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Harley Has a History of Survival

Friday, January 23, 2009
Harley-Davidson is cutting production and laying people off. The headlines are splashed on every moto industry news service on the web. Seems like the American automotive makers aren’t the only ones suffering from the current economic downturn. The Motor Company said it’s slashing production by 10-13% and 1100 workers will lose their jobs in the next two years.

But this isn’t Harley-Davidson’s first rodeo. It has demonstrated the ability to withstand the peaks and valleys of the unpredictable global marketplace before. The Motor Company has a habit of adopting the right strategies at the right time. The year before The Great Depression struck, the Harley-Davidson name was first stitched on a leather jacket. Now H-D merchandise is its third leading seller behind motorcycle sales and parts and accessories.

1933 Harley-Davidson with the first art deco  eagle  logo.
Who could have known that simple things like a splash of color and a cool eagle graphic would help your company survive during an economic depression? Apparently, someone at Harley-Davidson did.
Another strategy it adopted to stimulate sales during the Depression was using art deco paint schemes and vibrant colors on their motorcycles. Prior to then, most bikes were drab and monochromatic. H-D gave buyers customizable options at little cost to the Company. In 1933, they began painting an art-deco “eagle” design on all of its gas tanks, and the artistic graphic design would become inextricably linked with Harley-Davidson motorcycles.

In 1932, it came out with its first Servi-Car, a three-wheeler with a large cargo area in the rear. The utility trike was originally used by auto dealerships to make service calls and during car sales. It was designed to be towed behind a car, and when the vehicle was delivered to the customer’s home, the Servi-Car was then unhitched so the mechanic could ride back to the dealership. It was a practical workhorse for small businesses, and would become a mainstay in many police departments. The Servi-Car helped them make it through the Depression and remained in production until 1973.

Continuing the development of its V-Twin engine also kept them afloat. In 1936, H-D introduced the EL, a motorcycle with an overhead valve, 61 cubic-inch engine. The distinctive shape of the round knobs on the valve covers would earn the bike’s powerplant the nickname “Knucklehead,” an engine that still has a cult-like status among custom builders and old school riders today.

H-D also remarkably survived the AMF Years. Following its merger with the American Machine and Foundry Company in 1969, the new partner quickly streamlined production and slashed the workforce. Labor strikes ensued. Prices on the bikes they did put out were high in comparison to the Japanese makes that were flooding the market. The quality of their motorcycles suffered as well, and their reputation was tarnished.

But on Feb. 26, 1981, all that would change. Thirteen Harley-Davidson senior executives signed a letter of intent to buy back The Motor Company. And by June of that year, the deal was officially consummated, inspiring the rallying cry “The Eagle Soars Alone.”

The  Hillclimber  statue that sits outside of the Harley-Davidson Musuem was donated by the Davidsons.
Harley-Davidson will have to summon the spirit of the 'Hillclimber' as it has an uphill battle if it wants to return to its former prominence.
Despite regaining ownership, it was far from smooth sailing. In 1985, the bank that had financed Harley’s debts threatened to pull its financing and to begin liquidating its assets. It was New Year’s Eve, and time was running out. Like a last second pardon from death row, The Motor Company finally received the financing it was looking for. By 1987, Harley-Davidson went public and was listed on the New York Stock Exchange, staving the demise of America’s oldest motorcycle manufacturer.

Now the most recent crisis will again test Harley-Davidson’s resourcefulness. The Motor Company is already responding with appeals to a younger demographic by virtue of its Dark Custom series of motorcycles and by sponsorship of events like the UFC. More of its marketing is tailored toward the burgeoning women riders segment than ever before. It just released its newest rendition of a three-wheeler, the Tri Glide, which it hopes to market to police agencies once again. The Tri Glide received national attention as it led the procession down Pennsylvania Avenue earlier this week during the inaugural parade. And since people might be hesitant to shell out the dough for a new motorcycle right now doesn’t mean that they won’t be thumbing through the massive H-D Parts & Accessories catalog searching for ways to add a new wrinkle to their ride.

Weathering the turmoil is never easy. Righting the ship won’t come overnight, and unfortunately hard-working, dedicated employees will be the latest victims of the downturn. Sacrifices regrettably have to be made. But don’t count them out just yet. Harley-Davidson has proven to be a resilient bunch; otherwise it wouldn’t have made it through the first 106 years, and if history has a habit of repeating itself, I have a suspicion the “Eagle” will once again soar.

