April Fools 1983

President Ronald Reagan With CEO Vaughn Beals

In 2020, April Fools is passé and pranks are out.  The pandemic crisis has changed humor!

The popular metaphor for speech is “Shouting fire in a crowded theater,” which may cause panic.  The seriousness of COVID-19 has the capacity to frighten in a visceral way the public and dedicating a blog post to misleading people just seems like a very bad idea.

Do you remember a long time ago in a galaxy far far away, when tariffs were being used to control unfair trade practices (labor, environment and other issues).

Former H-D CEO Matthew Levatich With Recode’s Kara Swisher Discussing Tariff’s

Recall the hysteria of — Tariffs bad, Harley good?

Harley-Davidson execs and investors panicked when the European bloc raised its 6% tariff to 31% on motorcycles. That made each motor company motorcycle about $2,200 more expensive to export, and forced the company into opening another manufacturing plant in Thailand.

Thirty-seven years ago today, President Ronald Reagan took bold steps to protect Harley-Davidson from foreign competitors.  It was April 1, 1983, when Reagan ordered massive tariffs on large Japanese motorcycles to help the last surviving maker of American-made motorcycles.

President Ronald Reagan at H-D York, Pennsylvania on May 6, 1987

I’ve previously written about how during the 1970’s, Japanese motorcycle manufacturers flooded the U.S. motorcycle market decreasing Harley-Davidson’s market share. It had only been a few years since Harley-Davidson executed the epic buy back from AMF.  Their sales hadn’t reached the levels they envisioned, in part, because the AMF era was famous for shoddy quality, bikes requiring a lot of maintenance and the Milwaukee motor company was getting knocked down publicly and in need of some sunshine.

With poor quality and high-maintenance requirements, Harley was skiding toward bankruptcy.  In 1982, Harley-Davidson sought protection from the International Trade Commission (ITC) and requested a tariff on all overseas heavyweight motorcycles. This was the first and only time such a request was made to the ITC. They also lobbied the Reagan administration to raise tariffs on Japanese manufacturers because of “Dumping,” which in this context refers to exporting a product at a lower price than is charged in the home market, or selling at a price that is lower than the cost to produce it.

President Ronald Reagan and CEO Vaughn Beals at H-D York, Pennsylvania on May 6, 1987 — Recieving Appreciation Award

It was a different time and President Reagan used tariffs, versus tweets, to change the course of the American motorcycle industry.

On April 1, 1983, April Fools Day, President Reagan signed into law an act that imposed draconian import tariffs for a five-year period on Japanese motorcycles with displacement of greater than 700 cc’s.  This would give the American motorcycle maker some breathing room from intense competition to retool, get its act together and turn profitable. While the act was supposed to last for five years, then CEO Vaughn Beals asked that it be lifted a year early in 1987.

It was as good then and just as good today… Remarking about the celebrated Harley-Davidson turnaround in 1987, President Reagan quipped (recorded in this Podcast), “Never bet against Americans.”

If you are in need of some reading humor, check out these previous April Fools posts:
Harley-Davidson Boom Box Infotainment Virus
I Quit
Harley-Davidson Launches Blackline L-Edition
Keith Wandell Retirement Revs Up Harley
Wagoner Tapped As Harley CEO

Bonus:  President Reagan’s Remarks (Video) to Harley-Davidson Company Employees in York, Pennsylvania on May 6, 1987.

Photos courtesy of Harley-Davidson, Recode and Ronald Regan Foundation

All Rights Reserved © Northwest Harley Blog

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My Big Brother Motorcycle

1984 Honda Magna (VF700C or V42)

It’s a play on George Orwell’s dystopian 1949 novel 1984 — where the world in 1984 is under control of Big Brother and the Thought Police who enforced the rules against individuality and original thinking — essentially praising society’s achievement on the “Unification of Thoughts.”

Taking a page from Apple’s Super Bowl ad, my “1984 wasn’t like 1984,” — thumbing my nose at the roots of America, I purchased a little slice of freedom and original thinking in the form of a Honda VF700C or V42 Magna.

