Hobbies

Rebels too old for a cause

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The average age of motorcyclists in Japan is 53 years old and continuing to climb as younger riders looking to obtain new licenses continues to drift. Between 2010 and 2016 the Japanese National Police Agency (JNPA) noted that large capacity motorcycle license holders (ogata – classified as 400cc+) have fallen by nearly 1,500,000. While mid-size (chugata – classified as below 400cc) have risen around 715,000. Female riders have shown a similar pattern of 178,000 fall in ogata licenses and 147,000 increase in chugata respectively. While there are still 9.175mn men and 625,000 women willing to get out on the highway with large capacity bikes, the trend is alarming. More frighteningly, new graduates aren’t lining up either. 30,000 fewer students lined up to get a mid or large size bike license between 2014 and 2016 representing a 12.3% dip. Latest report found here Motorcycles in Japan – Analogica KK

The changing face of the global motorbike market

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Earlier in the week we touched on the 1,800,000 fall in the number of Japanese who possess a large capacity motorcycle license. The status of the Japanese motorcycle companies makes for some interesting comparisons. Honda remains the largest global manufacturer with over 17.7 million units produced annually. Yamaha has seen a c.1mn unit decline over the last 5 years but a jump in the average profitability of its bikes. Suzuki has cut production by almost 50% as it continues to rack up losses and Kawasaki has stuck to a large bike bias which has stabilised profitability. Here is a look at the state of revenue growth over the last 5 years among major listed motorcycle manufacturers.

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Profitability is a different picture among the global makers. Suzuki has been struggling to make a profit, Kawasaki has drifted down but remained in the black. Honda has been outpaced by Yamaha and among the foreign makers BMW Motorrad and KTM have beaten Harley-Davidson’s performance.

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The foreign makers are all much smaller scale than the Japanese and tend to focus in the larger engine size segments. Harley-Davidson has suffered the most among the 5 big players in terms of unit growth. KTM, followed by BMW Motorrad have made the biggest relative gains.

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Looking at average EBIT/unit produced yields starkly different results. Harley nets around $3,000 per motorcycle in EBIT with BMW around half of that amount at €1,285 ($1,430) with KTM half of that. Kawasaki makes the most per motorcycle among the Japanese on a unit basis. Honda has remained relatively stable at $103 (although we should note that this is closer to $170 as the consolidated production number is about 10m units and the global number including equity method companies is the 17.7m) and Yamaha at $64.  These are ridiculously low numbers and of course identifying mix within that would yield far more healthy results for certain models and losses on others.

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One thing it points out is that focused strategies appear to be paying off for the Europeans and to some extent Kawasaki which has moved away from a me too approach. Efficiency and brand seems to be paying off for BMW’s continued rise and a broad range of product unlike Harley which seems to be stuck in a divine franchise scenario. Profitable but struggling to break out of cruisers. It has had a stab at sports bikes through Buell (business was spun off and EBR has since closed) and the Porsche designed V-Rod (now out of production). Now that Ducati is potentially being sold by Audi, does Harley look to use a proper sports brand with no clash in its line up to fuel (no pun intended) its growth?

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Why don’t firms hire staff like they’d choose a heart surgeon?

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How many times have I heard over my career senior management talk incessantly about the need for new blood yet when it comes to doing anything about it with regards to new hires 99% of the time  the safe cookie cutter is favoured over the left field choice. It is ever more so the truth in the post GFC world. Managers seem afraid to take calculated risks because the left-field candidate may jeopardize their own positions if he/she fails.

As an example managers in finance often fall foul of hiring exclusively within the industry. The level of inferiority complex can be so overwhelming that they fawn at the idea a Goldman Sachs employee will work for them for some ridiculous sum. Invariably they forget that Goldman hires duds too and usually those that get cast off are in that bucket. If you are properly good, there is no incentive to leave Goldman as the salaries, opportunities and product capabilities are too wonderful vs peers.

Yet many financial firms set upon trying to change the firm into a wannabe Goldman Sachs. They forget that their clients can already deal with Goldman directly should they feel the urge. Why on earth would they choose to deal with a wannabe copy? Surely each firm has a unique selling property that is of value to clients. Why not invest and promote that rather than overlook the talent within. Who honestly values flattery? Besides, there are so many cautionary tales with hiring ex-bulge bracket employees who are so used to being spoon fed every possible product line that they struggle immensely when they are required to actually put elbow grease into the job. It is uncanny.

Some firms occasionally hire from outside the industry with huge success. Instead of financial analysts pontificating about a stock, someone who has worked within the industry has a far better feel for cycles, internal decision processes and strategy that formulates under different points in the cycle. Clients glean that value. They couldn’t care less about the stock target or valuation metrics because that ultimately is the investor’s job. Besides the history of brokers behind the curve is etched in stone. Unique context and perspective trumps commoditization every time.

Some financial (and other) professionals have such checkered histories that one wonders how on earth they get rehired. If companies viewed their hiring decisions as akin to selecting a heart surgeon for a life threatening operation, many of these people would never make the cut (no pun intended) given the body count from previous poor execution. Yet many firms continue to put quacks in their ‘surgeries’ with expected disastrous results. Generally hiring managers run interference on these bad choices to cover their own mistakes.

