BizNews
DANIEL N. JOHNSON
FEATURE
Harley-Davidson chairman and CEO Jochen Zeitz on a Harley Pan America, the company’s first entry into the adventure touring segment.
Harley-Davidson accelerating its plans for the coming years By Arthur Thomas, staff writer JOCHEN ZEITZ started riding motorcycles when he was 16. The chairman and chief executive officer of Harley-Davidson Inc. stopped in his 20s before starting again in his 30s. “It’s a life stage that you have to age into to be ready to ride a Harley, to have the time and the money to actually do that, and that’s a huge asset for us,” Zeitz said at a recent Harley investor day. In the 1990s and 2000s, baby boomers helped push Harley-Davidson to new heights. In recent years, many observers have wondered if the company could withstand its core customers aging out of the sport of motorcycling and if it could attract new rides. But attracting an 18-year-old to buy a Harley is not the goal Zeitz has in mind. 12 / BizTimes Milwaukee JUNE 6, 2022
“That’s really not focusing on the right thing,” he said. Harley’s estimates suggest that from 2015 to 2021, around 800,000 Harley riders aged out of motorcycling, while around 2 million left but could return in the future. Those losses were offset by around 3 million new and returning riders, pushing the number of Harley riders from 2.9 million to 3.1 million. “The key focus needs to be getting to those customers who want to start riding again,” Zeitz said. From 2021 to 2030, Harley estimates it will be able to add 5.7 million new and returning riders, offsetting 1.8 million riders aging out of motorcycling and 3.2 million leaving with the potential to return. The result would be 3.7 million Harley riders in 2030, an almost
20% increase from current levels. Reaching those levels is part of the stage-two version of “The Hardwire” plan, a strategic vision for the company through 2025. The updated version of the plan, released at the investor day, sets more ambitious targets for the company’s growth. The original plan called for mid-single digit growth in revenue at Harley-Davidson Motor Company and LiveWire, Harley’s electric motorcycle brand. The new plans call for growth of 9% to 11%, which would return Harley’s motorcycle business to sales levels it saw in 2018 but not quite to the levels of 2015 and 2016. Harley is in the process of spinning LiveWire off into its own public company through a sale to a special purpose acquisition corporation, or SPAC. Harley will remain the majority owner of the new LiveWire. In 2018, operating margins came in at 8.5% for the Milwaukee-based motorcycle maker. The
latest Hardwire plan calls for the combined Harley-Davidson and LiveWire to reach an operating margin of 12% by 2025, moving closer to 2017’s 12.5% and still trailing the 14.7% from 2016. Profitability has been a point of emphasis for Zeitz and his team since taking over in early 2020. Harley cut $135 million from its operating expenses, cut its product lineup by 40% and exited 40 markets globally. Harley’s latest plans call for $400 million in cost productivity by 2025, including optimization of its manufacturing footprint, investment in automation, reduced reliance on expedited freight, realigning the supply base and material cost optimization. “The next big opportunity for cost takeout is across the supply chain,” said Gina Goetter, chief financial officer of Harley, adding the company is looking at its manufacturing “to optimize delivery times and improve profitability in all of the markets in which (it)
