2011 Annual Report
Total Page:16
File Type:pdf, Size:1020Kb
With 2011 in the rear view mirror, Harley-Davidson keeps covering ground. The road remains stretched out before us, and we’ve got plenty of distance left to travel. But we are passing significant mile markers. Our journey of transformation is bringing us better ways of working and taking us to new places all over the world. Changing our ways hasn’t been easy—nothing worthwhile ever is. And at every turn, we are being inspired by the dreams and expectations of our customers. 02 Harley-Davidson, Inc. 2011 Annual Report changes in seasonal demand. We also expect to have significantly greater flexibility to adjust product mix based on retail demand. Similar changes are underway in the operating structure at our manufacturing facilities in Kansas City, Milwaukee and Tomahawk, Wis. Harley-Davidson employees in our Complete Knock-Down (CKD) production facilities in Manaus, Brazil, and Bawal, India, are implementing the same common operating system as well. And in Manaus, we moved into larger space to provide the capacity to meet the In 2011, Harley-Davidson’s journey of transformation gained needs of that growing market. great momentum. It is a multifaceted journey to make us more In short, every aspect of our approach to manufacturing centers on one thing: getting agile and more effective at exceeding customer expectations, the right motorcycle to the right customer and, in doing so, to create growth opportunities and sustain at the right time. our business for all stakeholders far into the future. Shorter Product Development Times When it comes to creating remarkable motorcycles, we have re-engineered our entire product development approach We have come a long way from where we While we celebrate these and other with a focus on three key elements: began just over two years ago, and our 2011 2011 successes, our focus remains clearly 1) a laser focus on the best product opportunities; results reflect this progress. Income from on the road ahead and the continued 2) reduced time-to-market; and continuing operations more than doubled execution of our transformation strategy. 3) increased product development capacity to $548.1 million on a 9.3 percent increase We expect the changes underway through e≈ciencies. in revenue, compared to 2010. in our approach to product development, While Harley-Davidson has an At retail, the Harley-Davidson brand manufacturing and the retail experience outstanding lineup of products, and they are showed its continued power and appeal, will enable Harley-Davidson to be clearly a driving force behind our success with sales of new Harley-Davidson world-class and customer-led in everything at retail, what we are the most excited about motorcycles up 5.9 percent globally for we do, and we are pursuing this work is that the best is yet to come! the full year compared to the prior year. with a relentless drive. Today in product development, there are In the fourth quarter alone, new Harley- 30 percent more projects in development Davidson motorcycle retail sales grew Flexible Manufacturing than there were just two years ago. We are 10.9 percent globally year over year, In 2011, we made great strides in the devoting 25 percent more engineering including an 11.8 percent increase in the transformation of our York operations. resources to innovation. Over the coming U.S.—our largest market. All Touring, Softail® and Tri Glide® years, customers will see a remarkable Our share of the U.S. heavyweight motorcycles are now built under one roof, stream of new products: motorcycles for our market stood at a record 55.7 percent in 2011. on one assembly line. Even more powerful core market, our outreach markets and We were also number one or number two in than the bricks-and-mortar change is the international markets. heavyweight motorcycle market share in change in the culture, where the employees nine countries across Europe. We generated on the line are creating and implementing A Premium Customer Experience… strong growth in Latin America as the operating improvements on a daily basis. the World Over result of a significant number of new dealers. Beginning in early 2013, we expect to At retail, Harley-Davidson and its And new Harley-Davidson motorcycle have surge capability at York, enabling us to worldwide dealer network are creating the sales in the Asia Pacific region grew, despite more closely match production to vision and implementing the strategy to the effects of the natural disaster early keep us great—not just as the best motorcycle in the year in Japan—our largest market dealer network, but as one of the world’s in the region. best retailers. 