BUSINESS Bloomberg Businessweek July 27, 2020
YIN LIQIN/GETTY IMAGES. DATA: MEDIA PARTNERS ASIAsell. “Our youngest buyer was 72,” says Kevin
Kodz, owner of Classic Harley-Davidson in Leesport,
Pa. “They weren’t hitting the market they wanted,
but those are the guys who can afford it.”
Defenders of LiveWire say it’s a so-called halo
product, an object of desire and aspiration meant
to redefine the brand. The company has said it plans
to electrify other parts of its lineup.
Meantime, Wall Street is counting on Zeitz being
a steely-eyed hatchet man rather than the eco-
conscious idealist who earned the nickname “the
sustainabilityTaliban”atPuma.Bystarvingdealers
ofnewinventoryduringCovid-19shutdowns,Zeitz
cleareda glutofusedbikesthathadbeenweigh-
ingonnew-bikeprices—aheadachethatdogged
previous management. He’s also said he’ll invest
more in Harley’s most profitable heavyweights.
“Cutting costs and improving the lineup and mak-
ing sure the investments are into profitable prod-
ucts, they can do better,” says Bob Bishop, Impala’s
chief investment officer.
While that may help profitability in the short-
term, Zeitz still has to grapple with Harley’s
demand problem, says Robin Farley, an analyst
with UBS AG in New York. “Harley has a top-line
issue,” she says. “I don’t know if marketing solves
it.”—GabrielleCoppola,withRichardWeissTHE BOTTOM LINE Harley is America’s premier motorcycle
brand. But its core customers are aging boomers, and it’s been less
successful findingproductstowooyoungerriders.Start to Buy Local?
○ The pandemic may provide an opening
for Chinese plane maker ComacThe coronavirus pandemic has upended the boom
in global air travel that fueled the fortunes of
Boeing Co. and Airbus SE over the past two decades.
But as aviation’s giants lose orders and cut staff, the
Chinese aerospace company hoping to challenge
them is seeing an opening. On July 10, Air China
Flight CA1109 took off from Beijing for a city in Inner
Mongolia, the first time the country’s flag carrier
flew a plane made by Commercial Aircraft Corp. of
China (known as Comac), the state-owned manu-
facturer that previously had only provided planes
to third-tier carriers such as Genghis Khan Airlines.
With tensions rising between China and the
West over issues including Hong Kong’s democracy
movement, Comac may finally have an opportu-
nity to narrow the gap with Western manufactur-
ers, which have been pummeled by the pandemic.
The coronavirus crisis “could be one of those
things that alters the playing field substantially,”
says Robert Spingarn, an analyst with Credit Suisse
Group AG. “While aerospace companies are busy
putting out the fires of today, somebody else who
doesn’t have those concerns and is under less pres-
sure may be able to make something happen.”
Comac is part of China’s strategy to become more
self-sufficient in everything from semiconductors to
satellites. The nation will need to buy $1.3 trillion
of planes over two decades, says a 2018 forecast by
Comac, which is flight testing its single-aisle C919,
designed to rival the Boeing 737 and Airbus A320.
For now, Comac’s only plane in operation is the
ARJ21, a jet that can seat up to 90 passengers. Since
introducing it in 2015, the company has managed to
deliver fewer than three dozen. But in June it deliv-
ered the ARJ21 for the first time to the country’s
most important airlines—Air China, China Eastern
Airlines, and China Southern Airlines—which will
receive a combined 105 by 2024. And regional car-
rier China Express Airlines in June ordered a total
of 100 ARJ21s and C919s. “This is the time where a
company like Comac that has a bunch of govern-
ment funding can continue to drive forward even
as others are retrenching,” says George Ferguson,
a Bloomberg Intelligence analyst.
Belt-tightening is the norm for most aerospace
players right now. Airbus received zero orders in
June, the third month this year with no new busi-
ness, and it plans to lay off 15,000 employees, or 11%
of its workforce. Boeing announced 6,700 layoffs in
May, as customers scrapped purchases because of
the 737 Max’s safety problems and the travel slow-
down. Boeing lost more than 600 orders in the first
five months of the year, and the company in April
walked away from a $4.2 billion joint venture with
Embraer SA, the Brazilian maker of regional jets.
Comac has yet to make inroads with foreign air-
lines and will face challenges given concerns about
the safety of Chinese-made aerospace products,○ Number of Comac
ARJ21 jets ordered
by China’s three most
important airlines105