That shiny jet black Honda Magna (V42) had a liquid-cooled, double-overhead cam 90° V4 engine (displacement is 699cc or 42.7 ci) with four valves per cylinder and a compression ratio of 10.5:1.  Honda claimed it’s output was 82 crankshaft HP at 9,500 RPM.  The motorcycle had a smooth shifting 6-speed transmission, a wet multi-plate clutch that was hydraulically activated and shaft final drive with helical gearing in the rear-drive unit.  The motorcycle featured twin horns, coil rear springs, hydraulic clutch, air preload front fork with anti-dive valving, and an engine temperature gauge.

1984 Honda Magna (VF700C)Specs

Braking was delivered via a hydraulic activated double twin-piston disc brakes up front and a traditional non-ABS mechanical internal expanding drum brake in the rear. Great for leaving skid marks, but not so much for stopping!

The instrumentation was housed in chrome and included an analog speedometer, tachometer and engine coolant temperature gauge, along with lights for oil pressure, neutral, turn signals, tail light burn-out and a light that illuminated “OD” which let the rider know the transmission was in 6th gear.

As I reminisce on riding the Magna, I recall it having good power and a broad torque band.  Given its light weight and low center of gravity, the motorcycle was easy to ride in the city or a twisty two-lane country road. The Magna’s features were truly pushing the state-of-the-art for a production cruiser in its day.

From a historical viewpoint, only a few years had past since Harley-Davidson executed the epic buy back from AMF.  Their sales hadn’t reached the levels they envisioned, in part, because the AMF era was famous for shoddy quality, bikes requiring a lot of maintenance and the Milwaukee motor company was getting knocked down publicly and in need of some sunshine.

The poor quality and hi-maintenance requirements on Harley motorcycles was a key factor in my decision to purchase Honda.  In fact, a member of our posse also purchased a Honda, a V65 Magna (VF1100C) the same year.  Man, those V65 Magna’s (1,098 cc) were fast.  It was Honda’s initial entry in the “1/4 mile wars” between all the Japan manufacturers during the ’80s.

As Harley skidded toward bankruptcy, you might recall they petitioned and lobbied the Reagan administration in 1982 to raise tariffs on Japanese manufacturers because of “Dumping.”

“Dumping” in this context refers to exporting a product at a lower price than is charged in the home market, or selling at a price that is lower than the cost to produce it.  In April 1983, President Reagan signed into law an act that imposed draconian import tariffs for a five-year period on Japanese motorcycles with a displacement of greater than 700 cc.  This would give the sole American motorcycle maker some breathing room from intense competition to retool, get its act together and turn profitable.

However, Honda quickly responded to the retaliatory import duties and retooled the engines (what had been the 750cc class, VF750C V45 Magna) to displace just under 700cc; making them immune to the financial impact of the tariff.  One of the bikes that debuted as a “tariff buster” in 1984 was the V42 Magna.  Ironically and in a show of engineering superiority, it had three additional horsepower compared to the 750cc!

Harley was eventually able to turn a corner and the motor company ultimately requested that the tariff protection end early — essentially stating, they were now strong enough to take on the best competition in the world!

While the act was supposed to last for five years, then CEO Vaughn Beals asked that it be lifted a year early in 1987.  The 5-year tariff officially expired in 1988. That same year the Honda Magna reverted back to its original size of 748 cc.

Photos courtesy of Honda and Harley-Davidson Museum.

All Rights Reserved © Northwest Harley Blog

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CEO’s That Made Harley-Davidson

Recently it was reported that the typical CEO at the biggest U.S. companies received an 8.5 percent raise last year, taking in $11.5 million in salary, stock and other compensation, according to a study by executive data firm Equilar for the Associated Press.

Over the last 5-years, median CEO pay has jumped by 19.6 percent not accounting for inflation.  That’s nearly double the 10.9 percent rise in the typical weekly paycheck for full-time employment across the country.

It could be, but this isn’t a rant about the typical line worker vs. CEO wage-gap.