03 Together with our dealers, we are contributions of Willie G. Davidson, marshalling the resources, the systems, who is retiring at the end of April after the tools, capabilities and talent that nearly half a century as head of styling. will improve all the ways Harley-Davidson Willie will stay close to Harley-Davidson interacts with customers. One example as Chief Styling O≈cer Emeritus, and is eCommerce, where later this year through special design projects and his we will roll out an entirely new, rich and presence at rallies and events. distinctly Harley-Davidson online Few individuals have the kind of shopping experience. impact on an organization, a brand and a The goal of this transformation at lifestyle that Willie has had, and his retail is quite simple: to provide a legacy will continue to grow, thanks to the premium retail experience with every talent he has nurtured in the Harley- customer, every day and everywhere, Davidson styling studios. Everyone with while strengthening dealer profitability. a love for motorcycles owes a great deal to Just as with the transformations in his vision and talent. All of us are honored product development and manufacturing, to have been blessed by his presence. we believe the opportunities and Clearly, Harley-Davidson has an amazing potential are tremendous. history and story. We also believe there is We believe there is tremendous untapped potential in this great brand, and through our transformation we are unleashing that potential. We also continue to expand the tremendous untapped potential in this great Harley-Davidson experience to the many brand, and through our transformation roads of the world. In 2011, we added 35 we are unleashing that potential. dealers in international markets, including While much remains to be done, we are Mexico, India, Thailand, Turkey, China well down the road and everyone involved and Brazil. deserves much credit for bringing these changes to life. I continue to be impressed Fulfilling Dreams by the efforts of all our employees, dealers At the core, these three transformations— and suppliers to deliver for our customers. in manufacturing, product development and No doubt there will be challenges on at retail—come down to one thing: we the road ahead. But our vision is clear and must ensure, in a world of ever-increasing we are resolute in our determination, customer expectations, Harley-Davidson working as one company, one team and continues to fulfill dreams through moving in one direction, to deliver for remarkable motorcycles and extraordinary all our stakeholders. customer experiences far into the future. While fulfilling dreams is truly a team effort, I want to recognize, on behalf of all of us at Harley-Davidson, the extraordinary Keith E. Wandell Chairman, President and Chief Executive O≈cer Harley-Davidson, Inc. 04 Harley-Davidson, Inc. 2011 Annual Report Our journey is marked by the measurements of how far we’ve come. More retail sales, increased income and continued success with outreach markets help tell the journey’s story. 111.1% VS. 2010 2011 INCOME FROM CONTINUING OPERATIONS OUTPERFORMEDHOG S&P 500 $ +12.1% HDI STOCK PRICE ROSE 12.1% 548.1 IN 2011, WHILE THE S&P 500 WAS VIRTUALLY UNCHANGED MILLION U.S. MARKET POSITION—OUTREACH DEMOGRAPHICS(1) 3.2 MILLION FACEBOOK FRIENDS 40% ARE 18–34 YRS OLD 05 % 2011 HDI REVENUE 9.3 MOTORCYCLES & RELATED PRODUCTS OPERATING VS. 2010 INCOME (DOLLARS IN MILLIONS) $ $561.2 5.31 $378.8 BILLION RESTRUCTURING IN CUMULATIVE ANNUAL ONGOING SAVINGS THROUGH 2011 AS A RESULT 2010 2011 $217 MILLION OF RESTRUCTURING ACTIVITIES 2011 HARLEY-DAVIDSON NEW HARLEY-DAVIDSON MOTORCYCLE RETAIL SALES(3) FINANCIAL SERVICES RETAIL MOTORCYCLE LOANS(2) EUROPE, MIDDLE EAST $2.2 UNITED STATES LATIN AMERICA AND AFRICA ASIA PACIFIC BILLION +17.3% VS. 2010 FINANCIAL SERVICES OPERATING INCOME (DOLLARS IN MILLIONS) $268.8 ALL-TIME HIGH MARKET SHARE(4) UNITED STATES EUROPE REGION $181.9 55.7% 13.7% % % 2010 2011 +0.8 VS. 2010 +1.0 VS. 2010 (1) U.S. market share position, on-road motorcycles, all sizes, based on the most current data available (full year 2010). Source: R.L. Polk & Co. motorcycle registration data. (2) Retail motorcycle loans written in 2011. (3) 2011 compared to 2010 (4) Full-year market share, 651+cc. Percentage points increase is 2011 compared to 2010. Source: U.S., Motorcycle Industry Council; Europe Region, ACEM, Association des Constructeurs Européens de Motocycles, The Motorcycle Industry in Europe. Europe Region data includes Austria, Belgium, Denmark, Finland, France, German, Greece, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom. 06 Harley-Davidson, Inc. 2011 Annual Report MARK STRONG / Technical Lead, New Product Steve Collins and Mark Strong 07 % 30 Models now in development will The goal: more products delivering more launch at world-class speed, cutting the time impact to more customers every day. it takes to bring products to market by 30%. Every rider knows the feeling that comes from finding the one—the Harley-Davidson motorcycle that you simply can’t live without.