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Archive through January 17, 2017Odd30 01-17-17  07:36 pm
         

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Prior
Posted on Tuesday, January 17, 2017 - 07:39 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

I was at the HD 100th anniversary concert with HD corporate tickets that got us somewhat close to the stage and with a lot of dealer owners and other HD employees. The talk was that the Rolling Stones plane was at the MKE airport and they were the headliners along with some other well-known openers. When Elton rolled on stage people went nuts, booing, complaining and a lot of the folks I was around just left. Best quote was from some British guy that was standing next to me- "Bloody fvcker doesn't even own a motorbike"

I didn't know you then, Brankin, but we could have drank a lot of beer then too! It was an ill-planned event. But hey. I saw Elton John and there's no way in hell I'd pay to see him.

I did meet some HD brass when I was there (my buddy had an internship with them in styled surfaces), I was back later that summer for a company picnic and got into the product development center late on Friday night when my friend went in to upload pictures from the event. Saw my first Firebolt in person (that was in the cafeteria), saw Willie G's office and some of the stuff that was covered up in the design space outside his office and some other cool stuff. I ended up with a prototype HD tank in raw steel too, JB2 painted that up in the prefect color scheme for me. That's Imron paint and it's like a mirror...



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Davegess
Posted on Tuesday, January 17, 2017 - 09:29 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

"Castiglione magic act" indeed, They parlayed the old Aermachi brand, which they bought from HD for a song, along with their Cagiva brand into a huge MC business that a bunch of brands including Ducati. They managed to sell then all off one by one for a profit and I don't think any of them were profitable when sold. Then they sold MV to H-D but one of the brothers got to run the place and got paid big bucks to do so. Then H-D paid all the debts, paid to complete development on all the new bikes, and then had to pay millions into a fund to keep the employees working, the place was still losing money, when they paid the brothers to take it back.
I suspect they dropped 250 million on the deal. Buell could have built a real super bike AND gone racing and winning that kind of money. sad
I once said to Erik that I would't want to ever do business with Castiglione and he said, "I want him to teach me how to do business; )
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2tracksam
Posted on Wednesday, January 18, 2017 - 12:56 am:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

Negotiate expected growth and a payable lump sum years into the future based on said growth. Watch the market tank or some other shorting activity and renegotiate an exit payable in today's dollars. Few companies want to admit to a failure to perform due diligence so an easy out saves face and deeper looks in the books.
Before HD it was Proton, MB/AMG in 2014/5 (Dieter Z's announcement was a page from HD's), and now Russian VC money (Ocean Shores).
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Reepicheep
Posted on Wednesday, January 18, 2017 - 09:20 am:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

LOL Dave. Awesome story.

Odd asked:

quote:

What I don't understand is shutting down Buell for a 130 million instead of selling it for 30 million and then taking out a 330 million loan from Buffett at 15% interest




For sure there would have been pretty big logistical issues disentangling Buell from HD. But nothing a pissed off set of elves couldn't have sorted out perfectly well over a couple months. So a factor, but not a determining one.

The next reason was purely spite. Buell didn't put a lot of time into sucking up to HD executives to make them feel important or feel good. And Buell was never shy about accidentally cannabilizing HD markets (like people going in to buy Road Kings and walking out with A Uly, or going in to buy a sporty and coming out with a lightning). They didn't target them, but when it happened the response was likely "sucks to be you, try harder". Which was the same response they would have had if they cannibilized their own sales, because that is how they are, but that's not how HD thinks.

Another answer eventually leaked out. Maybe in the Wheelnerds interview? I forget the exact details, but it had to do with available lines credit left to dealers, and HD inventory that needed to be moved to those dealers.

HD needed all current Buells the hell off of dealers floors, and they needed to make sure no other Buell used up a cent of what was now an almost non existent line of dealer credit. Selling Buell instead of executing it would have made things worse, not better, as they would have been handing a huge foothold into most of their dealer network to a competitor, and in their heart of hearts they likely knew Buell had the potential to be MUCH bigger than it currently was if it wasn't constantly starved and beaten.

