Stripped-down Harley rebounds from recession


Some motorcycle enthusiasts feared Keith Wandell might be the outsider who drove Harley-Davidson into the ground. Instead, he may be remembered as the guy who kept the motorcycle maker on the road.

Wandell grabbed the handlebars at the motorcycle maker in the heart of the economic crisis in 2009. Harley lost $55 million that year, as buying a motorcycle stopped being an option for many consumers.

“We had to make, quickly, some big, bold, decisions,” he said in a recent interview.

Wandell was the first CEO from outside Harley, so those decisions were watched closely. Not all were well-received. He got the union’s approval to use temporary workers, which enabled Harley to time its production closer to the peak bike-buying season, saving time and money. He relied less on middle-aged men in the U.S. to buy the bikes. And he focused the company on doing what many say it does best: making big, powerful, premium-priced Harleys. But that meant getting rid of some popular secondary brands.

The company made $624 million last year, the best annual profit since 2008. It also boosted profit by 30 percent in this year’s first quarter, compared to the same period in 2012. With lower costs and more efficient production, analysts say Harley is in a good position to grow as the global economy improves and in better shape to weather any future downturn.

“We’ve just got an awesome future,” Wandell summed up in a recent interview.

It’s a far cry from when he started. The recession and credit crisis sent shockwaves through Harley, a company that had done so well for so long that there was little incentive to innovate. In the early 2000s, many dealerships had waiting lists of buyers, and sales and profit grew year after year. Then, in one year, bike shipments dropped about 25 percent and the company laid off hundreds of workers.

Under Wandell’s direction, Harley angered many riders when it pruned popular divisions. Wandell stands by his decision. “We only had a fixed budget for product development, and we were spending it on three brands,” he said.

Harley modernized its operations in York, Pa., and renegotiated key union contracts so that it could use temporary workers to ramp up production quickly as it heads into the summer, when bike-buying peaks. In the past, the company estimated eight or nine months out what customers would want. If it was wrong, dealers had to trade bikes with each other to fill orders, costing them and Harley money. Now, Harley has to look ahead only a few months, making its predictions more accurate.

The company is in the midst of a similar but smaller transformation of its Kansas City, Mo., plant. By the end of this year, it will have spent $490 million to modernize, an investment it expects to save it $320 million a year in manufacturing costs.

As a result, profits are now rebounding faster than bike sales, said Bill Selesky, an industry analyst for Argus Research.

“It comes down to one thing … They can produce a bike as good, if not better, at a cheaper cost,” Selesky said.


Reader Comments ...


Next Up in Business

4 of the best ways to turn your home into a cash cow
4 of the best ways to turn your home into a cash cow

Your house is a large expense with many associated costs like a mortgage payment, insurance, maintenance and more. It provides a roof over your head, of course, but since it usually costs you money each month, why not put it to work for you and earn some cash in the process? The following are four ways your house can make you money: If you're planning...
6 things to know about working for Uber
6 things to know about working for Uber

Uber has been making headlines in recent months for everything from a new CEO to industry regulation. But if you want to work as a driver for the service that revolutionized the taxi-transport industry, there is more important information about Uber you'll want to check out. Here are six things you need to know about Uber before working for them...
Hatch to Sherrod Brown: ‘Don’t spew this stuff at me’
Hatch to Sherrod Brown: ‘Don’t spew this stuff at me’

Sen. Sherrod Brown and Senate Finance Committee Chairman Orrin Hatch are garnering attention today for a yelling match they had last night at a hearing over the tax reform bill working its way through the Senate. Hatch, a Utah Republican, took umbrage at comments by Brown saying the tax bill will help the rich at the expense of the poor. &ldquo...
Elder-Beerman parent company to close 40 stores
Elder-Beerman parent company to close 40 stores

Bon-Ton Stores Inc., the parent company of Elder-Beerman, will close at least 40 stores by the end of 2018. The retailer will shutter about a sixth of its 260 department stores, furniture galleries and clearance centers. The chain has Elder-Beerman stores at the Dayton Mall, Mall at Fairfield Common and several others at Dayton area locations...
Jeweler offering same-day delivery in Dayton, Cincinnati
Jeweler offering same-day delivery in Dayton, Cincinnati

James Free Jewelers is offering same-day delivery service in select areas throughout Southwest Ohio. The jewelry company has upgraded its website to offer customers the ability to schedule appointments with jewelry experts for private jewelry showings or via video. Customers can also now chat online with a James Free representative. “Imagine...
More Stories