If we’re being intellectually honest, CEOs today are required to master a broader range of skills than in the past, when top executives might have climbed the ranks with just one discipline. Companies are bigger, more global and increasingly complicated, and there’s accelerating competition in countries such as China, India and Brazil. Executives must also adapt to quicker technological change, including shifts brought on by autonomous driving, electric vehicles and the widening use of mobile devices.  And then there is the Board, and the increasing requirement that CEOs push their stock price ever higher to collect their maximum possible payout.

So, who are those CEOs at Harley-Davidson, that made Harley-Davidson?  Below is a historical snapshot of the motor company leadership:

Jochen Zeitz — Credit: Liam Sharp

Jochen Zeitz — born in Mannheim, Germany, the 57-year old was appointed May 7, 2020 as President and Chief Executive Officer (CEO). Zeitz served as Acting President and CEO since February 2020 when the previous CEO, Matt Levatich resigned. Zeitz also continues to serve as Chairman of the Board.

For more background please see this post.

Prior to being named Chairman, Acting President and CEO in February, Zeitz was a member of the Harley-Davidson Board of Directors since 2007 and established the Company’s Brand and Sustainability Committee. He served as Chairman and CEO of Puma for eighteen years from 1993 to 2011 and was also PUMA’s CFO from 1993 to 2005. Zeitz remained Chairman of Puma after being appointed CEO of the Sport and Lifestyle division at luxury goods company Kering (formerly PPR) from 2011 to 2012. He then served as a director on Kering’s Board of Directors from 2012-2016.

He also sits on the boards of financial services company Cranemere, and the Kenya Wildlife Service, as well as running his own charitable foundation (The Zeitz Foundation) and co-chairing The B Team, a non-profit that he co-founded with Richard Branson in 2012 to promote sustainable business practices. He has won the Financial Times Strategist of the Year award three times, been awarded the German Federal Cross of Merit, and co-authored two books – one of which, a dialogue with Benedictine monk Anselm Grün called The Manager and the Monk: A Discourse on Prayer, Profit and Principles, has been translated into 15 languages.

About fifteen years ago, he started his own business – Segera, a 50,000-acre luxury resort retreat on the Laikipia plateau in Kenya’s central highlands.  In addition, Zeitz launched other projects in Africa: The Zeitz Collection of contemporary art from Africa and its diaspora; the Zeitz Museum of Contemporary Art Africa, a complex of 100 galleries in a 1920s granary in Cape Town converted by Thomas Heatherwick, which houses work from both its own and Zeitz’s collections: and The Long Run, which rates sustainable tourism projects according to Conservation, Community, Culture and Commerce (4Cs).

On a personal level — he divorced his first wife Birgit Jöris in 2012 following an 18-year marriage.  He is currently married to LA-based producer Kate Garwood‚ 41‚ producer of the 2016 movie “Race”‚ about U.S. track star Jesse Owens.  They have two children; 4-year old Jesse, born September 2017 and a three year old. He keeps homes in Switzerland, Santa Fe, Los Angeles, the ranch in Kenya and has property in west London.  One would also assume he now has a home in Milwaukee!  His favorite thing is a Scottish Bailey.

Matthew S. Levatich

Matthew S. Levatich — Resigned on February 28, 2020 after a 26-year career at Harley-Davidson with the last 5-years as CEO.  For more info see this post HERE.

Harley-Davidson promoted Levatich to President/CEO in May 2015 when Keith E. Wandell retired.  Mr. Levatich was named COO during CEO Keith Wandell’s tenure.

Mr. Levatich, joined Harley-Davidson in 1994. Prior to becoming COO in May 2009, he held wide-ranging roles in the U.S. and Europe. Those roles included Vice President and General Manager of Harley-Davidson’s Parts and Accessories business, Vice President of Materials Management, and President and Managing Director of the Company’s former MV Agusta business. In addition to an undergraduate degree in mechanical engineering from Rensselaer Polytechnic Institute, Levatich holds a graduate degree in engineering management and an MBA from Northwestern University. He has served on the board of directors of Emerson, a St. Louis-based global manufacturing and technology company, since 2012.

Mr. Levatich is known as an avid rider and an engineer, that demonstrates a clear vision for the company and talks constantly about focus and alignment and helping the organization remain clear on what it is they’re here to do.  No longer is the motor company the “voice of the executive” rather it’s the “voice of the customer.”

