The initial market reaction to Artie Starrs ' appointment as new President and CEO( effective October 1st) has been very positive- especially from dealers. So far, he has made it clear that his management start-point policy priority is " all about the dealers "- and a Big Fat Hurrah for that. From his motorcycle training at Maverick H-D in Texas, to his conversations at the Milwaukee Dealer Forum and extensive dealer Road Trip visits, it is apparent that this is one " outsider " who is determined to ' get it '- for Mr Starrs, it is not ' all about him '. Listening to his remarks and Q & A answers with analysts and investors, after the Q3 ' fiscals ' were released( November 4), it quickly became apparent that he is a ' good study '. That he is an experienced executive who is well versed in the art of resisting the leadership temptation of thinking that the job title automatically endows an answer for everything. The only remark he made that didn ' t quite work for me was describing Harley as manufacturing the best motorcycles in the world. Were it true, then the ' MoCo ' wouldn ' t have gotten into its present mess in the first place. However, let ' s be clear- Harley makes the best Harleys. Indeed, gold star for Mr Starrs the best in its history and a range that many tens or even hundreds of thousands of current non-Harley riders globally could benefit from taking a closer look at. However, as regular readers will know, my ' beef ' with how Matt Levatich and Jochen Zeitz have been replaced is that this present board of directors is tragically guilty of underestimating and misunderstanding the changes that have taken place in the international motorcycle industry since the end of Harley ' s post AMF ' heyday ' in 2008. Sad to say, Harley has singly failed to track never mind embrace the altered attitudes to motorcycle ownership expectations and riding experiences that define newly emerging generations of potential customers when the industry ' s tectonic plates shifted. My view, that Harley needs management that is experienced in and drawn from within the international motorcycle industry, is well known and remains unchanged. Given a strong following wind, there is nothing that Harley-Davidson ' s research, design, engineering and production engineers can ' t achieve with the right vision and backing. The Pan America has proved that. Therefore, spending most of the money raised from the KKR / Pimco HDFS deal on share buy backs, rather on their in-house ' skunk works ', will not be judged well by industry historians. Though to be fair, as with the other questionable asset sales, that happened before Artie Starrs ' watch began. His focus will rightly be on what he can affect and how he intends to confront the issues that prior decisions have stored up. In these regards he has already demonstrated that ' He has game '. Backing his dealers and ultimately, his engineers, is absolutely the place to have started and all else should flow from there. It would appear that this is exactly where the new CEO ' s ' head is at '. In the investor Webcast, Starrs outlined four decisions that he said he had already taken. First, accelerating the focus on improving inventory management still further and, in name checking Touring and CVO model inventories, reducing oversupply of the most expensive and, by definition, most capital-intensive models, certainly chime with other remarks he ' s credited as making- especially in terms of optimizing " capital efficient " growth.
Will Artie Be a Star?
