| Author | Message | ||
     Buellinachinashop |
We all know HD owned a majority of the company, but few, like myself, know very very little about the money side of things. The biggest question I have is this...How did Harley get money/profits from Buell? Was there a percentage of each bike's profits that went to HD? Same for parts, accessories and softlines? If Buell sold 98% of its bikes to dealers, how did HD "lose" money? | ||
| Hex |
All speculation of course, cause I really don't know squat, but didn't I read that capital injections of millions of HD money was not accounted for in the "profits" report. I was asked once, how much did you pay for your Buell XB12R, and I said $11K, the guy was setting me up for this reply: 'Sounds like you got a great deal! It's really a $50K motorcycle.' | ||
| Sayitaintso |
As an accountant I feel comfortable saying that without knowing the inner workings of the accounting structure of HD its not really possible to say one way or another if BMC was in the red or black (unless there are some stand alone financial statements out there that I haven't seen before). There should be an allocation of HD expenses to BMC to cover areas where HD provided things for BMC. Things such as parts distribution, shipping of bikes to dealerships, advertising, and so on. I have no way of knowing any details about how integrated the two were or were not and if HD cost should or should not have been allocated to BMC. There is so much more than just the building and selling of the bikes to keeping a company running. So its not really right to say how much of each bikes profit does HD get. Accounting should be a straight forward proposition. Unfortunately it rarely is very straight forward and often involves quite a bit of judgement. | ||
| Iamarchangel |
According to their statements, it looks like HD did not separate Buell in their figures until the last one. It looks they treated it more as a model than a brand. Statements and discussions can be found at seekingalpha. They read like a train wreck. (Search term: HOG) They say they can't sell Buell as an entity because it is too tied up in their business which begs the question: if it cannot be separated, how do they that canceling will have any effect? | ||
| Mikej |
International and intra-National corporate accounting between subsidiary entities is a complex and at times perplexing business model. Corporation Abc has a subsidiary Def and another subsidiary Ghi. Ghi buys parts from Def while at the same time leases facility space from Abc. Def sells competitive parts against those of Ghi but at the same time does not compete with directly comparable models. When Def sells product both Abc and Def benefit. When Ghi sells product then all three entities benefit, Abc and Ghi directly and Def indirectly. I've worked for a couple of international firms now where the overseas entity would see a monetary exchange rate benefit which the local entity was not permitted to take advantage of in return. Sort of back to that whole tolerated step-child analogy thing. If you paid attention to spoken-of situations in recent years you might have noticed some imbalance on the playground. I don't know how the subsidiary financials and operation agreements are set up, I only know what I've observed with other corporations. Business does not have to be fair. | ||
| Mikej |
Here is a convoluted condensed example of just one corporate internal charge setup. The engineering department has a printer. The printer is owned by the corporation. The printer is maintained by the IT department. Engineering gets charged a monthly fee for the servicing of that printer charged against the engineering departmental budget. Engineering also gets charged for each single piece of paper that is printed on that printer. Engineering also gets charged for the paper that is used. The cost to print each piece of paper is usually several times higher than what a copy place like Kinko's would charge. Engineering is not allowed to buy their own printer, is not allowed to service their own printer, is not allowed to buy their own paper, regardless of how much apparent "cash" it would appear to potentially "save" the company. I do not know who owned the printers in E.T. | ||
| Sayitaintso |
Lol, Mike. Thats a fairly straight forward example. I know I've seen much worse (and sure you have too). As a matter of fact, right now I'm working on allocation insurance and vehicle costs ( purchase and maintenance). One of the first questions asked by someone here....."what do you want the end numbers to be?" | ||
| Rangeridn |
If they "own"/control the company they will report the financial results of Buell and HD on a consolidated basis (lumped together) i.e. total combined revenue, total combined expense. If they don't own enough to control a company they will report the ownership stake as an investment. There are rules around what a company has to report externally on a division by division basis. There is judgment that applies in determining what to report. If it would be "useful" to investors they should report it separately. If they don't have to report details externally I find a company typically won't. Regardless of what is reported externally, internal reporting will be more detailed. | ||