Interestingly, Harley-Davidson has evolved from platform teams. Dyna platform, Softail platform, which was largely modeled like the automotive industry. Each platform team was competing for the next big capital investment so they could say now it’s Dyna’s turn to have a major refresh. Or now it’s Softail’s turn. Or now it’s Touring’s turn.  And that doesn’t exist anymore.

In an interview with Cycle World Mr. Levatich stated: “We’re not really in the business of manufacturing motorcycles. We’re in the business of building customers.”  

Keith Wandell

Keith Wandell —  hired from Johnson Controls to serve as Harley-Davidson President/CEO in 2009 — retired May 1, 2015 — only 6-years later.

Credited for leading Harley-Davidson back to profitability by cutting jobs and making its production more efficient he transformed manufacturing through a restructuring plan that generated more than $300 million in annual savings.

Mr. Wandell cut millions of dollars in costs and eliminated several thousand jobs in the manufacturing plants. He brought a sense of urgency to the company, saying he did not want it to be like General Motors and the auto industry that had fallen into deep trouble.

Under his leadership, Harley made significant gains in reaching new customers through growth in international markets and sales to “outreach” segments in the U.S., including young adults, women, African-Americans and Hispanics.  Mr. Wandell also was credited with stoking excitement for a planned electric bike, called Project LiveWire.

Mr. Wandell has been the Non-Executive Chairman of Dana Incorporated since October 27, 2016 and served as its Interim Chairman from September 9, 2016 to October 27, 2016.

James Ziemer

James Ziemer — served as President/CEO from 2005-2009.  Retired in 2009.  Mr. Ziemer is a native Milwaukeean who grew up in the neighborhood next to Harley-Davidson’s original Milwaukee factory location on the city’s west side.

He started with the motor company in 1969 as a freight elevator operator while attending the University of Wisconsin-Milwaukee. He worked at Harley-Davidson for 40 years.  Upon earning his undergraduate degree in accounting at UWM, he joined the accounting department where he spent the majority of his career. He was named the Company’s Chief Financial Officer in 1990. In 2005, he was named President and Chief Executive Officer of Harley-Davidson.  When he retired, employees presented Mr. Ziemer with the original wood doors from the freight elevator he operated when he first was hired at Harley-Davidson.

As a sidebar, also in 2009, eleven years after being bought by Harley-Davidson, Erik Buell leaves the company to establish Erik Buell Racing.

Jeffrey L. Bleustein

Jeffrey L. Bleustein — retired as Chairman of the Board of Harley-Davidson in April 2009.  He was Chairman from December 1998 to April 25, 2009.  Previously, he served as CEO from June 1997 to April 2005.

He served at Brunswick Corp in many capacities and was President of Trihawk, Inc., a subsidiary of Harley-Davidson, 1984 to 1985. Remember Trihawks?

Mr. Bleustein was a technology consultant with American Machine and Foundry Co. (AMF).  In 1969, AMF merged with Harley-Davidson and in 1975, AMF assigned him to help reorganize Harley-Davidson engineering operations.  Led by AMA Hall of Famer Vaughn Beals Jr., and 11 other Harley-Davidson executives (including Willie G. Davidson), Bleustein helped execute an $81.5 million leveraged buyout of the company from AMF on June 16, 1981.

To commemorate the buy-back, approximately two dozen company officers, along with their wives and select motorcycle press, made a cross-country motorcycle trek from the production facilities in York, PA to Harley-Davidson’s main offices on Juneau Avenue in Milwaukee. This 900-mile independence journey was also a ride to support the Muscular Dystrophy Association, now the official charity of Harley Owners Group (HOG). The ride followed a host of ceremonies at York which included the signing of documents that marked the ownership change, and pulling the first “new Harley-Davidson” motorcycle off the assembly line. This 4-day celebration began a new chapter in the company’s “new” future.

Mr. Bleustein was responsible for notable engineering innovations which included the rubber engine mounts, redesign of the V-Twin and introduction of the Kevlar drive belts.

