The Milwaukee museum caters to a casual crowd, with most visitors not even riders. Hardcore enthusiasts can opt for the Steel Toe tour at the Pilgrim Road facility – so-named from the steel toe caps given to visitors as they enter the working factory floor.
Located about 20 miles north, in Menomonee Falls, the Pilgrim Road site was once shared by H-D with Briggs & Stratton. Harley has since taken over the entire facility. All engine production, save the water-cooled V-Rod, is now consolidated at Pilgrim Road. It’s one of the crucial changes in the company’s revamp of the manufacturing process (dubbed ERP in corporate speak – Enterprise Research Planning), the aggressive restructuring a signature move of Wandell’s leadership.
Wandell arrived at Harley in May 2009 from him previous tenure as COO of Johnson Controls. Unlike previous Harley execs, he did not emerge from within H-D’s corporate ranks, and (gasp) he didn’t even ride! Wandell inherited a company in crisis, the economy free-falling and H-D’s financial outlook dire. Triage-like decisions came swiftly – and were unpopular. Shuttering Buell motorcycles is still deemed unforgivable by many enthusiasts. Wandell also cast off MV Agusta, with H-D taking a bath on the recently acquired Italian marque. Now more than three years removed from Buell getting the axe, it’s difficult to find fault in either decision from a financial standpoint. In this regard, Wandell’s perspective as an outsider may have been a benefit – making unpopular, but necessary decisions for the bottom line.
Certainly, Wandell’s follow up restructuring decisions were, if anything, even more unpopular. Harley would slash costs by renegotiating labor contracts, cutting its workforce and consolidating production. Its negotiation tactics with the unions were brutally efficient, threatening to shut down plants unless workers acceded to the new terms. Workers and communities in Wisconsin, Pennsylvania and Kansas City, were all played against the other. H-D even threatened to move production from Wisconsin, its home state, as it worked favorable tax and wage concessions from local governments and labor unions alike.
H-D’s relationship with labor is one of the many paradoxes of the company. It strong armed what it sees as necessary changes, which eliminated high-paying jobs, and yet, H-D employs the most unionized workers of any American motorcycle manufacturer. H-D also sources local American suppliers for the castings machined at the Pilgrim Road facility.
Wandell’s move to a more flexible ERP should help ensure The Motor Company runs in the black whether it manufacturers 200,000 units, or the 400,000 it was churning out during the pre-2008 boom years. The use of part-time workers (which replace some of the full-time jobs that were lost), allows H-D to ramp up production based off of seasonal demand.
The real benefit of the restructuring, however, is cost reduction. Begun in 2009, the restructuring will be complete by 2014 and have incurred a cumulative expense of $495 million. But savings have already affected the bottom line – contributing $200 million to the 2012 balance sheet, and an expected $305 million saved in 2013. H-D reckons annual savings of $320 million from 2014 and beyond.
Jobs and costs weren’t the only items pared from the H-D books. Harley dealers were also casualties. Euphemisms of “rightsizing” the dealer network in company literature are a kinder way of saying the network had become bloated during the boom years. It doesn’t take much research to find troubled H-D mega dealers that, in hindsight, were clearly unsustainable. But the culling of dealerships thinned out networks for the entire industry. Again, it appears that H-D’s has bled less than its metric rivals – to its relative advantage.
Clopping along down the Pilgrim Road aisles our steel-toed group of journalists sounds like a troop of Clydesdales on cobblestones. We get the standard-issue Pilgrim shtick, thoroughly entertaining and worth the $38 price tag for the H-D faithful. Particularly for those who’ve never witnessed firsthand the modern manufacturing process, which is impressive. H-D customers can effectively pre-order their engine from the assembly line. In fact, with the expanding H-D1 program, customers can special order virtually the entire bike – for specific models (right now the Custom 1200 and Street Bob). It seems only a matter of time before customers special ordering their bike direct from the factory will be standard operating procedure.
Our group watches the engine production process: Forged parts machined down to spec, heat treated and anodized before final assembly. Tour participants see other powertrain components come together, like the transmission. The latter system elicits chuckles from the attendant journalists, as our guide touts the Harley gearbox’s trademark “clunk of confidence.” The scratching of pens and pencils on notepads is nearly audible over the din of machining tools as the gathered scribes frantically scribble!
Clunk of confidence… The phrase arouses wan smiles and good-natured ribbing. But is this not the crux of what makes H-D critics froth at the mouth? Rival OEMs produce lighter, faster, more powerful bikes – and many are even less expensive! But while the competition may be objectively superior in road performance, Harley outperforms them on the sales floor. Critics of the Bar & Shield cannot reconcile this.
The phenomenon of high-performance bikes underperforming on the sales floor holds even within Harley’s own ranks. Here we can revisit the Buell question. Models like the 1125CR remains one of MotoUSA’s all-time favorite rides – a hoon-tastic bit of high-performance kit for the street. But Buell street performance didn’t translate into sales success… (subject for feature story of its own!) The same sluggish sales problem comes with other H-D branded performance-oriented bikes. The V-Rod (which features the liquid-cooled engine famously seized internally from Buell) has enjoyed success, but clearly holds secondary status, at best, to H-D’s traditional air-cooled model lines.
The trouble with “performance” bikes in the H-D lineup is perhaps best epitomized by the XR1200. We first laid eyes on the XR1200 at the INTERMOT Show in Cologne in 2008. Our excitement was followed by dismay that it would not be heading to the US, with H-D developing the XR specifically for the European market. This is exactly what H-D needs to build, we thought… It’s the most performance-oriented bike in the Harley fleet, with adjustable suspension and up-spec brakes. Thankfully, Harley imported it after all – even promoting it with its own spec racing series in the AMA (you can’t get more committed than that!). But the XR1200 didn’t sell, at least not well enough to earn its keep – and is a conspicuous absence in the 2013 lineup (at least so far). The AMA spec series has since dropped the XR1200 moniker. Like the XR750 in Flat Track, it appears the 1200 will be race-bike only.
So, back to that ‘clunk of confidence.’ Harley transmissions are, yes, clunky. Why? Harley claims because that’s what its customer wants – direct, solid shifts. A Harley “feels” different – raw and visceral, it shakes and rattles. This fact cuts to the core of H-D’s success.
This intangible “feel” and “character” is something the Japanese metrics have sought to replicate. One example is the Kawasaki Vaquero bagger, which intentionally made the clutch “damper-less” to make it less smooth in engagement. One can sympathize with the Kawasaki engineer, who must have thrown his hands up in despair, “they want a clunky transmission!” Yes, sir, they wants their transmissions with a bit of clunk and engines that lump.
Motorcycling isn’t a cold, rational activity – it’s an emotional one.