Many HR surveys (including Harvard) show that bad hires end up costing way more than the salary when the cost of onboarding is included. Not only do companies potentially have to foot the cost of a headhunter (25-30% of salary is a standard fee) , what follows is poorer output, the potential for incumbent employees to become disgruntled at the new hire’s lack of ability and most worryingly an increase in dissatisfied customers. If they land a toxic employee that can damage team productivity to such an extent the best performers will seek challenges elsewhere.

So in a world that is getting harder and harder to succeed in, on what basis does conventional thinking bring anything to the table but more of the same? What does hiring a competitor do other than bring similar tactics? In fact, the more telling question is if they were knocking the lights out their success would permeate within their current employer. Unseating happy employees requires dynamite way over and above what they can probably afford.  What hirers often forget is the extent to which internal human capital plays a part. How awful does one’s human capital creation have to be to consider jumping ship?

That is where the left field choice comes into its own when hiring. A person genuinely looking for career change may well be doing it because they’ve tired of several decades of the same industry. They’ll likely come full of fresh ideas, out of the box solutions and lessons from a completely different background with the passion of a new graduate.

Many companies fail to adapt because the stupid questions don’t get asked by the incumbent staff for fear of ridicule. Yet someone eager to learn may ask the most basic of questions and ask “does it work?” One company I consult had a new boss join from HQ and he questioned why staff had meetings on such trivial matters? One staff member said “we’ve been doing it for 15 years!” When the boss said “does it work?” all replied ‘not really”. Yet they offered little in the way of proposals to change what was broken.

In a sense I see many businesses that operate in status quo mode where change if ever happens on a trivial or traumatic basis not through consistent due diligence and proactive leadership.

Think of it like asking an elderly person “if you had one more day to live what would you do?” “Well I’d play golf, take my wife to an expensive dinner and drive a Ferrari” If you asked Athenia”why don’t you do it now” the response would be “well I’m not dead yet!”

Look at the successful businesses around the world today and invariably the corporate culture is likely to be open and flexible. Bosses are prepared to hire people more qualified than them because they want to learn. Show me a company where inferior staff are hired to protect a manager and I’ll show you a dud business.

Which then goes back to the most important ingredient in a tech savvy smartphone world. Analog relationships. Look at the latest recruitment sites which ask candidates to fill in fields where a computer will sift through algorithms to screen. These systems remove the most important skill in selecting good candidates – gut feel. A good recruiter can understand a client’s needs far better than a computer. Besides if a computer is searching for terms fixated on what you’ve done and not what you want to do it will screen you out every time. What a wasted opportunity!

Human nature is uncanny. Risk taking is inevitable but instead of most people becoming  victims of change only a mere few will end up being agents of it and there will be no second guessing who dares wins! So instead of screening for the textbook definition of identity based diversity how about focus on diversity of thought!

 

Is the motorcycle market bust in Japan for real?

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Japan may sell around 1/7th the number of bikes at the peak in the 1980s but the latest stats from the 44th Tokyo Motorcycle Show in late March 2017 revealed a record number of crowds – some 146,495, up 10,000 on last year. 155 exhibitors showed up. In fact it was even larger than last year with 2 floors being utilized vs last year’s show. Clearly the motorcycle product market is expanding – from scooters, enduros, adventure, super sports, naked, e-bikes to trikes. Interestingly Japanese brand Yamaha has turned its success on the track to pricing some of its products (e.g. R1M) at premium European levels, something unheard of 5 years ago. In the reverse Harley-Davidson has had to introduce a 750cc bike made in India to compete with Yamaha’s budget entry cruiser, the Bolt.

The average age of riders in Japan is now 53 and rising. Getting a license is an expensive ($3,000) nightmare and finding a parking space can be an even bigger horror. So there are plenty of ways to turn this sinking ship around. Product has evolved along with huge leaps in technology. Cornering ABS and cornering sensitive traction control to begin with. Even Harley-Davidson has realized it can’t survive on just its legacy. It has introduced the Milwaukee-8 engine which looks to modernize its line-up. Europe’s largest motorcycle maker KTM is bringing out incredible range of products in both its KTM & Husqvarna brands while BMW is entering the sub 400 category to attract younger riders. Yamaha is dominating the Japanese makers for product offering. Honda amazes in its ability to bore with totally uninspiring product. The only things that raise a pulse are concepts which the engineers say won’t see production. Suzuki and Kawasaki remain fringe players with a dash of lunacy amongst a pretty ordinary offering.

Tesla proves autonomous vehicles have a LONG way to go

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I’m not a believer in autonomously driven vehicles. This idea that a computer, if pre programmed, can outsmart a human. Sure, the raft of new safety features (auto brake assist) and lane assist control etc can help in situations when people cruising at brain dead slow speeds are busy texting and checking FB. Yet, there is a point where these systems are dangerous. I have driven cars with them and there have been times where the car outputs are the exact opposite of my inputs. It is unsettling and downright dangerous so I tend to switch these aids off. This excerpt from the Tesla Owners forum on FB shows how the latest and greatest auto-pilot function is flummoxed by such a simple situation. Read on.