During Mr. Bleustein’s tenure (circa: 1998), Harley-Davidson bought Buell Motorcycle Company and named founder Eric Buell Chairman of Buell Operations. The first Buell’s hit showrooms in late 1999.

Rich Teerlink

Rich Teerlink  — served as Chairman and CEO until 1999 at Harley-Davidson until he retired.  Mr. Teerlink joined Harley-Davidson in August 1981 as CFO where he enjoyed great success over his 18-year career.  He started with the company just two months after the group of 13 Harley-Davidson managers had bought the company from its then parent company, American Machine and Foundry Co. (AMF), in a leveraged buyout.

Mr. Teerlink’s greatest accomplishment was establishing the Harley Owners Group (HOG) in 1983.  Mr. Teerlink joined the Vertex Board in 2002, and while serving on the Vertex Board, he also served on the Boards of Johnson Controls, Snap-on Tools and Quad Graphics.

Mr. Teerlink is also a notable author of More Than a Motorcycle, The Leadership Journey at Harley Davidson book.  Mr. Teerlink retired from the Vertex Board of Directors, effective February 4, 2015.

Mr. Teerlink was inducted to the AMA Motorcycle Museum Hall of Fame in 2015.  Mr. Teerlink was awarded an Honorary Degree, Doctor of Laws from Marquette University on May 22, 2005.

Vaughn L. Beals Jr.

Vaughn L. Beals Jr. — served as CEO of Harley-Davidson from 1981-1989 and as Chairman from 1981-1996.

In June 1981, it was a challenging time as American Machine and Foundry Co. (AMF) wanted to cut and run, but no one wanted to buy a company with a limited line of high-priced, obsolete products and a reputation for unreliability.  Vaughn Beals Jr., and 13-other** Harley-Davidson executives (including Willie G. Davidson), led an $81.5 million leveraged buyout of the company from American Machine and Foundry Co. (AMF).

Mr. Beals previously served as a research engineer for North American Aviation and Cummins Engine Company where he negotiated the purchase of logging equipment manufacturer Formac International as he was a minority owner and CEO.  This proved to be valuable during the AMF Harley-Davidson buyout.  He was named Harley-Davidson CEO after the buy-out option.

In 1982, the motor company won an anti-dumping judgment from the International Trade Commission (ITC). This led then-U.S. President Ronald Reagan to impose additional tariffs on imported heavyweight Japanese models, as allowed by the ITC.  The additional tariffs–45 percent on top of an existing 4.4 percent measure–were meant to decrease gradually over five years, until April 1988.

In June 1986, Harley-Davidson went public with a stock offering to raise capital to help pay off the buy-out option.  This was very successful increasing share price from $11 to $24.  Harley-Davidson  used some of the stock sale revenues to buy Holiday Rambler, a U.S. maker of recreational vehicles, for $150 million.  The Holiday Rambler sale pushed Harley-Davidson into the Fortune 500 category for the first time at number 398.  In March 1987 the company asked the ITC to remove the tariffs imposed on Japanese motorcycle imports a year earlier than scheduled.

Willie G. Davidson, V.P. Styling (Left); Vaughn Beals Jr., CEO and Charles Thompson, President (Right)

Mr. Beals was inducted to the AMA Motorcycle Museum Hall of Fame in 2008.

Charles Thompson — served as President and CEO of the restructured Harley-Davidson after American Machine and Foundry Co. (AMF) buy-out option.

Mr. Thompson was a long-time Harley-Davidson employee, well-liked throughout the motorcycle industry and served as president and CEO of the restructured company until his health failed in 1982.

William Herbert “Bill” Davidson — was president of Harley-Davidson Motorcycles from 1942 to 1971.  He was the son of William A. Davidson who quit his regular paying job with the Milwaukee Road railroad in 1903 to get into the business of making motorcycles.

William Herbert “Bill” Davidson

Bill Davidson, started working on the Harley-Davidson shop floor of the family business in 1928 after attending the University of Wisconsin.  He won the AMA National Enduro Championship in 1930 and when he wasn’t winning motorcycle races, Bill worked his way up through the company, becoming a foreman, manager of many departments, and finally president of Harley-Davidson in 1942.

