The sound of a Harley is deep and rumbling, felt as much as heard, the beginning of an earthquake maybe or a volcano waking up. For those who love the sound, it is a voice, one that speaks knowingly of wind and rain in the face and freedom, a voice that beckons.
Mike and Judy Ramos of Naperville both have Harleys. Judy says: “The sound is unique. I can’t explain why I like it, but I can be up in the house and hear my husband start my bike up, and I get shivers.”
Linda “Jo” Giovannoni lives out in the country in northern Illinois. “It’s like music,” she says of the Harley sound. “I can recognize one coming from a long way off. After 26 years of being around motorcycles, I still get excited enough to stop what I’m doing and watch a bike pass by.”
Something like 20,000 Harley voices will form a thundering chorus at the Wisconsin State Fair Grounds in the Milwaukee suburb of West Allis June 9 through 11 as members of the Harley Owners Group (HOG) hold their annual rally to celebrate the group’s 10th anniversary. And on June 12 at least 60,000 attendees are expected at the Summerfest grounds on Milwaukee’s lakefront as Harley-Davidson Motorcycles celebrates its 90th birthday.
In 1901 21-year-old William S. Harley and his boyhood friend, 20-year-old Arthur Davidson, decided there would be a market for a motor-driven bicycle. Harley had had experience building bicycles. Davidson had made patterns for a small, air-cooled gasoline engine. In a while, Davidson’s brother, Walter, joined the project with his mechanic’s skills. Then, another Davidson brother, William, a toolmaker, signed on.
The partners soon realized that a standard bicycle frame wasn’t strong enough to be motorized and that the 3-horse engine they built was woefully underpowered. What was needed was a more rugged, more powerful vehicle, a motorcycle rather than a motorized bicycle.
Production of the Harley-Davidson motorcycle began in 1903 in a 10- by 15-foot shed built by the Davidsons’ father on Milwaukee’s near northwest side. A hand-lettered sign on the door read, “Harley Davidson Motor Co.”
Three bikes would emerge from that door that year, the same year in which the Wright brothers successfully tested their airplane at Kitty Hawk, N.C., and Henry Ford’s Model T went into production in Detroit.
Thus Harley-Davidson joined a burgeoning roster of American motorcycle manufacturers, a list that over some three decades would grow to more than 300 names, among them: Kellog Bearcat, Constructa-Scoot, Chicago 400, Thoroughbred, Torpedo, Minerva, Lowther Lightning, Speedbike, Green Egg, Puddlejumper, Flying Merkel, Badger, Rockola, Young Cyclone.
By the end of the Great Depression, however, all but two of those names had disappeared, and when Indian closed down in 1953, only Harley-Davidson remained. And by 1980, even this, the last American motorcycle company, was in critical condition and not expected to survive.
Interest rates were high then, and the economy was slumping, making it increasingly difficult for Harley’s primarily male, primarily blue-collar customers to justify the purchase of such an expensive-around $8,000 on averagethen-non-essential item. Also, Japanese-made bikes had been sneaking up on Harley, first innocuously, as small-engine models, then head-to-head in the big-bike arena that was Harley’s market. The Japanese bikes-Honda, Kawasaki, Yamaha and Suzuki-cost half as much as the Harley, and they didn’t leave an oil slick every place they were parked.
Harleys had become famous for breaking down, and owners who remained faithful to them were people with the time and the mechanical skills to deal with unreliability.
Even the hard-core Harley nut who was willing to overlook breakdowns and leaks had something to complain about. The American Machine and Foundry company (AMF) had bought Harley from family ownership in 1969 and broadened the product line and increased production greatly, cranking out bikes that Harley enthusiasts disparagingly called “AMFs.” They just weren’t “real” Harleys.
They also weren’t real good. At the end of the production line, more than half the bikes failed inspection and were shunted to holding areas termed “hospitals” while the parts needed to make them right were sought. The problem was not lack of parts; there were mountains of them. But many of those parts had deteriorated in storage or had been made obsolete by engineering changes. It could take days to get a bike out of the “hospital,” and even then dealers had to do a lot of tinkering to make a new Harley run properly.
Meanwhile, only about 5 percent of the Japanese-made bikes were failing final inspection. In addition to all that, bad publicity from 30 years earlier had dogged motorcycling, limiting Harley-Davidson’s marketing reach. First, there was a Life magazine photo spread on an incident in California in which a motorcycle gang terrorized a small town. The incident was dramatized in the 1954 movie “Wild Ones,” starring Marlon Brando.
For years, motorcyclists, especially Harley riders, were tagged with the “outlaw” label, even though Brando hadn’t ridden a Harley in the film and outlaws make up a small fraction of motorcycle ridership and thus are termed by Harley-Davidson officials as “One Percenters.”
For these reasons, the company’s share of the American market for superheavyweight bikes (those with engines of more than 850 cc) had dropped from 77.5 percent in 1973 to 30.8 percent in 1980.
Around that time, AMF let it be known that its beleaguered motorcycle division could be bought.
No one made an offer.
