From: carlp@frigg.isc-br.com (Carl Paukstis)
Newsgroups: rec.motorcycles.harley
Subject: Re: The new motorcyle yuppies.
Date: 11 Dec 92 19:02:10 GMT
Organization: ISC-Bunker Ramo, An Olivetti Company

tomw@megatek.com (Tom Wright) writes:

>In article <Byyurn.MM6@news.cso.uiuc.edu> lahg8287@uxa.cso.uiuc.edu (Lisa A. Haynes) writes:

>Harley has been too conservative to tool up to meet the current demand. This
>allows them to have a high price and a good margin, but in the long term it
>huts their market share, especially on a world wide basis. One example: a

Maybe.  They don't think so, and the guys running the show seem pretty
level-business-headed to me; I met some of them at the Town Meeting at
the HOG rally in Reno this year.  They _are_ conservative,
deliberately.  They don't know how long this trendiness is gonna last;
they lost the company once, and almost a second time right after the
buy-back.  They don't wanna do it again by sinking too much of their
capital into inventory; they don't wanna spend that capital to buy
extra production capacity which may be wasted 3 years from now; 
they don't wanna hire workers they may have to lay off; they want to
make sure they maintain quality, at the sacrifice of quantity if
necessary.  Remember that part of the shortage last year was QC
problems with the new high-tech paint facility.  I _like_
their attitude - it's DIFFERENT for an American company these days.

There's only so much they can increase production at a time.  They are
slowly increasing, and with some prudent capital expenditures (like
that new paint plant).  Sooner or later they'll be running three
shifts everywhere and have to buy MAJOR new tooling.  They seem ready
to worry about that when it happens, and increase output in a
controlled manner while maintaining quality.  They're not making
cookie-cutters, here; it's a complex business to ramp up.

>Given that the supply to dealers is so low, none of them can afford to allow
>test rides. They need the most margin they can get out of the bikes they
>sell, and they can't get as much margin out of a bike that's been ridden.

Certainly not "none" of them offer test rides.  MOST of them DO,
counting the whole country.  It's been reported that H-D wants to
REQUIRE dealers to offer test-rides, but I don't know if this is
confirmed, and surely some of them do not.

>Harleys command fantastic prices outside the U.S. because so few are ex-
>ported. Harleys cost over $30,000 in Japan! With the manufacturing capasity
>to export 10 or 100 times their current tiny export volume, the company
>could afford even better engineering (which IMHO is currently quite good),
>and their increased volume could reduce manufacturing and parts costs. And
>exporting more Harleys could help our balance of payments.

Close to one-third of Harley's production is exported.  Same problems
apply, especially "trendiness".  To export 10 times what they do now,
they'd have to minimally quadruple production, and then there'd be 5
times as many Harleys leaving as staying - do you want that?  It's all
very well to think big, but do you have any idea what it means even to
quadruple production, let alone multiply by 10 times?

>tit-for-tat. If Japan puts a big tarif on imported Harleys, we can put the
>same tarif on imported Hondas, etc. (Of course this assumes someone in
>Washington would have even the tiniest bit of backbone and would not be
>influenced by the thousands of American lobyists hired by "Japan Inc." or
>polititions getting fat campaign contributions -- But I digerss...)
>Anyway, Harley could greatly expand their U.S. and world-wide markets by
>the most direct of methods -- produce more product!

>End of this segment of Economics 101.

Well, we disagree about tariffs.  If the Japanese put a big tariff on
Harleys, we (USA) should buy cheap Hondas by the boatload, 'til they
can't afford to make 'em no more.  And send our Harleys to Germany or
one of them other places with a V-Twin shortage.
--
Carl Paukstis, RRR&RSG         | "The good news is that Clinton will have to
 ISC-Bunker Ramo / Spokane, WA |  work very hard to do worse than Bush in terms
 Phone: +1 509 927-5439        |  of economic policy.  The bad news is that he
 Mail: carlp@mail.isc-br.com   |  will probably manage to do so." - Ed Ipser
Newsgroups: rec.motorcycles.harley