Harley Davidson Survives Major IT Implementation; London’s Black Taxi Company Not So Lucky

Harley’s earnings take a hit, but 2013 situation looks better; Manganese Bronze goes into administration

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Harley Davidson Survives Major IT Implementation; London’s Black Taxi Company Not So Lucky

Back in 2009, iconic motorcycle company Harley Davidson began a painful restructuring of its manufacturing operations and work force in the face of weak consumer demand and nagging quality issues. One major element of its restructuring plan was a massive transformation of its York, Pennsylvania facility to increase its “factory customization, enable more flexible production and provide end-to-end supply chain integration.” 

The effort was described CEO Keith Wandell in April  2011 as including the “retraining our entire workforce on a new operating system, outsourcing nearly 2000 non-core parts and subassemblies, moving and reconfiguring production lines, implementing a new ERP [enterprise resource planning] system and redefining our vehicle delivery process. The restructuring of our York facility is expected to be largely complete in the first half of next year [2012]. Through the next several quarters, we continue to expect York deficiencies will be adversely impacted by restructuring activities.”

The company had hoped to launch the ERP system in the early spring of this year, but in testing the system, Harley said it found “opportunities to improve the design of the system and reduce downtime during launch,” according to a Central Penn Business Journal story. In other words, it didn’t work as expected. The launch date was pushed back into July, a delay that was somewhat fortuitous because it meant that the ERP launch was not going to take place during the height of this spring’s selling season, and instead would support the company’s transition to the 2013 model year, albeit that delay would affect bike production as well.

Yesterday, Harley Davidson announced that it had earned $134 million for the quarter ending Sept. 30, down from $183.6 million for the same quarter last year, due to the York ERP launch over the summer. However, the launch was successful, the company said, although it will likely take the next several months to fully optimize the system. The news, along with an increase in Harley international sales, sent the company stock up some 7.6 percent while the rest of the market took a beating.

Elsewhere in the automotive industry, however, the news is bleaker. Manganese Bronze, the maker of the iconic London black taxi, announced this week that it was going into administration—normally the U.K. version of U.S. bankruptcy law's Chapter 11, but in this case, probably its death knell. As I noted a few months ago, a new accounting system installed in 2010 missed some key transactions during the cut-over and led to an understatement of £3.9 million in historical losses, which weren’t discovered until recently. The company, which has been under strong competitive pressure, saw a massive sell-off of its already weakened stock.

Then a few weeks ago, the company announced a recall of 400 of its latest TX4 model taxis due to a steering box defect. The announcement forced the company to suspend trading in its shares.

Unless a deep-pocketed buyer emerges, the 64-year old company will be no more.

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