| Author | Message | ||
     Ft_bstrd |
Reading many of the posts that seemed to come almost weekly here on BW about dealerships dropping Buell didn't sink in, but I was thinking tonight, what if part of the decision was the ever shrinking dealer base? Was there a minimum number of dealers willing to carry the Buell line for Buell to be viable? Did we cross over that threshold? Buell needed to sell X number of Buells each year to stay in the red. Was the numbers of sure purchases by Buell dealers calculated to be insufficient? We buy from the dealers. Once the dealers have bought the bikes, Buell has made their money. | ||
| Hex |
Should read: Buell needed to sell X number of Buells each year to stay in the black. There I fixed it for you. | ||
| Ft_bstrd |
Doh, sorry. Shouldn't post past 12:00 am. | ||
| Cityxslicker |
Cordoreau pants ? I know they were an alarm trend when I was a kid. | ||
| Rpm4x4 |
Thats why buell should be allowed and encouraged to also be sold outside the harley dealers. Buell should be sold right next to the competitors bikes. | ||
| Aptbldr |
+1/2. If not the hard numbers, could be the hard resistance of dealers to continue with the distraction of Buell on their floors. Lately reading/re-reading BMC 'historical' pieces, included are descriptions of BMC's lucky break with H-D: '02-'93, EB attends a very-important-dealers outing. Court reminds us here frequently: dealers are H-D's real/primary customers. | ||
| Ft_bstrd |
The problem is that there was no supply system available to support sales outside of HD's dealer network. There was no separate technical system, there was no separate parts system, there was no separate delivery system, and there was no separate training system. This is the main reason (at least stated by HD) that Buell isn't being sold. It's not hard to move the bike sales outside HD. It's VERY hard to move the rest of the dealer proposition outside HD. | ||
| Greg_e |
Not anymore, now it is just difficult and the biggest issue that must be answered for any buyers that would try to get HD to sell Buell. But I do not think this is impossible if there is a good plan with decent amounts of money to bankroll buying back all the parts and to train service people. I would say nothing will happen until at least Spring and then they would still need to get service people trained and ready to put in place in the new dealers. Time and money, but there might still be hope. Of course it is super easy to sit here and speculate like this, it's not my time or money being put on the line. But I do hope someone can come up with a solid plan and convince HD to sell the line. | ||
| Chadhargis |
So let me get this straight... HD says they can't split off Buell parts, service, etc?? Last time I checked, EVERY Buell part I ever purchased had a unique Buell part number and even said Buell on the bag/box. Training, well, there's nothing to that. HD does the training at a negotiated fee. Engines? Rotax supplies the 1125, HD supplies the Thunderstorm. What's hard about that? We're not talking about a huge company. It's a little sportbike company. Distribution should be no problem. Load 'em on trucks and ship 'em out. Logistics ain't rocket science. Heck, even this old IT geek has built logistics systems before. The only thing Buell would need is a dealer network. Selling franchises would allow new dealers on board, and as part of the selling price, current successful dealers could be maintained or grandfathered in. It's not that big of a deal to get this done. HD doing the whole "smoke and mirrors" thing to make it seem like they can't sell Buell is insulting to those of us who've operated in the business world for years and have seen pieces of companies sold off or others merged in for years. Being in IT, I've worked on a lot of the back end stuff. Modern technology being what it is, it's VERY easy to carve out everything Buell from HD's systems and sell it off. They IT team could probably export everything in a couple of days tops. | ||
| Hughlysses |
I wonder if the root of Harley's evident refusal to sell Buell isn't the XB engine? Hell, there may not be ANY parts on the 1125 associated with Harley, but the XB engine comes from a Harley plant. Knowing the reputation of Harley's apparently massive legal staff, maybe they consider it a liability to have a Harley built engine associated with an outside produced product. Providing engines, spare parts, etc. for XB engines would tie a new Buell company in with Harley's internal administrative systems. Maybe this just means that whatever new Erik Buell motorcycle company comes out of this won't have access to XB engines. | ||
| Macbuell |
Every manufacturing company has a minimum number of units to sell to cover their costs. That's just business. If Buell had a hard time making that number it points more to a flawed business strategy than it does a flawed product. Forcing Buell to sell their bikes in HD dealerships was a bad business decision. | ||
| Indybuell |
I think it all boils down to the finance wing making WAY too damn many sub-prime loans to people who had no freakin business buying a new bike, plain and simple. | ||
| Rainman |
Too many loans and then the complete fail of the American manufacturing system. In our little town alone we've lost more than 2,000 jobs in two years, jobs that paid $40,000 a year. When they go, so does the ability to buy and spend. Holiday Inn don't pay that much to bus boys and neither does Hardees. | ||
| Mikej |
Could be that the "dealer's vote" mentioned in a different thread was simply an analogy for "the number of dealerships signed up to carry the brand". But I'm late to the discussion so consider this just talking to myself and the lamp over in the corner.... | ||
| Mikej |
