The re-birth of Harley-Davidson

In 1988, the Harley-Davidson Motor Company loaned me a brand new red Harley Electra Glide and invited me along on a ride from Maine to Milwaukee to celebrate Harley’s 85th birthday. I wrote several stories about the ride and about the company’s resurgence from the road. I also had a blast! This story was one that I wrote once I returned to Maine. This clip was published in the Chicago Sun-Times, but the story was also published in papers around the country, as well as in Europe and Australia.

Harley roars back to lead the cycle pack

By ARTHUR FREDERICK

MILWAUKEE (UPI) – Harley –Davidson Motor Co., careening toward extinction just five years ago, has roared back to lead the pack, scooping up an increased market share from the best of the Japanese motorcycle builders while placing itself solidly in the black.

It was a different story in 1983, when Honda and other Japanese motorcycle makers pushed Harley, America’s only surviving motorcycle manufacturer, to the edge of bankruptcy.  But Harley searched its past and re-discovered a formula that seems to be redefining the company’s future.

The quality of the big V-twin engines Harleys had declined seriously over the years, and antiquated manufacturing techniques kept costs high and production low.

When Japanese builders such as Honda and Yamaha began building low-cost, high-tech super-heavyweight touring bikes, once the sole domain of Harley-Davidson, a number of former Harley riders jumped ship.

“We simply weren’t building a product that the customer wanted from a quality point of view, “ said Richard Teerlink, Harley’s president. “The customer needs quality, especially when he is paying a premium price for the product.”

Harley had once dominated the large-displacement motorcycle market, but by 1983 Harley’s market share for motorcycles of 851cc or more had faded to just 23.3 percent, while Honda’s share of the market had swelled to 44.3 percent. And there seemed to be no end to the downward trend.

“They used to call me Dr. Doom around here – my reports were always that the sky was falling,“ said Frank Cimermancic, Harley’s director of business planning.

With its back to the wall, Harley began fighting back.

The company claimed Honda and other Japanese manufacturers were dumping big-displacement motorcycles in the united States in order to harm Harley, and asked the Reagan administration for stiff tariffs on the biggest Japanese bikes,.  The administration responded with a five-year tariff plan.

With the tariff providing some breathing room, Harley went to work and began devising a strategy for getting back on solid ground. Harley’s strategy worked so well that by the end of 1987, its market share had zoomed to 40 percent, and was still climbing steadily.

1988 Harley-Davidson Electra Glide 85th Anniversary Edition

In the first quarter of 1988, Harley’s share climbed to 50 percent, while Honda slipped to 22 percent.

“We are really smoking,” Cimermancic said. “It is hard to believe, if you had told me five years ago we would be doing this kind of volume now, I would have asked you where you got your drugs from.”

Ironically, Harley’s precarious financial position necessitated some seat-of-the-pants market research, an approach that turned out to be uniquely effective for the motorcycle manufacturer.

“Marketing research nowadays is extremely sophisticated, and you hire psychologists and sociologists and Lord knows who else to do your work for you, and in the end you have a three-inch ring binder with graphs and charts,” Cimermancic said.

“What we do is go out and talk to the customer. Our executives go out and ride and meet our people, and we talk with tour riders, and we find out what they like and don’t like,” he said. ”It is market research in its purest form.”

In June, Harley celebrated its 85th birthday by sponsoring what it called its “Milwaukee Ride for MDA,” a series of motorcycle rides that began in 10 locations around the United States and Canada.

All of the riders ended up in Milwaukee June 18 for a celebration attended by thousands of Harley buffs. Proceeds from the rides, which were led by Teerlink and other Harley executives, benefited Muscular Dystrophy research.

“That Harley ride is a major marketing research effort,” Cimermancic said. “Our executives won’t come back and say that 34 percent of our customers feel a certain way , but they will come back and say there is a feeling among our riders that we should make this change or that change in our product.”

“The million dollar term for this, we find out, is ‘ethnographic research’. The sociologists say that to understand a culture you have to live in the culture,” Cimermancic said. “It’s like going off and living with the tribes in the South Seas.”

What the customers told Harley was that they wanted beautiful customized motorcycles, maybe with links to the motorcycles of the past. And they said they wanted a return to the old Harley quality.

Harley responded with a new line of motorcycles,. The company’s engineers redesigned the V-twin power plants, and developed what they call the Heritage Series, a line of motorcycles that are recreations of the big Harleys of the 1950s.

On all the new Harleys, fit and finish work is of the highest quality.

“We have made terrific strides in quality,” Cimermancic said. “We are having trouble getting enough bikes to our dealers,  and one reason for that undersupply is the fact that we are rather hesitant to raise production rates until we are confident that we can retain the quality the quality at those higher rates.”

“We are not going to sacrifice quality for short-term profits and lose all the strides we have worked so hard for,” he said. “We know we can’t go back to the days of turning out shoddy products.”

Just five years after it seemed that Japanese competition would drive Harley out of the marketplace, Harley has found its niche as industry leader.

The company’s recovery was so rapid that in March 1987 Harley was able to ask that the special tariff protection be ended a year early.

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