| Teddagreek |
They have the books they can spin this anyway they want... Harley has pumped money into Buell R&D over the years... A lot of that has trickled over to HD products.. A lot of things never made it to production like the dirtbike... I'm calling bullshit for losing money... Its a gimmick to appease the stockholders and Buell got caught in the crossfire... | ||
| Cyclonedon |
I agree Teddagreek! I'm calling bullshit for losing money... Especially the money they are spending to drop Buell!!! That's Total bullshit! | ||
| Roysbuell |
....."what do you want the end numbers to be?" LOL!!! That is the first question my accountant asks me when it's tax time. | ||
| Court |
It's tougher to understand the financial implications until you understand the business structure. Buell Motorcycle Company ONLY designed and built motorcycles. They were sold to another entity when they left East Troy that handled warranty, customer service, publications, parts and accessories, marketing, advertising and so forth. Let me . . . as you guys seek to gain understanding . . . give you an example. Tom Harris works for Harley-Davidson, earns $150,000 a year and is assigned to Buell marketing. He spend roughly half his time on chaps and fringe and half on Buell. Buell is gone. Do you think his salary will go to $75,000? Harley-Davidson will likely be dispatching (they have been using the word "release") about 2,200 more folks and they have just announced their worst results in history during the quarter which is traditionally the best quarter of the year for motorcycle sales. Buell was providing more to Harley-Davidson than it was costing. Buell may be closed but Harley-Davidson has much more serious problems. I just spent 3 days in Milwaukee visiting with people. Harley-Davidson is becoming a collection of folks running frantically around (two of the news accounts of the Buell decision used the word "frantic" and "desperation") keeping busy telling folks how busy they are and how important they are. Not my idea of job security. Keep an eye on Ketih. | ||
| Mikej |
Keith? | ||
| Hex |
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| Ev780 |
As a business manager I feel very confident in saying that HD knows EXACTLY how much Buell was making or losing. In fact I suspect there are internal documents that explain how much they made or lost on ULYs, Lightnings, 1125's, T-shirts, accessories, parts or most other sub category you want. My not be on public financial statements, but any business leader with half a brain has at his or her disposal a ton of financial detail. Rest assured that if Buell was a cash cow it would still be being milked. It wasn't and it is gone. I am not arguing that it is not a viable business unit given other leadership but Harley screwed it up and Harley got rid of it. | ||
| Cyclonedon |
Keep an eye on Ketih. Court, how in the hell did he get that job to begin with? He seems to know absolutely nothing about motorcycles or the people that ride them! I wouldn't have any problem with Harley parting ways with the Buell motorcycle line because they are NOT the type of motorcycles that Harley is known for making. But when I say parting ways, I mean by selling the Buell division, not just closing it! It seems like Harley Davidson is quickly returning to the days when AMF owned them. I'm not so sure they can survive with their current leadership. It's going to get interesting if new leaders are not found soon. | ||
| Mikej |
Oh, this Keith: http://www.harley-davidson.com/wcm/Content/Pages/H D_News/Company/newsarticle.jsp?locale=en_US&articl eLink=News/0414_press_release.hdnews&newsYear=2009 &history=news Only functionally on the job since May 1st. Mayday seems an appropriate call at this point in time, followed by bonzai. | ||
| Rfischer |
Corr: "Banzai And I am in total agreement with EV780's comment. H-D management, at some level, knows precisely how much everything connected to Buell operations made or lost them. That is not to say that senior management and/or the board relied exclusively on those numbers when making the decision they did, only that they were/are aware of them. Conversely, one has to wonder how aware Erik and his folks were of these numbers as the closing apparently caught them completely off-guard. It is the question that puzzles this simple staple salesman most. | ||
| Hex |
On the Maypole: The Maypole is often considered a phallic symbol, coinciding with the worship of Germanic phallic figures such as that of Freyr. One clear sexual reference is in John Cleland's controversial novel Fanny Hill: ...and now, disengag'd from the shirt, I saw, with wonder and surprise, what? not the play-thing of a boy, not the weapon of a man, but a maypole of so enormous a standard, that had proportions been observ'd, it must have belong'd to a young giant. http://en.wikipedia.org/wiki/Maypole | ||
