Friday, July 23, 2010

Is Harley On The Highway To Hell?

Harley Davidson has been having problems during these turbulent economic times, to be sure.

However, it is questionable as to exactly from where there problems are coming from and what the best way to address these issues are.

As for the source of their problem, some people, like Scott Walker and other Republicans, are laying out the false pretense that the biggest problem for Harley is taxes, namely, the combined reporting tax. However, this is poppycock. Even the HD CEO has said as much. The combined reporting complaint is just a gimmick used by the conservatives to play on the fear and anger of the TEA Party types, or on the people that don't really follow the news, but are still mad as hell. But I repeat myself.

Harley itself has tried to paint the union workers as the bad guys. They are threatening to move plants out of Tomah and Milwaukee unless the unions quickly capitulate to their demands of severe concessions.

I think that they will find this approach to meet with minimal success. While they have the ultimate power card of being actually able to follow through with their threats, it would be very damaging to them if they were to play it.

First of all, it would be a hard sell that the workers should be shouldering the burden by themselves when their CEO was paid nearly $6.5 million last year. Further weakening their position is the fact that the company just reported that their profits are soaring. Also, many Milwaukeeans still remember how, when Harley was in real trouble not all that long ago, it was the workers that voluntarily dug in and gave up what they had to to help keep the company afloat. Apparently, some of the few Milwaukeeans who don't remember this fact are the brass at HD.

Interestingly, just ran an article about this whole mess, with a very good point of insight:

Harley management undoubtedly thinks they have a fourth option: reinvent the value chain by moving more production overseas and to another state whose workers and government offer a more attractive deal.

This move would be penny-wise and pound-foolish. Why? Because this move would show a lack of guts and courage, the opposite of the Harley brand.

The United States needs the rebel who stands up to Wall Street and price-shopping buyers and says, “This is our business. This is how we want to run it. Come ride with us for the long haul, because, like Ford, we are on the next wave of our reinvention. Buy Harley. Support America.”

For what it's worth, I think Harley's biggest problem is themselves. As the last cited article points out, they need to do more than just rely on their brand name and to expand their selling power, or they will become just an obsolete historical reference that our great grandchildren will look at much like we look back at 8-track tapes or cell phones that weigh three pounds.


  1. "As for the source of their problem, some people, like Scott Walker and other Republicans, are laying out the false pretense that the biggest problem for Harley is taxes, namely, the combined reporting tax. However, this is poppycock."

    Where did the CEO specify that what Walker said was poppycock?

  2. Another thing, if you think that a stand-off between Harley and its union will hurt Harley, I think you underestimate the popularity of Harley.

    I'm not sure you can see this (given your affection toward your union), but unions aren't particularly popular right now. The Mercury Marine business hurt their image locally, and if the drama plays out again, it won't be good for unions in Wisconsin. In fact, it might make it easier for a Republican Governor to steamroll over them after November.

  3. If the company moves, will Walker hang onto his Harley?

  4. Aaron,

    Read the links. That is why I provide them. Secondly, the way Mercenary Marine played out, the business ended up losing a lot of faith and the town thanked the unions. A true journalist/reporter would have known that.

  5. Mike,

    Look at how quickly Walker dogged out Midwest, and the tax payers that had provided the loan to Midwest, in favor of campaign-ride funding Air Tran.

  6. Capper, you ought to back off of making everything about Walker.

    You bet combined reporting hurt the company, but they are more concerned about the long-term union costs of keeping their operations here.

    Put your politics aside and get your thinking capper on straight. Wisconsin and it's labor unions must become more employer friendly or we will lose a whole bunch of jobs.

  7. Cap,

    I read your links, that's why I asked the question. The CEO didn't reject the fact that taxes play a role in relocation. He said, according to Barrett, that he didn't want this politicized. I'm sure the CEO watched the whole Mercury Marine saga and doesn't want a repeat of events. But when $22 million is sucked out of your profitable returns, it makes a serious dent.

    Concerning Mercury Marine, I'm not talking about the town, but rather the PR across the state. I don't have to tell you that the news of their battle traveled further than that town. I think you're too far buried in "all things union" to connect with what the general population felt about the incident.

    The general feeling was that the union didn't want to concede on anything even though we're in the roughest recession since the 30s. It's the inability to understand that when the private sector gets crushed, then union workers need to share in the sacrifice.

    Think about it for a second. Our unemployment rate is near 10% One in ten workers, and their families, heard about a union that refused to concede on certain benefits in order to save their jobs. The union could have been right, but the perception is that they were wrong.

  8. And another thing, quit putting that "real reporter" crap in my face. That's a good way to stop me from commenting on your blog.

  9. Anonymous,

    Did you read the post? No? I didn't think so.

    The problems isn't the unions. The problem is overpaid CEOs and an unwillingness to improve the business plan.


    The CEO also said that there were no complaints about the combined reporting tax.

    Also, as far as Merc Marine, you are falling in the trap that many of us do, at least from time to time. The Milwaukee media market is in no way a reflection of what the rest of the state thinks.

    You hear Belling and Sykes prattle off their talking points day after day, so you start to believe them. But you go up north, and they actually get the news. Most people feel that Merc Marine was the bad guy, holding the workers, the city and the state hostage.

    Taxes are too high, but the CEOs wanted the tax payers, as well as the workers, to pay for their profits. People can see we got screwed by the company because we gave into their blackmail.

  10. Oh, BTW Aaron, it doesn't make a tinker's damn to me if you leave a comment or not.

  11. That's a shame, Capper. Because every comment you get on your blog is a benefit to your Google and Yahoo ranking. Hence, the more participation you draw, the more visible your site will become.

    Good luck with everything.

  12. Don't worry, I know how the game works. But I also understand that it isn't just how many visit your site, that counts. It's who reads it.