Then, in 1981, a group of 13 Harley managers did what must have seemed at the time as one of the dumbest business ventures ever. They put together three bank loans and in a leveraged buyout purchased Harley-Davidson for about $80 million. They thought, of course, that the company could be made viable. But there were emotional factors at work too. Peter Reid’s book about the takeover of the company, “Well Made in America,” quotes one lending officer: “This was the only product I’d ever seen that people had tattooed on their bodies.”
On June 16, 1981, the new owners of Harley-Davidson mounted their bikes and set out from the York, Pa., plant, where Harley’s final assembly takes place, to Milwaukee, where the executive offices and the engine-assembly plant are located. At one dealership along the way, someone climbed atop the roof and spray-painted out the AMF logo. For Harley fans, it was a ride nearly as triumphal as the liberation of Paris at the end of World War II had been for Parisians.
The first year after the buyout, however, was the worst in the company’s history. Market share fell even lower, and the Wall Street Journal predicted that Harley would be taken over and its 85th birthday celebration would take place in Japan. Others predicted that there would be no company at all by then.
Jump ahead 10 years.
In 1992, a year in which the Fortune 500 posted the smallest profits in the history of the list, Harley, for the first time, surpassed $1 billion in sales. Compared with 1980, its U.S. market share rose 97 percent, productivity 50 percent, U.S. revenues 80 percent and international revenues 170 percent. Stock first offered in 1986 at $11 split two for one twice and, as this is written, is selling at around $36.
Walk into a Harley dealership, and you’ll notice that all the bikes have “sold” signs on them.
“That’s right,” says Tim Ferrell, general manager of Illinois Harley-Davidson in Berwyn, “everything here was sold as of August, when the `93 models came out.”
Demand for Harleys is well beyond the 81,000 bikes that currently are made each year. Harley-Davidson Inc. president and chief operating officer Richard Teerlink says: “We need to get production capacity up. We don’t ever want oversupply, but we do want to get to 100,000 units a year.”
Among the steps toward that goal is a new, $28 million paint facility intended to eliminate some production bottlenecks caused by increasingly complex paint schemes. Colors like Brite Aqua Sun-Glo and Mandarin Orange are a far cry from early Harley gray.
During an interview last March, Ferrell was constantly interrupted by calls from would-be Harley owners offering down payments on the ’94s. Many dealers are getting requests-10 years early-to take deposits on the centennial-edition bikes.
The factory will send Ferrell something like 200 bikes during the August-to-August model year. All are presold at prices averaging around $13,000. Multiply that by the 600 U.S. and 300 foreign dealers, and Harley becomes an amazing success story in what has been, in most parts of the economy, a rough couple of years.
“I’m not at all tired of telling our story,” Teerlink says. “In fact, I’ve become evangelical about it. As I talk about the Harley turnaround, I get revitalized. The frustration is that 50 percent of our people have been here less than five years and haven’t lived it. They may think we’re like all companies.
“We’re not like all companies, damn it. We rose from the ashes, no matter what mistakes management made over the years, because the riders, dealers and suppliers refused to let the company die.
“The Harley story is a tribute to what people can do in this country. I’m a first-generation American. My dad came from Holland-6th-grade education, tool-and-die maker. My mother was an immigrant too. I was always taught this was a land of opportunity, and I think the resurgence of Harley says, `Yeah, it’s still here; it still can be done.’ “
Here are some of the ways Harley did it:
– Employee involvement. One of the first things the company did was level the traditional pyramid-shaped organizational chart in line with what Teerlink has called the “responsibility and obligation of top management to create an environment in which an employee feels free to challenge the system to achieve success.”
– A system of parts supply they call “Materials As Needed” (MAN). Instead of piles of parts sitting around deteriorating and eating capital, parts are “pulled” by the needs of the assembly line.
– Statistical operator control. Giving every employee the statistical data necessary for measuring the quality of his or her work.
Although these attitudes and techniques were widely fostered in Japan, they were-and are-far more rare in this country.
“We’re not above learning from somebody else,” Teerlink says. “Other than the design of the motorcycle, we’ve never done anything original at Harley-Davidson. We believe there’re good ideas everywhere.”
– Protection: In 1982 President Ronald Reagan, following the recommendation of the International Trade Commission, imposed additional tariffs on imported heavyweight (over 700cc) Japanese motorcycles. The tariffs were to be in effect five years and would protect the American motorcycle industry-in effect, Harley-Davidson-from unfair competition.
Harley had argued that despite declining demand, Japan refused to cut back production of its heavyweight bikes and was shipping the surplus to the U.S., where they were sold at deep discounts.
The Japanese quickly retooled to make their 750cc engines into 699cc engines, thus slipping under the law by one cubic centimeter. The bikes with these engines were termed “tariff busters.” Despite this ploy, Harley was able to use the protected time to great advantage, and in 1986, one year before the tariffs were due to expire, the company pulled off a public relations coup. They asked that the tariffs be removed.
President Reagan visited the York, Pa., plant and declared Harley to be “an American success story.”
