The Canary in the Coal Mine???

[PapaUtah]

I hope this isn't catching...Motoprimo here in the Twin Cities recently closed one location to "consolidate" in their new building...and then this from the Miami Herald this morning...

"Worried that the desire for open-road thrills will be no match for a slowing economy, Harley-Davidson's© top South Florida dealer dismissed a quarter of its workers this week.

The firing of 41 employees from Bruce Rossmeyer's Harley-Davidson© were spread over four South Florida locations: Fort Lauderdale, Pompano Beach, Sunrise and Boca Raton. Twenty-eight of the dismissed employees worked for the company full-time, according to a statement from Florida's top dealer for the high-end choppers.

No firings were announced for Rossmeyer's Harley-Davidson© dealerships in Daytona or New Smyrna Beach. They also plan to reduce hours at its stores in Fort Lauderdale, Pompano Beach and Sunrise.

The dismissals follow a down year for Harley-Davidson© sales, which were off 4.7 percent nationwide as of September, according to company filings. Company executives predicted a challenging year in 2008, too."

 

[ponyfool]

So a 4.7% dip in sales lead to a 25% reduction in dealership staff?

I don't think the minor dip in sales had anything to do with it. Sounds more like the dealer simply over extended expecting a surge rather than a dip.

 

[pickax]

This is the same dealer who lost the sale of an "08 road king from a coworker to the dealer one county over.

They wouldn't budge from MSRP.

 

[Murph]

The fact is that, due to a variety of reasons, sales of recreational vehicles have slumped in recent times and manufacturers are scrambling to address the problem. To save costs and reduce production, HD will temporarily close plants next week (click here). Undoubtedly, layoffs will occur at dealer level ... especially at dealers that provide few or no winter offerings (such as many HD dealers).

These problems are not only limited to motorcycles. My wife works closely with a major boat manufacturer that is also scrambling to find solutions to the recent trend of slumping sales and, in fact, is looking closely at HD's method of handling the problem by cutting labor costs through breaks in production. Given the multi billion $$$ industry that is recreational vehicles, ramifications could be big and could send ripples throughout the economy.

The problem is much greater than to simply cut prices and hope for increased sales. I would suggest that, should sales continue to slump, we will most likely see line reductions and fewer models being introduced in the next few years. That would be in sharp contrast to the amazing growth of the industry during the last decade. I'm only saying it could happen ... but let's not jump out the window just yet.

 

[snowmonkey]

The fact is that, due to a variety of reasons, sales of recreational vehicles have slumped in recent times and manufacturers are scrambling to address the problem. To save costs and reduce production, HD will temporarily close plants next week (click here). Undoubtedly, layoffs will occur at dealer level ... especially at dealers that provide few or no winter offerings (such as many HD dealers).
These problems are not only limited to motorcycles. My wife works closely with a major boat manufacturer that is also scrambling to find solutions to the recent trend of slumping sales and, in fact, is looking closely at HD's method of handling the problem by cutting labor costs through breaks in production. Given the multi billion $$$ industry that is recreational vehicles, ramifications could be big and could send ripples throughout the economy.

The problem is much greater than to simply cut prices and hope for increased sales. I would suggest that, should sales continue to slump, we will most likely see line reductions and fewer models being introduced in the next few years. That would be in sharp contrast to the amazing growth of the industry during the last decade. I'm only saying it could happen ... but let's not jump out the window just yet.

So, should I sell the HD and Bayliner stock and buy PPK?

 

[Pjturbo]

Not PPK, Starbucks. No matter how bad the economy gets people will still buy $7 a cup coffee. Anyway I already have my FJR.

Phil

 

[gr8eyes]

No buy gold

 

[Murph]

I'm more a fan of SWHC (symbol lookup) .... but I'm old-school!

BTW - I totally agree with the $7 coffee comment! Seriously, why buy a $6.50 coffee when you can buy another for $7?!!? :lol:

 

[PapaUtah]

International sales are up. Hopefully Yamaha will keep improving the FJR and not let it rot on the shelf. But in the face of sales headwinds like this manufacturers may just reduce that R&D budget a little to maintain the bottom line. 10 years of great sales numbers...guess we need to pay the piper sometime... <_<

 

[FJRMGM]

So a 4.7% dip in sales lead to a 25% reduction in dealership staff?
I don't think the minor dip in sales had anything to do with it. Sounds more like the dealer simply over extended expecting a surge rather than a dip.

+1 - bad business practices are everywhere.

 

[snowmonkey]

I'm more a fan of SWHC (symbol lookup) .... but I'm old-school!

The Smith & Wesson stock looks good except for that major drop this month. Ruger had a similar drop. What's up with that?