At that moment, I don't think they were thinking "we need more profits". I think they were thinking "we got greedy and lazy and bet the farm, and it went wrong in a big way, and we do this or we get sold in bankruptcy next year".
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Upthemaiden
Posted on Wednesday, January 18, 2017 - 11:06 am:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

The dealer network and current loans were the biggest reasons I had heard, but I assume spite was a big factor in them not being willing to work something out. With my lack of experience in finance and accounting, and knowing that loans are sold from one lender to another all the time, I'm not entirely sure why HD couldn't just lump together every one of the Buell loans and sell them off to another lender. As far as the dealerships, nobody with a Buell ever wanted to set foot in an HD dealership in the first place, so I'm sure we could've resolved that situation amicably.

I can see them just wanting to wash their hands of it, although despite being a "Made in America" company who is huge into being local and homegrown, they seemed to be oddly fine with saying "tough luck" as they shut the door on a bunch of workers. It's too bad they couldn't have just given Erik that deal MV Agusta had.
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Reepicheep
Posted on Wednesday, January 18, 2017 - 12:30 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

It wasn't the Buell loans, it was the dealer loans. Dealers can't afford to buy then sell bikes. So they finance the bikes that sit on the showroom floor, like from GE Capitol or something.

Overnight, because of crashing credit bubble, three things happened:
1) The amount of available loan money kicking around went from "irrationally high" to "irrationally low"
2) The money that was there was terrified of overextended consumers, who had just crashed the mortgage loan market, and what is effectively a "motorcycle mortage" was even more sketchy than an unsecured house mortage.
3) The bike market was crashing because consumers had no money either.

The net effect was dealers had a lot of bikes on the floor they couldn't move, and even if they sold one, they may not have been able to get another loan to get a replacement for it.

Harley is sitting on a mountain of bikes they now can't sell, because their buyers (the dealers) don't have room and can't get money.

Harley is also sitting on their own hidden time bomb, "Eagle Credit", that made the really sketchy zero down home loan market look like the paragon of virtue and wisdom. In other words, if the market figured out how bad Eagle Credit really was, Harley isn't getting a cent from anyone anywhere ever again. It really is game over for them.

So:
1) Do the Buell shutdown and fire sale to make as many dealer floor holes as possible, and hope some eek out enough credit to grab a sportster or something.

2) Do the Buell shutdown so you can bury a mountain of staggeringly bad finance in division bets in "shutdown expenses" and hope the market doesn't see through your shell game.

3) Don't, at all costs, do anything that would let somebody else get a toe in the door of your dealer network. Like letting BRP buy Buell, them putting the Buell's back in the same showrooms, and then sneak in an Indian or a Victory next to it as well.

Just speculation on my part. I have no proof, no inside information, and I am not a corporate finance expert.

(Message edited by reepicheep on January 18, 2017)
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Upthemaiden
Posted on Wednesday, January 18, 2017 - 02:38 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

That makes sense, I was only thinking of the loans customers use to buy the bikes, which I knew they could get straight from HD. I wasn't thinking about loans the dealerships used to stock their floors.

The saddest part of the whole event was that picture of the dumpster filled to the top with XBs. That picture nearly killed me. All I can hope is that there was at least one or two rogue employees at the demo site that at least stashed a few of those bikes before sending the rest to the crusher. You can't even imagine how ridiculous I'd look if I had seen that dumpster outside of a building, trying to flip a few of those bikes out of the dumpster, and trying to push them all the way back to my house, move one bike 10 feet, move another 10 feet, move a 3rd 10 feet, move the first one another 10 feet.... Would've been worth it!
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Reepicheep
Posted on Wednesday, January 18, 2017 - 03:31 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

Good news for you then... that picture wasn't what it was said to be.

It was an old picture that predated the close, and it was test bikes that by law had to be destroyed. Bad things were likely done to them as a part of testing before they got on the dumpster list... very bad things. Like "Court starts a sentence with 'well, what if...'" levels of bad things....

I wouldn't be surprised if there was some creative storage solutions applied to various bikes of difficult to determine status when the factory was closed, but I'm fairly positive they all found a home that was much more loving than a dumpster. And given Harley's goal was "make this go away" I doubt they really cared.