– Clever marketing: The company quickly realized that when a customer was buying a bike, he-or, in small but increasing numbers, she-really was buying a lifestyle. The romance may begin with the sound or the look but expands quickly to the customizing, the clothes, the activities, to what Harley director of market communications Mike Keefe calls the “whole egg of Harley.”
“The product is the center, the ticket in,” Keefe says. “But with all the ways you can customize, you can extend the euphoria of the purchase process forever. Nobody needs a motorcycle, and because of the price, our motorcycle is probably more impractical than most. But since ’88, it’s been nothing but blue sky for us. Buying one of our bikes is not a rational decision, but grab a customer’s guts, and he’ll follow you anywhere.”
The new look in Harley dealerships is bright lighting, open spaces, a lot of focus on the company’s Motorclothes line of fashions-everything from black leather jackets in children’s sizes to boxer shorts bearing the bar-and-shield Harley logo to a woman’s bikini in leather-look material with “Harley Davidson” spelled out in studs across the swimsuit’s top.
Hand-in-hand with a changing marketing thrust and look is a changing Harley purchaser profile: 5 percent women (compared to 2 percent in 1985), 26 percent college grads (up from 14 percent), 38.5 years average age (compared to 34.4) and $40,300 annual personal income (up from $28,000).
In addition to the aftermarket of things, Harley offers a rich array of aftermarket activities: rallies, fundraiser rides (in 11 years of association with the Muscular Dystrophy Association, Harley’s employees, dealers and owners have raised more than $12 million), etc. The activities keep the new bike owner involved, giving him something to do with his new toy. The Berwyn dealership announces rides and fashion shows and servicing specials through a publication, “The Eagle’s Claw,” that general manager Ferrell puts out. Its mailing list totals 10,000 people in the 606 ZIP codes.
Top Harley execs are riders, too, and show up at events clothed in the same sort of leathers and enthusiasm as their customers.
“A good motorcycle,” Keefe says, “is like a good horse. If you don’t use it, it goes bad. To me, the worst thing is a bike covered with old tarps in the back of a garage. That’s a criminal thing to do to a motorcycle.”
– Mystique. Some things have it-chicken soup for instance-and some don’t-vegetable soup. Harley-Davidson is steeped in it.
Harley owners admit that their bikes are kind of old-fashioned, pretty basic. They like them that way. One customer at the Berwyn dealership admiringly patted the gas tank of a bike saying: “No tachometer, no gas gauge, just a speedometer. Who cares what your rpm’s are or how much fuel you’ve got left? You just want to go.”
Harleys also are not as fast as the Japanese “crotch rockets” whose working parts are hidden beneath aerodynamic fairings.
But whatever they lack, they more than make up for in an almost mystical appeal.
“I tell people we didn`t create the Harley cult,” Keefe says, “we’re just trying not to mess it up.”
At the focus of Harley’s powerful magnetism is the designer of these vroooms with a view, William G. Davidson, grandson of one of the founders and the remaining family member with the company. Sometime in the late ’60s, Davidson shed his white shirt and tie and adapted the laid-back style and name by which he is known anywhere motorcycle enthusiasts gather: “Willie G.”
In a recent interview, Davidson appears dressed all in black with silver jewelry-a classic black Harley with chrome trim.
“Many, many years ago,” he says, “I admit to wearing a suit and a tie. I guess the greening of America had an effect on me, the ’60s lifestyles, music and dress. Traditional business attire didn’t make sense anymore. You don’t do a lot of fun things with a tie on.”
He is told about one Harley owner who said that in winter when he couldn’t ride, he’d open a beer, get his radio and go out to the garage just to sit and listen to music and look at his bike.
“I think,” Davidson says, “people are comfortable with visuals that have to do with a time that moved at a little slower pace. We’ve developed a character based on shapes that are recognized around the world. You know it’s a Harley-Davidson without ever reading the nameplate. It has to do with the classic V-twin engine (developed in 1909 and the source of Harley’s distinctive sound) and the teardrop tank and exposed (rather than enclosed) parts. In my office, I have drawings of motorcycles slated for ’94 and later that look like ’60s vehicles but are brand new with today’s comfort and handling.
“My background is industrial design. Mechanical art is a play of shapes, forms, textures, colors. A motorcycle is rolling sculpture. A lot of our customers are folk artists who modify their bikes to their own tastes. Some of them are phenomenal.
“The mystique is very, very complicated, and the design is just a tiny part of it. The V-twin is the heartbeat of the thing, and there’s the camaraderie and the clothes.
“The lifestyle is about wanting to be cowboys, wanting the freedom of the road. There’s an element of the Wild West outlaw in what it’s all about. You get out of your suit, put on your leathers, get away from your desk. You get some buddies together, and school’s out. There are no phones out there, no faxes, at least not yet.”
Davidson looks out the window of the conference room. It’s a nice day for a ride.
“I’ve been all over the world, and this state (Wisconsin) is one of the best places to ride. You come in from the west over the Mississippi early in the morning, with the steam rising from the river, and see the lush hills and a red barn here and there and you think, `My God, I’m in heaven.’ With that Harley under you and the sound of the exhaust trailing out behind-WOW! I LOVE IT!”