Let's play with that for a moment: Let's say your business model requires 20% of your dealership base to carry a product for that product to be qualified for the distribution system. Then let's assume you have 1,000 dealerships to simplify the math (the lampshade has the light on but I'm not sure if anyone's at home). Now let's say your best friend Sven is a world class chess player and Sven has designed a nostalgic chess set with the pieces representing various founders of H-D and of various component parts of past motorcycles. So being Sven's friend you take a copy of the chess set to a July dealership meeting and ask how many dealerships would be willing to stock some chess sets in their dealerships. Many of the dealers and their reps there say sure, why not, and they place initial orders. Sven is now a happy camper. But after a year or 20 the dealerships start dropping the chess sets because they say their local customers don't play chess. Sven tries to organize some BattleChess matches to display how well the chess pieces are balanced which frees up a player's mind to focus on the game more and less upon the manipulation of the chess piece itself, almost as if the chess piece simply goes to where you point it just by thought alone. Sven's team even comes up with accessories and clothing and carrying cases. But all to no avail as some of the dealerships just have no interest in chess. So the numbers dwindle and eventually you have to call up your friend Sven and say that he no longer meets the requirements of the distribution business plan. You offer to have Sven stick around to help design shot glasses and pool cues where handling is also an asset, but one has to wonder just how happy Sven will be with that. Overly simplified and totally wrong in analogy, but the lampshade seems to smile in acknowledgement even though the lamp itself believes that while that story might tell part of it that there is probably more to the story. I think I'll spend some time this weekend reading my copy of the Buell story and look at the names of those who so graciously signed it. If anybody needs me I'll be sitting in the chair over in the corner, next to the lamp, reading the history of Buell and pondering the future of the elves therein. | ||
| Indy_bueller |
You just made my head hurt. Good analogy though. | ||
| Jpl9sx |
One thing that shocked me from the Harley press release was their income tax rate of 61.8 percent ! I'm an owner of a small business and I would be closing my doors pretty fast if I had a tax rate that high. Income Tax Rate The Company's third-quarter effective income tax rate was 61.8 percent compared to 38.2 percent in the same quarter last year. This increase was due primarily to the tax implications of MV Agusta, including the non-deductible write down of goodwill, and the impact of reduced Company earnings. The Company expects its full-year 2009 effective tax rate on continuing operations, excluding MV Agusta, to be approximately 59 percent due to the previously reported one-time charges for the Wisconsin tax law change and the non-deductible goodwill write-off for Harley-Davidson Financial Services, as well as the impact of reduced earnings for the remainder of the year. | ||
| Jlnance |
This is the main reason (at least stated by HD) that Buell isn't being sold. This discussion assumes logic, which I think is a mistake. I don't know what Buells numbers are, but I was under the impression that they were operating in the black. That may have changed this year, I don't know. But I get the impression that they had their finances in order. While it's always possible to do things better, particularly with the help of hindsight, I get the impression Buell was doing well enough to survive if all you're basing that decision on is their financials. My opinion, and I certainly could be wrong, is this. HD is in trouble, and their management has to report this to their owners (stockholders.) If you're going to tell someone bad news, you at least want to have a plan to present for getting out of the mess. The plan is "focus on what made us a fortune in the past." Chunking Buell and MV is a way to demonstrate to their shareholders that they actually intend to do something. Also, when company's are loosing money, shareholders want to see cost cutting, which means someone is getting fired. It's always easier to fire people at remote sites than it is the people you work with every day. Buell was sacrificed because someone had to go. Another thought that occurred to me is this. And again I'm not claiming that it ever occurred to anyone else. HD's largest asset is the lore associated with their name. Just imagine a world in which people's first though when they heard "American Motorcycle" wasn't HD but Buell. That would be a devastating thing for HD, and owning Buell wouldn't make up for it. The reason they are not selling Buell may be that they are afraid it would be successful. Based on a comment I saw from Court once, I don't think HD ever envisioned Buell growing to it's current size when they bought it. We all assume that Buell got axed because they didn't sell enough bikes. What if the truth is they sold too many? | ||
| Tramp |
You do all realize our nation's struggling with a near-unprecedented recession that as-much-as bankrupted even GM, right? No "cash-for-clunkers" incentive involving motorcycles ever came about, hence American MC manufacturers are feeling the pinch. HD let its lowest bottom line performer go. Period. No need to over-engineer the neverending conspiracy theories. Mighty GM would be no more were it not for federal intervention....and you wonder why a tiny American Sportbike division was dropped from Harley-Davidson? Anyone who couldn't see this coming months ago really isn't in touch with the realities of the American, let alone world, markets. This has been considered a forgone conclusion some time ago by most MC enthusiasts I know who maintain their Ser. 7 with their jobs downtown. Let's celebrate our shared passion for these wonderful Buells, and let's be there, on Badweb, etc., to help our fellow Buellers find the parts & service they need. We need to keep our collective eye on that ball. ...and let's keep X-Files where it belongs.....in the reruns on Nick at Night. (Message edited by tramp on October 20, 2009) | ||