(Message edited by reepicheep on January 18, 2017)

(Message edited by reepicheep on January 18, 2017)
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Froggy
Posted on Wednesday, January 18, 2017 - 08:04 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

Yep the dumpster bikes appeared to be mostly prototypes. If you looked closely you could see things like the word "Buell" embossed in the frame on some of them, something that never made it into a production bike. Looking at it again, I see at least a X, XT, 1125R, and an SS on top of countless other bikes and random parts I can't make out.
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2tracksam
Posted on Thursday, January 19, 2017 - 12:31 am:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

What was or is the status of the Barracuda that Cycle World tested? Was that a "misplaced" prototype and is there a way that survived when assumed others didn't?
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Kenm123t
Posted on Thursday, January 19, 2017 - 01:21 am:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

I m betting the Barracuda is in Courts New Barn. Hidden in the Buell Swag. It will be found in 4-5 years when he (if he unpacks)
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Court
Posted on Thursday, January 19, 2017 - 08:05 am:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

>>>All I can hope is that there was at least one or two rogue employees at the demo site that at least stashed a few of those bikes before sending the rest to the crusher.

You may sleep soundly.
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Upthemaiden
Posted on Thursday, January 19, 2017 - 08:30 am:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

haha at least I can feel a little better any time I see that picture in the future.
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Fdl3
Posted on Thursday, January 19, 2017 - 12:29 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

Yep the dumpster bikes appeared to be mostly prototypes.
Even so...the parts...THE PARTS! Gah!
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Hughlysses
Posted on Thursday, January 19, 2017 - 12:36 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

I still wonder, if you knew where to look in a scrapyard near East Troy, might you find a pile of these junked bikes buried in the back of their lot somewhere?

That reminds me of a tale I heard regarding a scrap metal place about 20 miles from here. 10 or 15 years ago, they got a contract to scrap out-of-date, defective or otherwise undesirable tread mills from some company. After a couple of months doing this, it occurred to someone there that the treadmills looked perfectly serviceable, it seemed a shame to scrap them, so they started selling them on Craigslist cheap. All was fine until someone who bought one had a problem and called the manufacturer to see about getting it fixed. The buyer had to give their serial number and the manufacturer soon figured out what was up and the junkyard was in hot water.
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Airbozo
Posted on Thursday, January 19, 2017 - 02:21 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

Hugh,
I have a similar story about SUN and Cisco parts. The scrapper and his buddies ended up in jail. One is still on the run out of country.
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Court
Posted on Thursday, January 19, 2017 - 04:09 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

>>>ven so...the parts...THE PARTS! Gah!

Trust me . . . you don't want the parts.
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Reepicheep
Posted on Thursday, January 19, 2017 - 04:59 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)


quote:

Bad things were likely done to them as a part of testing before they got on the dumpster list... very bad things. Like "Court starts a sentence with 'well, what if...'" levels of bad things....




Seriously. Would you want a part from a bike Court tested? ; )
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Doz
Posted on Thursday, January 19, 2017 - 06:40 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

I would buy a part, frame it. With the caption below saying...."you should hear the story behind that part, remind me to tell you sometime."
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Court
Posted on Thursday, January 19, 2017 - 09:14 pm:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

Hahahahaha . . . the first thing that comes to mind was the day I was sent to test an S3 with "revised frame geometry" . . . . .

Remind me to tell you THAT one some day . . .

:-)
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Hughlysses
Posted on Friday, January 20, 2017 - 08:48 am:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

Would you want a part from a bike Court tested?

Hey, I'd be OK with a turn signal assembly, or a seat maybe. Anything more critical than that, probably not.
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Reepicheep
Posted on Friday, January 20, 2017 - 10:41 am:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

Check that turn signal for birdshot from a farmers shotgun. Especially if it smells like diesel. Which was supposed to be gasoline, dammit!
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Court
Posted on Friday, January 20, 2017 - 11:16 am:   Edit Post Delete Post View Post/Check IP Print Post    Move Post (Custodian/Admin Only) Ban Poster IP (Custodian/Admin only)

>>>Especially if it smells like diesel. Which was supposed to be gasoline, dammit!

That was ugly . . . about 19oF / . . . sleeting and totally miserable.

I learned a lot of "life lessons" that day on a bike was "didn't exist".
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