Can a senator save Harley?
Today's Financial News - Posted January 16, 2009
Any company that relies on consumers or credit are in for a long road ahead. Harley Davidson (NYSE:HOG) sells the ultimate discretionary item… coolness. Will the government save the Hogs, too.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): Some investors may be in “hog” heaven going into the weekend after learning that a lawmaker from Pennsylvania is trying to kick start Harley Davidson’s (NYSE:HOG) chances of survival.
Or here’s another way to look at the story… one more failing company is turning to the government for a handout.
As I wrote earlier in the week, Harley Davidson is suffering from an ailment eerily similar to the catastrophe brewing in Detroit. The symptoms are much the same: high union wages, a slump in product demand and a near-complete halt in consumer credit.
Harley’s only saving grace? It has a smart management team and an even better brand image. Unfortunately, two top-level managers are on their way out and the brand is quickly being eroded by a growing consortium of American competitors.
Here comes Uncle Sam to the rescue
But if Senator Bob Casey Jr., D-PA, gets his wish, Sheila Bair and the FDIC could soon boost the motorcycle manufacturer’s hopes of success. The congressman wants Harley, more specifically its Harley Davidson Credit Corp, to be considered eligible for the funds set aside to help save failing financial institutions under the Temporary Liquidity Guarantee Program.
Harley is certainly not a bank, but it finances nearly half of the bikes it sells. With the credit markets still suffering from a case of lockjaw, it cannot sell bikes if its financers cannot make loans.
So far, it has been tough for most companies to get qualified for the guarantee program. Harley will likely run into the same speed bumps After all, the FDIC has never had to guarantee money deposited through Harley. But this is a new economy that requires new rules, at least according to our lawmakers.
Unfortunately, this may not be an easy battle for the company to win. We saw the trouble GMAC had. Harley does not have near the political clout of Detroit, even though a Fat Boy sounds so much cooler than a Chevy Volt.
For shareholders, even short-term traders, this is news to watch. It is barely making headlines today. But as Casey’s demand gains momentum, you can bet it will have an impact on share price. At the very least, it may ensure Harley has a few bucks out of the next round of stimulus earmarked and sent to Milwaukee.
If Detroit is too big to fail, Harley is too cool let go. But it may be too late.
Next Article: The news will dominate Wall Street this week
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January 22nd, 2009 at 12:24 am
this is sort of funny I requested help from Casey’s office and I was told to go through the SBA, let the fats ask and Casey is all but ready