| Rainman |
At the risk of setting a precedent that will result in the tarnishing of his image, I concur with Tramp. I think the dropping of Buell has more to do with economic panic most manufacturers are feeling and the pinch of job losses. That doesn't mean it was a good idea or a smart idea, but a lot of managers are flailing about trying to figure out how to make a dolla. I'm in the newspaper business. I know about epic flails. | ||
| Gowindward |
Tramps right! The economy is hurting, it is not getting better. You can look at this http://investor.harley-davidson.com/downloads/CG_B oardList.pdf And read the quotes from here. http://hellforleathermagazine.com/2009/10/harley-d idnt-calculate-savings.html Tell me which one of those board members is passionate about motorcycles. Not just H-D's but motorcycles...anything that rolls on two wheels and has an engine on it. My guess is that not one of them road 500+ miles on any day this year. I bet not one of them road on a day it was going to rain. I bet not one of them really has any bait in this other than their fat board of directors salary and stock options. It is a very sad state to see a company so rich in motorcycling history being run by folks that could probably careless if they get to ride to work, or take that long road trip for no other reason than to be on the motorcycle. It is sad to see them more concerned with their "brand" than making motorcycles. It's very very sad. | ||
| Chadhargis |
I still want to know if Buell was making money or not. I have seen some saying they were losing money and some say they were still making money, just not as much. What are the actual facts? If Buell was indeed making money, and HD scraped them....that's the mystery. If they were a big money pit, and losing their shirts, then I can't and don't blame HD for their decision. Companies who aren't profitable deserve to be shut down. I do not believe in corporate welfare. If HD kept Buell limping along as long as they could, then we should laud them as heros for trying to keep the brand alive, but if they shut them down for no good reason other than financial trickery, then they should be ashamed. | ||
| Tramp |
One can still make money while losing money...I know I certainly have. I can earn a decent weekly wage and still have a debt over my head that I can't begin to pay on that wage, which is the impasse at which many in the manufacturing sectors now find themselves. Manufacturing is expensive, and excesses needed to be cut. A s much as some may whine and moan about directors not logging 2-wheel miles on, it's still business, and we're all hurting. Wake up and smell the unemployment | ||
| Swordsman |
"Manufacturing is expensive, and excesses needed to be cut. " Er, in terms of production, wasn't Buell an entirely separate entity, and actually posting profit? If so, the above wouldn't apply, because H-D was not manufacturing Buells, nor were they paying for it. I culd be wrong there... I've read so many different things on here, I could be mixing them all up. ~SM (Message edited by Swordsman on October 20, 2009) | ||
| Hughlysses |
Following up on Chad's post, we have apparently conflicting statements from Wandell, CEO of HD. In one he says: "Our decision to discontinue Buell and sell MV Agusta takes in to consideration the following: investment in the Harley-Davidson brand has provided greater returns than either the Buell or MV Agusta brand..." source: http://seekingalpha.com/article/166808-harley-davi dson-inc-q3-2009-earnings-call-transcript That certainly implies HD Inc. made a profit from Buell. It also follows that it could be a reasonable strategy to close Buell on this basis. If you had two savings accounts and one earned higher interest than the other, you might choose to close the lower interest one and put the money in the higher interest one, right? OTOH, he also said this: "Wandell said that the company intends to reinvest capital that would have gone into the Buell brand into the Harley-Davidson brand. The corporation made a $6.6 million capital investment in Buell last year and a $4 million investment so far this year. In return, the brand lost $18 million in 2008 and $27 million so far in 2009, including the $14.2 million impairment charge, he said." source: http://milwaukee.bizjournals.com/milwaukee/stories /2009/10/12/daily59.html That doesn't seem to reconcile with the original statement. Why not say "we were losing thousands on every Buell made" in the original statement if that were the case? I'm sure the bottom line on this will be revealed eventually- it would seem to be the crux of any business case for a new motorcycle company. It's probably better for us not to speculate further at this point. I'm going home and ride my new 1125CR...  | ||
| Ferris_von_bueller |
Buell wasn't manufacturing Buells. They were assembling the parts they engineered and had someone else manufacture, no? | ||
| Rkc00 |
+1 Tramp  | ||
| Ferris_von_bueller |
It's probably better for us not to speculate further at this point. Why not? Did you get a cease and desist order from HD? | ||
| Liquorwhere |
Court kept talking about the 200 year plan, I wonder where in the plan closing after 26 years was written. Maybe Court needs glasses or something and it was really a 26 year plan. I don't know. I know it bums me out, but in the end HD owns it and can do what it wants with it. It seems it was a stock price motivated deal. The market loves companies that layoff and cut costs or cut lower producing lines. I think they are trying to bolster the price a bit, stop the bleeding and get some capital built up to take a shot at marketing what they have left over. Just my 2 pennies. (Message edited by liquorwhere on October 20, 2009) | ||
| Rubberdown |
O.k Hugh .... CONGRATULATIONS!!! |
