Slotted to take place on July 21st, potential buyers will be able to bid on EBR’s assets, in bulk. All winning bids are of course subject to court approval, which will be granted/not granted quickly after the auction, on July 23rd.
The bar isn’t set particularly high when it comes to the motorcycle media’s coverage of complex business issues, nor would you really expect it to be. The majority of my colleagues are more likely to have amateur or racing licenses, rather than MBAs or law degrees. Fortunately for A&R, I’m not an accomplished motorcycle racer.
It therefore didn’t surprise me last week that the headlines regard Erik Buell Racing ranged in their proclamations from the more accurate “ceased operations” to “gone bankrupt” – with the even more presumptive publications proclaiming the ultimate demise of the American brand.
This comes from a lack of understanding about how the receivership process works, which my European colleagues should have a stronger grasp of, as the concept is more prevalent across the pond.
As such, I would like to explain the issue further, and how it applies to the situation facing Erik Buell Racing. To entice you on what will surely be a boring subject to many, this doesn’t spell the end of Erik Buell Racing…not even close.
News being broke by the Milwaukee Journal Sentinel says that Erik Buell Racing has ceased its operations. The East Troy company plans to also file for protection from creditors under Chapter 128 of Wisconsin’s bankruptcy code.
Under Wisconsin law, EBR will be placed into receivership (the company will be run by attorney Michael S. Polsky), and ultimately bids will be made on purchasing the bankrupt company. If no bids are made, the company’s assets will be auctioned off, with the profits going to EBR’s creditors.
The great State of Wisconsin has begun to offer Harley-Davidson branded vanity license plates to its four-wheeled constituency. With the words “Share the Road” wedged underneath a double-dose of Harley-Davidson branding, the proceeds of the new plates will go to help fund State-sponsored motorcycle safety programs (a worthy cause).
Admittedly, we’re having a hard time with this story. On the one-hand, we love to see that motorcycle safety courses and programs are getting funded. There is a need to educate new riders, and to generally be good stewards for our sport and industry. On the other hand though, we generally frown on the commercialization of public programs, and while Wisconsin is the home of America’s largest motorcycle manufacturer, the whole thing just feels dirty.
Two months ago when Harley-Davidson stuck an ultimatum to its union workers, the company asked for work force concessions while it threatend to move production out of its Tomahawk and Menomonee Falls. Hoping to help sway the vote and keep Harley put, the State of Wisconsin extended Harley-Davidson a $25 million tax incentive to help lure the company into keeping production at its Wisconsin facilities. While the unions eventually caved to Harley-Davidson’s will, the Bar & Shield company announced today that it will not be taking Wisconsin up on its offer for tax breaks.
Through an Enterprise Zone tax credit, the Wisconsin Department of Commerce has handed Harley-Davidson a $25 million tax break for coming to terms with its labor unions in the company’s Tomahawk and Monemonee Falls production facilities. In a move that saw unions cave to Harley-Davidson’s ultimatum, the Bar & Shield brand has disclosed to the SEC that the agreement will save the company $50 million in annual operating expenses, but not before the company writes off a one-time charge of $85 million in restructuring costs, which includes the severance packages for laid off workers.
Workers at Harley-Davidson’s Menomonee Falls plants have caved to Harley-Davidson’s labor restructuring ultimatum today, voting to approve a seven-year labor contract that would see 275 jobs cut and a two-tiered workforce implemented in the company’s Wisconsin-based production plants. The vote comes after Harley-Davidson threatened to move its Wisconsin production outside of the state (Kansas City being one of the alternatives), which would see the unions losing its entire 1,350 member workforce.
After putting Wisconsin on notice that it was shopping around for other places to build its motorcycles, Harley-Davdison has reached a tentative agreement with local labor unions that would keep the Bar and Shield brand in The Cheese State. Harley and union officials have not disclosed the terms of the deal, but both the Harley-Davidson and International Association of Machinists and Aerospace Workers are recommending approval of the deal. The terms of the deal are expected to be released next week, so union members can vote on the contract on September 13th.
In about 18 months, roughly a thousand workers will be out of a job at the Polaris plant in Osceola, Wisconsin. In that timeframe Polaris plans to close the Osceola plant, and move its production south of the border to Mexico. The move comes about as Polaris looks to increase production efficiency (i.e. lower production costs with cheaper labor), which will then allow the company to be more competitive with its products’ positions in their respective marketplaces.
Harley-Davidson is looking to slash costs wherever they may be, and that includes its assembly/manufacturing line labor costs. HD and Milwaukee go together like peas and carrots, but Harley-Davidson has warned that if it doesn’t see lowering labor costs, it could walk away from Wisconsin all-together. At issue is nearlt $54 million in what Harley calls “costs gaps”, which the company attributes to the high cost of manufacturing at its Menomonee Falls and Tomahawk facilities.