now do not do it as part of any type of lifestyle choice. Most do it as a mode of cheap transportation, especially in urban areas. The new generation, mostly those born after 1994, have no desire to spend on a Bagger, Road Glide, or even a Softail. Most of that generation don’t believe in the long road trips anymore, getting out in the wind and enjoying the freedom of the open rode. No, they are more worried about getting back to their xbox or playstation. When they do decide to hop on a bike they go around the corner to their buddies house or to the local bar. Expensive models just don’t fit into what they are looking for.
Harley has to come up with a dynamic plan to blunt this downward trend and it can’t come from suit in corporate. Most of those suits don’t even ride their own products. One part of that plan is going to have to be revamping their dealership system. If you ever noticed walking into a dealership, over 75% of the floor space is reserved for clothing? Also something that is worth noticing when walking into a dealership, what is the customer base? Does the dealership cater more to the white collar crowd or does it have blue collar folks walking around? If their is more of the white collars, then you can start seeing the problem happening with Harley. Their marketing strategy they have used since the early 90s hasn’t brought back the blue collar worker. The blue collar worker use to be Harley Davidson’s most reliable base. When Harley decided it was time to charge a fortune for their products, the base that they use to enjoy and kept the company in business all those years started to move over to the foreign companies. Thus, Harley Davidson now finds itself in a screwed up position.
Will the suits at Harley Davidson ever change direction? Probably not, they will wait until it’s too late before it hits them in the face they’ve been targeting the wrong market. A market that was only buying their products because they thought it was cool, not because it would be a lifestyle for them, but because they were in a middle age crises that wanted to re-capture their youth. Once they got all the thrills, they decide it is time to move onto the next thing, sell the bike and that was that. In the meantime the ones Harley Davidson pushed to the side, the blue collar working men, found another company to support. Harley Davidson is going to have to do a whole bunch of changing to lure those it alienated back. Most have gone on to find incredible rides with Honda, Suzuki, and Yamaha. The days of having to own just a Harley are no more.
KANSAS CITY, Mo. — Harley-Davidson plans to close the Kansas City motorcycle assembly plant.
According to Harley-Davidson’s full-year 2017 results report, the company plans to improve manufacturing operations and cost structure by commencing a “multi-year manufacturing optimization initiative” anchored by the consolidation of its motorcycle assembly plant in Kansas City, Missouri into its plant in York, Pennsylvania. The report doesn’t say when the plant will close.
“The decision to consolidate our final assembly plants was made after very careful consideration of our manufacturing footprint and the appropriate capacity given the current business environment. Our Kansas City assembly operations will leave a legacy of safety, quality, collaboration and manufacturing leadership,” said Matt Levatich, president and chief executive officer, Harley-Davidson, Inc., in the report.
The report says Harley-Davidson expects to incur restructuring and other consolidation costs of $170 to $200 million and capital investment of about $75 million over the next two years and expects ongoing annual cash savings of $65 to $75 million after 2020.
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