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Comments
Patsohall -Poor Quality  July 1, 2009 11:07 AM
First off I love my Dyna Lowrider. My Complaint is about all the cheap products sold through H-D dealers with Harley Davidson on it. The first to fail was a set of H-D boots all the stiching blew out after a year and half. I wear Danners to ride with now. The second was pocket watch the back keeps falling off. The third was a set off H-D chaps. Snaps broke zipper broken stiching falling out. These products are of exteame low quality and workman ship. The funny part is there all made in China. My Danner Boots are made in the USA and are a quality product. If Harley sells quality and made in America bikes why is there apperal products cheap china products.
Mike -This may be the beginning of the end for H-D  March 20, 2009 11:11 AM
H-D's Ad campaigns of the last twenty years have done a brilliant job of promoting their products to the well off, middle aged and retired. The un intended message is that their products are for that segment of society only. An entire generation has grown up believing that Harley-Davidson's are a "Granpa's Bike" and had that notion has been continuously reinforced in print, movies and real life observations. Couple the above attitudes with little or no support by the company and its dealer network for products older than seven years (read that as the entry level and younger markets), the resulting forecast is grim.
Ridehard -Bashing Harleys  February 27, 2009 07:49 AM
I dont get it. I am a Canadian but have chosen to ride an american motorcycle for over 40 years now; that being a Harley Davidson. I cant understand how so many fine americans have such pride in their country and their products but there always seem to be the detractors who, quite franky, should maybe move to japan, or china, or werever the think they might be better off. I gotta tell ya, have some pride in your country, support it and the things they produce and if there is any doubt, just like the great U.S.A., Harley will always be there.
Tim -Harley Davidson  February 12, 2009 08:51 PM
Harley Davidsons are inferior to Japanese motorcycles and cost more. Fact. Anything else is opinion or personal preference.Fact.
Huck -Reply to Wisconsinte  January 27, 2009 09:18 PM
You have a great evening too. God bless you, your family and the USA.
Wisconsinite -Thank you for conceding the argument  January 27, 2009 08:43 PM
Here's some more you can search for- "GM outsources Engineering to India". Oh I've been out of Wisconsin- been to Michigan 26 trips last year. And abroad about half that. Have a great evening. "Screw it- lets ride"
Huck -Reply to Wisconsinte  January 27, 2009 06:24 PM
You should try to get outside the Wisconsin borders some day, there is a big world out there. I have personally seen it. And everything you wrote about China and trade etc. I already knew and have seen and touched with my own eyes and hands many years ago. Maybe you’re just overly enthusiastic about the whole China thing because it is new to you. “if its on the internet it MUST be true” So are you saying GM is lying and all of the media. “Since you like to use the Internet to cite your postion”. I cite the internet because it will give you an immediate understanding of your misguided ness and false assumptions based off your own uniformed, unsupported self proclaimed facts. If I cite a magazine article or a book, I doubt you will run out to the nearest public library and double check my citation.
Wisconsinte- -If its on the Internet- it MUST be true.  January 27, 2009 05:54 PM
Huck- Since you like to use the Internet to cite your postion. Try searching "china violates u.s. trademark" - and stand back from your screen. (You may need to "three finger salute" it to make it stop scrolling). But, you are right about one thing- I do love my Harley.
Huck -Reply to Wisconsinte  January 27, 2009 09:31 AM
"Wow- did I digress or WHAT??!! :)”…Ahh yeah ya sure did,Wisconsinte. I am not sure what my point or Bryan’s article has to do with our current trade deficit with China. Understandably you are trying to draw a connection to the justification of the 1984 tariff with the current issues with China. Remember simple finished goods shipped over here from china will take away jobs from Americans, but not complex goods like cars, motorcycles, or even heavy machinery. Take a good look at all the import dealers for cars and motorcycles. None of these salesmen, mechanics, F&I guys, dealer principals, porters, cashiers would have their jobs. And no, most of the people that buy these import bikes would not just substitute a Harley for their import choice because what would the substitute be for a GSXR1000 or a KLR650. It also works the other way around. Harley sells many bikes outside our own borders, so if we tariff their incoming bikes they will tariff our outgoing bikes, thus hurting everyone’s bottom line. Many jobs are created form free trade. These complex items (cars, machinery etc.) need Americans to sell them service them and to operate them. This is especially important since the American car and