 

[4KLESS]

It may simply have been a matter of economics. I suspect the debt service on the new location is staggering and the consolidation may be both a means to increase the income per square on the new facility to an acceptable level and a realization that MP had capacity well in excess of its projected business across the two facilities. IIRC MP has always been a list price shop as well. I live on the north side of the metro so haven't done much business with either location. There is a dealer on the north side who employs a similar pricing strategy; they are my last resort for parts and I would never consider buying a cycle from them. I figure if they're not going to pass on the advantages of their size and volume on to their customers, then I will spend my money in an establishment that at least appreciates my business. The sport-touring segment of the market continues to be popular so I don't think we're at risk of seeing the FJR become stagnant like the C1000 did. If the market contracts significantly, I 'd expect R&D to drop on entry-level, dirt and niche bikes before something like the FJR.

 

[Murph]

4KLESS, very interesting analysis that makes sense (although, admittedly, I don't know the market in which this dealer competes). Nevertheless, I could discuss the general topic all day.

I can say with confidence, however, that long-term big decisions are made with respect to a brand's share across a particular segment....so each mftr would manage model cuts or line reductions differently dependent on where its models rank within their segments (for example, Harley continues to introduce Sportster line extensions since that model ranks at the top of introductory cruisers).

Bringing this around to our shared interest in the sport-touring segment and if/how Yamaha would handle model cuts, etc., we first have to consider how large is the "supersport touring" segment and what is the FJR's share? This is interesting to consider (and, at most, is just mere speculation) but this discussion has the possibility of going anywhere. I am interested to hear what others think about mftrs addressing decreasing sales, possible scenarios, and if/which models would be most likely to be cut.

Personally ... and it pains me to say this ... I could see the FJR being eliminated since it is a highly targeted model within a highly targeted segment that is becoming increasingly more competitive. Then again, the FJR undoubtedly has a nice, increasing sales curve since Yamaha used the order process to drive demand and control inventory for the first few model years. Still, I can see mftrs focusing on the low end $ bikes and cruisers since (1) that is where the volume is (eg. many re-entry riders go to those segments first when seeking a bike); and (2) if things continue to go the same direction, banks will continue to tighten lending requirements thus impacting the ability for many to purchase higher ticket bikes of $10k+.

Again, I'm not saying we should be jumping out windows (or getting Smith & Wessons) ... I'm only speculating on what could happen should certain economic factors continue.

 

[Bustanut joker]

.
These problems are not only limited to motorcycles. My wife works closely with a major boat manufacturer that is also scrambling to find solutions to the recent trend of slumping sales and, in fact, is looking closely at HD's method of handling the problem by cutting labor costs through breaks in production. Given the multi billion $$$ industry that is recreational vehicles, ramifications could be big and could send ripples throughout the economy.

The problem is much greater than to simply cut prices and hope for increased sales. I would suggest that, should sales continue to slump, we will most likely see line reductions and fewer models being introduced in the next few years. That would be in sharp contrast to the amazing growth of the industry during the last decade. I'm only saying it could happen ... but let's not jump out the window just yet.

Murph Don't know what type of Boat those guys are building but the company that employs me is currently on track to have another record year in sales. I don't know what we're doing right but have a couple of models we can't build fast enough.

Current production is 16 boats a day. I've been on mandatory ten hour days since April. Going to ramp up a second shift to meet demand shortly. And we're in Michigan where the economy just plain sucks.

:jester:

 

[Murph]

Murph Don't know what type of Boat those guys are building but the company that employs me is currently on track to have another record year in sales. I don't know what we're doing right but have a couple of models we can't build fast enough.
Current production is 16 boats a day. I've been on mandatory ten hour days since April. Going to ramp up a second shift to meet demand shortly. And we're in Michigan where the economy just plain sucks.

:jester:

Good to know...and proof that not everything is down right now. Besides, as I've been saying, I really don't want to jump out a window!

 

[Bustanut joker]

Back on track, an old school chum just bought out one Harley dealership, and built a new one a county over. (to add to the two he owns in Tejas) He just opened a Honda dealership in town last year and says he did better that he expected. Going multi line in the spring.

Sounds more like bad business practice did in the Fla. dealer

:jester:

 

[camera56]

No buy gold

That was a great idea about 8 months ago. Or yesterday. It's up $15 today.

 

[gr8eyes]

Remember the 70's,inflationup oil up gold hit 850 an ounce in 80. Same scenario now. 850 an oz in 80 would be 1500/oz in todays dollars. Plus the dollar has rolled to the edge of the bed. When it falls out watchout. IMHO of course.

 

[Fore Stroke]

I'm more a fan of SWHC (symbol lookup) .... but I'm old-school!

The Smith & Wesson stock looks good except for that major drop this month. Ruger had a similar drop. What's up with that?

Hmmmmm.........too many perps in the jernt, with few havin' the current need to buy any "gray market" firearms, prehaps?.....for semi-scientific validation, should also check to see if there's been a corresponding rise in the sale of KY Jelly mirroring the stock drop....I'm not sayin............