| Buellinachinashop |
"I just spent 3 days in Milwaukee visiting with people. Harley-Davidson is becoming a collection of folks running frantically around (two of the news accounts of the Buell decision used the word "frantic" and "desperation") keeping busy telling folks how busy they are and how important they are. Not my idea of job security." That's exactly what I have been hearing. Some folks at the PDC are going to such great lengths to stay off the radar they won't take vacation days, will eat at their desks, don't break and won't even bring a cell phone to work. If you drive by the PDC on Sundays and see car in the lot, thos folks aren't being paid OT, I can promise you that. | ||
| Hex |
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| Doylejj |
This probably wasn't purely a money decision. Even if Buell made money for HD, if management thought they could divert Buell investments they forecast to earn x% to tee shirts/foreign sales/who knows what which they forecast to earn x+% (or had less risk of loss), they could easily persuade a CEO without any feel for the business that he should "go with the brand". | ||
| Court |
>>This probably wasn't purely a money decision. I agree. The financial costs and implications are known precisely. | ||
| Hughlysses |
I found this story a while back, I wonder if Mr. Wandell was the one who ordained this policy for Johnson Controls (employees in Europe may not ride motorcycles while on company business): http://thekneeslider.com/archives/2007/04/16/johns on-controls-ltd-bans-motorcycle-use/ | ||
| Prior |
Many companies have a policy against riding motorcycles on company business. It all comes down to liability. | ||
| Hughlysses |
More bad news from Harley: http://www.manufacturing.net/article.aspx?id=22483 8 | ||
| Mndwgz |
Too many 'gators on the track down here... http://www.naplesnews.com/news/2009/oct/28/harley- davidson-closing-testing-operations-naples-/?partn er=popular http://www.harley-davidson.com/wcm/Content/Pages/C areer_Opportunities/loc_naples.jsp?locale=en_US 26.17°N 81.5°W http://www.harley-davidson.com/wcm/Content/Pages/C areer_Opportunities/talladega.jsp?locale=en_US | ||
| Technomad |
HD likely took out the 15% notes in anticipation that the recession would be short lived. While there are some signs of recovery, it's very uneven, large companies are still shedding jobs, and few are hiring in the current uncertain climate. HD lost that bet. MoCo management is probably now looking at future cash flow forecasts that scare them. Closing Buell and now the Eastern test tracks would be efforts to improve on that. | ||
| Rex |
I am sure they are setting around the tables looking for every way to save money and keep the stock up. Every area was probably evaluated. I am sure they reviewed Buell and MV Agusta, and Harley Davidson, and came to the decision they need focus on what they do best. Sell cruisers. All short term focus. But to stay alive, it was their decision. I am sure they said we do not need to be in the sport bike market. Get rid of everything that does not help make the core product stronger. Take all of the work that people are devoting to Buell, Mv Agusta, and other items and get rid of them. Cut back production facilities, cut back on employees, and concentrate all of our work on the cruiser and HD marketing products. They are hoping to cut the loss of money, put profit back into the bank, and show the stock market they can manage assets. Investors like to see proactive management. Be flexible and cut where you need too. Most of the market probably thinks it is a good deal. Getting back to basics and only concentrating your work force brains and work on your strong core products. I am sure every area of the company was reviewed and every manager was asked to come into the meeting with a certain % of a cut in their areas, or even discuss areas outside of their responsibility. I have been in those kinds of meetings several times in my career. You are really only working on short term, keep us afloat thinking. Not long range goals of the future. it is a survival mode, and you hope you make the right decision. | ||
| Hellgate |
HD knows the cost to the penny and expenses to a penny for Buell operations. They are on a major "financials" computer system (pretty sure it is SAP) and each business area has a cost center. It is a simple matter of addition and subtraction on a balance sheet. Just because they "sold" 98% of their bikes, who cares? The question is what is the Return on Investment for development, production and service costs for Buell? My guess is the cost exceeded the revenue. Also Buell and MV took away from the "core" business of HD; buttless chaps and other gay clothing. They are no longer the "Motor Company", they are an image company/lifestyle company. By selling B and MV, HD is returning to their core business; buttless chaps... As you can see I'm not an HD fan, never have been. |