your Harley, have many foreign made components in them. So, by default you are supporting foreign economies and our economy. You are no more or less “patriotic” than someone who buys a foreign anything. Other countries buy our goods and services and we buy theirs. So unless everything you own use and buy is 100% American made, your argument is hypocritical at best. BTW,your comment “The average Chinese person has never heard of an American automobile” this is a false statement, Buick (the American car maker) is very popular in China as a matter of fact it is the number one car make sold. Here are a couple of snippets: “In fact, GM now sells more cars overseas than it does at home”. "And Buick bucks the trend, GM brand is No. 1 car seller in China, thanks to smart marketing. (http://www.msnbc.msn.com/id/12801549/)
Wisconsinte- -Reagan rode a Deuce and would have done the same today with China  January 26, 2009 09:29 PM
That article- was written by a conservative sore loser GRAD STUDENT in 1984- who probably didn’t like the fact that Reagan was a moderate. He probably was a Buchanan supporter. Geez- whatever Reagan did- it worked. It worked until Clinton reversed the housing act enabling anybody with an address and SSN to get a loan with a "Don't ask, don't tell" mentality (regardless if they could pay it or not). Many Harley's are paid for using 1st and 2nd mortgages. This same philosophy- should be enacted now with regards to China. It really is not hard to understand that if a lock washer is purchased in the US- that money gets put back into the US economy (People buy cars, houses, pay taxes, social security, etc. The factory buys equipment, computers, training, infrastructure, etc). But if it is sourced outside the US- no workers get to buy houses, American cars, pay taxes or pay social security; no training, computers, CNC machines, etc. China is FAR vaster in cheap resources then Japan was in 1984 but at least Japan is a Democratic country. The average Chinese person has never heard of an American automobile- but has heard of Harley-Davidson. Kudos to H-D and their undeniable awesome job of selling the sizzle, not the steak. Also of note- China has no child labor law, no minimum wage- oh and no free speech- (I'm sure the Chinese government will tell you when you can speak freely). Don't get me wrong, I firmly believe in a free market- but laws and tariffs are created and implemented to prevent exactly what has happened with China and this recession. China sucked out vast US resources, to their own detriment. China should be regulated now- same as Japan was back in 1984. China has many products sold here in the US- but by contrast, H-D and big firms like McDonalds only have a few dealers/restaurants in all of China. Wow- talk about politics- in a country 3 times the size of the US. Just a side note- I'd take Japan, Taiwan, or Mexico outsourcing any day over China. At least their not buying cruise missiles with the money they make of the U.S. Wow- did I digress or WHAT??!! :)
designeraccd -H-D  January 26, 2009 02:41 PM
Five out of my (so far) 79 bikes have been H-Ds. I must say I enjoyed them all, especially my much modified 2004 1200; one of the best bikes-for me-that I've owned. I love motorcycles and hate bashing thereof, just my oh-sooo-HUMBLE opinion. DFO
Bryan Harley -Thanks, Huck.  January 26, 2009 12:45 PM
Thanks for the input, Huck. It's refreshing to see someone support their argument with evidence. When I get time, I'll check out the article you listed.
Huck -Reply to Bryan  January 26, 2009 12:24 PM
Hi Bryan, thank you for a meaningful the reply. I know it is a short article but the very subject is about Harley’s survival and the history of it; therefore, the subject of the tariff is very relevant and would only take an extra 20 words to mention it. My comment on nearly killing the motorcycle industry may have been a little over stated but the fact remains the industry was still hurt and the tariff did not help anyone, including Harley. “But unless you're putting out a better product, all the taxes in the world aren't going to save you”. I agree with you fully Bryan, as I am sure so does Harley since the end of the tariff. My point is so many times I read articles and books that recall Harley Davidson’s history both in product and in business practices but rarely are some of the not so appealing facts/events even mentioned. Oh, you wanted some facts. Here is a snippet from an article written in 1984: “If relief had not been granted, Harley's creditors might have called in their loans, forcing the firm into bankruptcy. Approximately 2,500 employees of Harley-Davidson and its suppliers could have been put out of work. However, some administration officials said that the tariff threatens as many as 3,000 workers in motorcycle retail, distribution, and after-market (parts, accessories, service, etc.). In a letter (6 December 1982) to Secretary Kenneth Mason of the ITC, Ed Lemco, a motorcycle-industry consultant, argued that with a large tariff, "the net effect would be substantial loss of American jobs and the failure of a great number of American businesses." The rest of the article is excellent as it goes into the politics behind the approval of the tariff and many other details. http://www.cato.org/pubs/pas/pa032.html and this is an .org site so this information is not being biased against Harley or any other manufacturer.
