Harley-Davidson Rewire Plan Suffers From Short Circuit
In April, Harley-Davidson CEO Jochen Zeitz announced that it was time for the company to change and recapture the magic that made it one of the most iconic motorcycle manufacturers in the world.
“As a result of my observations and assessment, I’ve concluded that we need to take significant actions and rewire the company now in terms of priorities, execution, operating model and strategy to drive sustained profit and long-term growth. We are calling it The Rewire and it’s our playbook for the next few months, leading to a new five year strategic plan, which we will share when visibility to the future returns.”
Apparently that visibility was obscured by the coroanovirus pandemic, which has laid waste to the motorcycle industry around the world. In the past few months, Harley sales have gone over a cliff. As a result, the company announced this week that it will trim its global workforce by 700. It expects about 500 workers will be laid off before the end of the year, according to TechCrunch.
In other news, CFO John Olin has been terminated, effective immediately. Harley-Davidson’s current VP Treasurer Darrell Thomas has taken over as interim CFO until a successor is appointed. “Significant changes are necessary, and we must move in new directions,” Zeitz says.
In many ways, Harley-Davidson is very much like the Big Three Detroit automakers — supremely confident that its products would continue to sell in perpetuity with very little investment in new technology. Although its basic V-Twin engine has been updated from time to time, its original concept dates back to the very beginning of the company in 1903. It’s as if Jaguar still put its fabled XK engine — designed in 1948 — into its cars today.
Despite threats to introduce an electric motorcycle for the past 5 years, Harley-Davidson has been afraid to move forward and afraid to move back for the past 5 years. Stuck in neutral, it has basically been begging for its own Kodak moment to happen. Its customers are getting older, and younger motorcycle enthusiasts are less content to settle for an antiquated machine whose primary claim to fame is an excellent imitation of a rhinoceros with an advanced case of flatulence.
Part of the plan to reboot the company was to move into manufacturing smaller electric motorcycles, scooters and bicycles, but unfortunately there are about 147 companies doing the same thing. Without that “potato-potato” beat of a V-Twin engine, Harley’s offerings can’t rely solely on name recognition, which peaked in 1969 in the movie Easy Rider. It’s been a long, slow, downhill slide ever since.
TechCrunch suggests the new new plan involves a back to basics approach that will feature a return to the company’s core products. “Crank up the V-Twin production line, Ephraim!” The company plans to say more about how it will move forward into the future during its Q2 earnings call.
What any of this means for the company’s long delayed LiveWire electric motorcycle is anybody’s guess, but if you said it is dead in the water you might not be too far from the truth. Two years ago, our own Michael Barnard laid out the reason why it would not save the company from its decline. Legacy automakers, especially those with their headquarters in Detroit, might find the Harley Davidson experience instructive. They are headed for the same cliff Harley has already stepped over and they won’t be able to use the excuse that nobody warned them.
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