Harley Davidson Puts Labor Issues to Rest

On Friday the United Steelworkers and International Association of Machinists and Aerospace Workers, Local 2-209, is expected to approve a 4 year deal with Harley Davidson (HOG). Terms have not been disclosed.

Last summer 2,900 workers in York., PA struck and finally agreed to a 12% pay raise over 4 years and the agreement is widely thought to be a blueprint for the current negotiations.

Now that HOG has put to rest labor issues, the timing of this is very good for the company. Dealer inventories are reported to be tight all over and the spring selling season is beginning in earnest. With that being said, the last thing HOG would want at this time is a labor dispute that would cause delivery disruptions to dealers.

While 2008 is not supposed to be a banner year for sales by any means, all evidence is that the company and its dealer network have done a wonderful job controlling inventory levels.

With possible labor issues behind it, HOG will now be able to control production on its own term to assure steady inventory levels.


Disclosure: Long HOG.

Comments

[mallarde:]

I am wondering where these reports of "tight" dealer inventory levels comes from. Nothing is reported online that I see. Does the author have sources? Does he call the dealers himself and ask? Are people he knows shopping for bikes and asking salespeople how inventory levels are?

If, in fact, inventory levels are tight, that would be a very good fact for HOG in a quarter where auto sales are flagging. I have increased my short position and am waiting to see what happens.

2008 Apr 03 01:38 PM

[bmw99:]

I expect the stock will tank after earnings....I see nothing but a graveyard of bikes on dealer lots.....

2008 Apr 03 02:31 PM

[Nate C:]

I would agree with Mallarde, where are these reports of tight inventories coming from. HOG has been notorious for stuffing their inventory channels so they could meet earnings expectations. They report earnings when they ship the bikes to their dealers versus when they actually receive the money for the bike. Complete fraud.

On another topic, who is buying new motorcycles? Sub-prime people who are losing their homes, people who are getting layed off or having trouble with sky high inflation in food and energy prices. I guess after you lost your home, you go out and buy a 15-20K motorcycle. I dont think so.

2008 Apr 03 05:19 PM

[Old Trader:]

Another shoe dropping....traditiona... HOG earned a nice peice of change via their finance arm. Given the condition of the financial markets, and consumer lending, that train's left the station.

Jan

2008 Apr 03 09:35 PM

[NoFanOfHD:]

I believe when the author of this article indicates that the inventory levels are "tight." He meant to say that the inventory levels within the H-D dealer network are high. The rumor on the street would indicate that the H-D dealer network has a lot of 2008 model year units waiting to be sold. This isn't a good position for H-D seeing that the 2009 model year launches in just over 3 months.

This year has also been a very bad year in regards to quality issues. If you talk to your local dealer they will tell you this is the worst quality they've seen in nearly 10 years. The dealers are seeing poor paint and chrome quality, missing parts, wheels mixed, and paint color schemes wrong. What's going on at H-D??? I'm assuming from this article that now that the labor issues are resolved that all will be bright and shiny at H-D.....??

2008 Apr 04 10:15 AM