Bryan Harley -Huck  January 26, 2009 10:38 AM
The title of the article is 'Harley Has a History of Survival.' One-hundred and six years in business proves that. I used two instances where the company's resiliency came to mind. I wasn't writing a college dissertation, but a brief newspaper article. I stated enough facts to support my claim. And yes, tariffs were enacted. And your point? This is a common practice in the world marketplace. But unless you're putting out a better product, all the taxes in the world aren't going to save you. Surrounding yourself with people that are passionate about what they are doing will. You want to hear something that sounds pre-canned? "They also forget to mention how this tariff nearly killed the motorcycle industry ..." Talk about being overly dramatic. Where's the 'historical facts' you like to speak of?
Bsinati -Harley  January 25, 2009 09:38 PM
Hey e4rolaids,I hope you loose your job and home.I don't believe you owned a Harley either.
Wisconsinite -Where were you guys in August?  January 25, 2009 03:21 PM
I don’t know about you guys- but i live in Wisconsin. Last August (5 months ago) the 105th event sold out EVERY Hotel, motel, campsite, empty parking space, etc etc in a 100 mile radius of Milwaukee. I don't think H-D lacks the loyal customers- the customers now lack the financing. You can thank the banks for that. As far as being the largest- he means American Motorcycles. Also of Note- Harley is not owned by some mammoth car company like Honda or BMW. H-D designs and sells motorcycles, Motorcycle assc, and And H-D Motor clothes- period. Personally, I can't wait until enough snow melts so I can get my 2008 Ultra on the road again. I road mine until the day we got 14 inches of snow- almost road it then too. Lastly- I would be shocked if Indian could out last this recession. H-D should buy them and take them out of their misery. Then they can put them on display in their museum in the “ancient History” section- next to the AMF display.
e4rolaids -junkboxes  January 25, 2009 05:28 AM
They should go out of business, how can they sell such junk to us. I would like to see the same thing happen to them that had befallen indian now that would be nice. I say this coming from an owner of the product. It was such a bad experience I just wanted to tell somebody. It is a shame in that a multi-billion dollar company sells a product and that they dont have the service or the pride in them. It is too bad that harley could not put all of those billions of dollars in their service techs instead of just making their bikes look so pretty as what was done to me. These people have no pride in their product at all and that is why they are junk. If history does indeed repeat itself then maybe harley will finially become a part of history. Remember what happend to the Romans, could it finially happen to Harley, only time will tell.
Huck -Note to Bryan Harley  January 24, 2009 03:29 PM
Bryan you forgot to mention, “The special tariffs were imposed for a five-year period by President Reagan in April 1983 as Harley skidded toward bankruptcy. Aimed at giving Harley time to carry out planned changes in manufacturing practices and product improvements, the tariffs followed a sliding scale that added 45 percent to the cost of the Japanese imports with engines larger than 700 cubic centimeters in 1983 with a decline to 10 percent in the year ending April 1, 1988”. (http://query.nytimes.com/gst/fullpage.html?res=9B0DE3DA1039F93BA25750C0A961948260&sec=&spon=&pagewanted=all) This cute and trite HD history refresher you just wrote sounds like all the other pre-canned historical write ups given about Harley. These write ups always forget the fact mentioned above. They also forget to mention how this tariff nearly killed the motorcycle industry or how many American people that lost their jobs because of the import dealers that went out of business or how quickly this selfish move by Harley dramatically slowed new motorcycle sales of all brands-including Harleys. There are a number of other historical facts that are selectively absent from this write up also.
Huck -WilCon, who's the largest???  January 24, 2009 03:11 PM
"They are the largest motorcycle retailer, they made a profit last quarter even with a dip in sales. The auto industry all lost billions last quarter, even Toyota didn't make money for he first time in it's history. Harley is in fine shape". Ahh...Honda sells nearly 15,000,000 motorcycles a year Harley sold 302,000 last year. How is Harley "the largest motorcycle retailer"?
WilCon -Harley  January 24, 2009 12:33 PM
They are the largest motorcycle retailer, they made a profit last quarter even with a dip in sales. The auto industry all lost billions last quarter, even Toyota didn't make money for he first time in it's history. Harley is in fine shape.