Found a bug in 8.1 the hard way. Ruined two rims after 15 minutes of use.
That’s what happened yesterday: I started the AP on a smaller street with a sidewalk with a curb on the right. There was no line on the street next to the curb, but a line for bicycles on the sidewalk. The AP then suddenly pulled right, as it was irritated by the line on the sidewalk and ignored the curb. The rims touched the curb before I was able to react, even though I had my hands at the steering wheel…I already posted this in a German group yesterday and some people told me they had the same situation, but were able to react before it was too late.”

The idea that people put complete faith in auto-pilot systems is a worry. By the same token more advanced systems are supposed to use inbuilt algorithms to determine whether to swerve away from the kid on a BMX bike doing skids on the sidewalks toward the edge of the kerb braking as late as he dares and an old lady on a crossing 5 meters further on. The system may choose to sacrifice you the driver, err sorry passenger. While there is no doubt autonomous systems will continue to get better, would you prefer your airline pilot to be limited to a computer software program only or would you prefer a human in the cockpit who can assess the situation in real time?

Maybe I’m too analog. A fuddy-duddy that refuses to accept the future. I don’t think I’m alone but one day more people will grow tired of an app-driven existence. Life will become too boring and they’ll soul search for more tactile experiences. I was tinkering in the garage on my bikes fitting new parts, tyres, cleaning chains and doing oil changes. There is a something to be said about zen and the art of motorcycle maintenance. I was completely at peace after completing these analog tasks because it requires a focus that can’t be found in a 15 second swipe of an app.

Ban on WiFi and smartphones for the under 24s in Japan a must

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I had lunch with an executive of a major auto manufacturer the other day and he was lamenting the future. It wasn’t so much product issues but people. It wasn’t a lack of intelligence or qualifications either. He asked some new grads who had joined what the three most important things in their life were. Most of them replied:

1) WiFi

2) battery life

3) online related software/apps

When he asked me – after seeing my stunned face- what I thought we almost said in unison – motorBikes, Beer and Babes (the three Bs). How the younger generations are not interested in the analog but the digital. Where the idea of using a rotary dial phone, adjusting the float in a two-stroke carburettor or changing a flat tyre seems more complicated than translating Mein Kampf into Swahili. They seem much happier doing “virtually”nothing. That is a huge headache for a carmaker. The DNA developed over decades by artisans and craftsmen.

No sooner had I had this lunch that the Japan Times highlighted today:

Sexlessness among married couples in Japan was more pervasive than ever in 2016, with nearly half not making love for an extended period of time, a survey released Friday showed.

The biennial interview survey, conducted by the Japan Family Planning Association, a Tokyo-based public interest organization, covered 3,000 people aged from 16 to 49 nationwide…Of the 655 married respondents, a record 47.2 percent confessed to not having sex for more than a month, compared with 44.6 percent in 2014. The ratios were 47.3 percent for married men and 47.1 percent for married women.

The result underlines that sexlessness — where spouses engage in no sexual activity for more than a month and show no sign of resuming in the foreseeable future — is growing unabated, Dr. Kunio Kitamura, director of JFPA, said.

For men, the biggest reason cited for their disinclination toward sex was “exhaustion from work,” at a record 35.2 percent, spiking from 21.3 percent in 2014…The survey, however, could not confirm any correlation between number of hours worked and reluctance to have sex, Kitamura said.

Next cited was loss of romance at 12.8 percent, with respondents saying they now viewed their spouses as mere family members rather than romantic partners…For women, 22.3 percent snubbed lovemaking as a “hassle,” the top contributing factor to sexlessess.

Youth sexlessness also seemed common. The survey found that 47.9 percent of unmarried men between 18 and 24 and 52.9 percent of women in the same bracket had never had sex.”

Perhaps the government needs to restrict the sale of smartphones and ban WiFi for those under 24 to get the youth to value more analog experiences. Perhaps they should only have internet access to analog related websites. It doesn’t have to be about pro-creation but at the very least recreation. Is it any wonder 80% of millennial live at home. It seems the Yu aspire to very little.

The museum only open for one hour a day

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There is something perhaps only the Italians can explain with a shrug of the shoulders but the Museo Moto Guzzi, situated near Lake Como, is only open from 3pm-4pm.  1 hour only!

The star of the show was this beautifully restored 1919 250cc.

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I could have spent hours in that place looking at every intricate bit of the “out there” Italian design and vision. The Finnish Police asked Guzzi in the 1930s to develop a bike that would work in the snow. They attached skis and a clever device on the front wheel which would prevent the front wheel spinning backwards.

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There were too many gorgeous items to see in one hour and I’m sure there were many other things I missed. One was a 350cc V8 and looking at the vintage race bikes of the time with skinny slippery tyres, no brakes and a powerful engine showed how brave these riders were.

The original wind test tunnel consumed so much energy that Moto Guzzi was forced to test after midnight as it caused blackouts in the town.

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In the end it was still 1 hour worth spending, on my birthday of all days…