The initial market reaction to Artie Starrs ' appointment as new President and CEO( effective October 1st) has been very positive- especially from dealers. So far, he has made it clear that his management start-point policy priority is " all about the dealers "- and a Big Fat Hurrah for that. From his motorcycle training at Maverick H-D in Texas, to his conversations at the Milwaukee Dealer Forum and extensive dealer Road Trip visits, it is apparent that this is one " outsider " who is determined to ' get it '- for Mr Starrs, it is not ' all about him '. Listening to his remarks and Q & A answers with analysts and investors, after the Q3 ' fiscals ' were released( November 4), it quickly became apparent that he is a ' good study '. That he is an experienced executive who is well versed in the art of resisting the leadership temptation of thinking that the job title automatically endows an answer for everything. The only remark he made that didn ' t quite work for me was describing Harley as manufacturing the best motorcycles in the world. Were it true, then the ' MoCo ' wouldn ' t have gotten into its present mess in the first place. However, let ' s be clear- Harley makes the best Harleys. Indeed, gold star for Mr Starrs the best in its history and a range that many tens or even hundreds of thousands of current non-Harley riders globally could benefit from taking a closer look at. However, as regular readers will know, my ' beef ' with how Matt Levatich and Jochen Zeitz have been replaced is that this present board of directors is tragically guilty of underestimating and misunderstanding the changes that have taken place in the international motorcycle industry since the end of Harley ' s post AMF ' heyday ' in 2008. Sad to say, Harley has singly failed to track never mind embrace the altered attitudes to motorcycle ownership expectations and riding experiences that define newly emerging generations of potential customers when the industry ' s tectonic plates shifted. My view, that Harley needs management that is experienced in and drawn from within the international motorcycle industry, is well known and remains unchanged. Given a strong following wind, there is nothing that Harley-Davidson ' s research, design, engineering and production engineers can ' t achieve with the right vision and backing. The Pan America has proved that. Therefore, spending most of the money raised from the KKR / Pimco HDFS deal on share buy backs, rather on their in-house ' skunk works ', will not be judged well by industry historians. Though to be fair, as with the other questionable asset sales, that happened before Artie Starrs ' watch began. His focus will rightly be on what he can affect and how he intends to confront the issues that prior decisions have stored up. In these regards he has already demonstrated that ' He has game '. Backing his dealers and ultimately, his engineers, is absolutely the place to have started and all else should flow from there. It would appear that this is exactly where the new CEO ' s ' head is at '. In the investor Webcast, Starrs outlined four decisions that he said he had already taken. First, accelerating the focus on improving inventory management still further and, in name checking Touring and CVO model inventories, reducing oversupply of the most expensive and, by definition, most capital-intensive models, certainly chime with other remarks he ' s credited as making- especially in terms of optimizing " capital efficient " growth.
Second, focussing on " market responsive customer facing promotions. These are designed to drive traffic to our dealers, help close more sales and support the reduction of touring inventory by moving units through retail." It ' s kind of shameful that prior marketing initiatives don ' t appear to pass that test. Third, " we ' re assessing alternative approaches to ecommerce, working closely with our U. S. Dealer Advisory Council. The goal here is to better meet the expectations of today ' s consumer while maintaining the right balance with the needs of the dealer network." Dealer-centric marketing. Yes, yes and yes again. " Fourth, we ' re reviewing the Fuel Facility Program guidelines to provide more flexibility for dealers. While that review is underway, penalties for noncompliance will be suspended for twelve months." For a brand that is said to champion freedom and individuality, that ' s a big slab of brand cookie-cutter BS gone right there. Initial observations about strengths and opportunities centered on " brand and community "- delivering " the best products for our customers "; " strengthening our manufacturing capabilities " and third, the dealer network. " It ' s clear to me that the exclusive dealer network is a unique and powerful differentiator. We need to build on that foundation." It ' s also kind of shameful that a 123-year-old business has to be talking about " building on foundations ", but such has been the unstitching of that most fundamental primary asset in recent years. So far, there ' s been no mention of going back to private ownership. That ' s going to be a tough Genie to ever get back into the bottle. In addition to ' Pizza and Golf ', Starrs has served time in the investor world so maybe that will be an unwind too far for him. " We ' ll continue to invest in supporting and strengthening the dealer network as we all navigate the evolving commercial environment." He said that HDFS " continues to be a significant strength and asset to the company, and to the HD dealer network," and that " post transaction, this will continue to be the case." In terms of opportunities, he said that the continued interest rate environment means that " affordability will be critical in winning in the market. Our product portfolio must balance aspiration with accessibility." He intends to ensure that Harley does not " over index on one product family while continuing to appeal to new riders. It is worth highlighting however that the average US consumer credit interest rate was more than double what it is now when Harley wasn ' t able to build bikes fast enough to keep up with demand. Just sayin '. " We must improve our speed to market [ Hurrah!]. We need to move faster to bring innovation to market and capture new riders. Finally, in the current demand environment, we must sharpen our focus on cost and capital efficiency." There ' s that phrase again- capital efficiency. Good start. Simple, practical, realistic- gold star for Mr Starrs.
Robin Bradley
Co-owner / Editor-in-Chief robin @ dealer-world. com