In 1963, Bill brought in his son William Godfrey Davidson (Willie G.) on to head up the styling department of the company. Willie G. would end up creating some of the company’s more popular designs, including the legendary Low Rider and the Super Glide which was inspired by the ideas of bike customizers.

In 1965 Harley-Davidson went public as the two families decided to give up control and put the company’s shares on the market.

In 1969, Harley-Davidson was bought by American Machine and Foundry Co. (AMF), a leisure equipment manufacturer.  The arrangement proved, at least initially, to be a good one for Harley-Davidson, for it was in the mid-1960s that the company experienced its first real competition after Indian went out of business. The financial resources and stability that AMF was able to provide helped the company battle Japanese motorcycle manufacturers, who had begun exporting their vehicles around the world, placing themselves in direct competition with Harley-Davidson.

Bill stayed on as president under the control of AMF reporting to it’s then current chairman and CEO Rodney C. Gott (Mr. Gott served as AMF president, starting in 1962, and chairman and chief executive, from 1968. He retired in 1978).  Mr. Gott was a Harley-Davidson rider and big motorcycle fan.  As a sidebar: In World War II, Mr. Gott was a decorated veteran who served in Gen. George S. Patton’s Third Army and on the staff of Gen. Lesley James McNair, chief of ground forces, and was also commander of the 79th Infantry Division Artillery.

In 1971, Bill Davidson was made Harley-Davidson chairman, but reported that he had little power while under AMF’s control.  It was noted that he was chairman of the Harley-Davidson board that never met.  Conflicts with AMF’s strategy and chaotic market conditions led to Bill Davidson’s resignation in 1973.

It was a period of high CEO turnover at Harley-Davidson.  During this time, AMF named John O’Brian and then Gus Davis as president, marking the first time someone other than a Davidson would sit in the company presidents chair.  Other Harley and Davidson family members continued on at the company under AMF’s ownership.  Bill Davidson’s son John was vice president of Sales, and then moved up to become president after Gus Davis.  William J. Harley was engineering vice president until his death in 1971.  His brother John Harley remained at the company until his death in 1976 as the last Harley at Harley-Davidson.

In 1975, AMF put Vaughn Beals Jr. at the head of Harley-Davidson, and Jeff Bleustein was named chief engineer. Bleustein was charged with making manufacturing improvements, which had  become increasingly necessary as production grew and quality declined.  A limited line of high-priced products and a reputation for unreliable motorcycles marked this timeframe in history.  AMF began to lose interest in keeping the struggling motorcycle business afloat.

Rodney C. Gott (Left) and John Davidson, President Harley-Davidson

In a bit of irony, (circa: 09/1977), the motor company unveiled a motorcycle museum in York, PA., that was named after AMF’s CEO — Rodney C. Gott Motorcycle Museum.  A video HERE.

In June 1981, to save the company, and to effect a turnaround, thirteen Harley-Davidson executives, led by Vaughn Beals Jr., put together a plan for a leveraged management buyout. With the financial support of Citicorp, the management team succeeded in taking control of Harley-Davidson from AMF on June 16, 1981, at a cost of $81.5 million.

The role of the new officers after the company buy-out option included: Charles Thompson, president and chief operating officer; Jack Hamilton, Chris Sartalis, Jim Paterson, Kurt Woerpel, Peter Profumo, Jeffrey Bleustein, Thomas Gelb, William Davidson, and Tim Hoelter, all vice presidents. The president of the various divisions were: John Davidson, golf; David Caruso, parts and accessories; Ralph Swenson, York; and David Lickerman, Harley-Davidson International.

Even though he was no longer actively involved with the company, Bill Davidson lived to see the renewal and success that Harley-Davidson enjoyed starting in the late-1980s.

Bill Davidson died in 1993.  He was inducted into the AMA Motorcycle Museum Hall of Fame in 1999.

Walter Davidson — was president from 1907 to 1942.  Bill Harley was chief engineer and treasurer. Author Davidson is secretary and general sales manager and William A. Davidson is the works manager.

In 1936, six sons of the founders are working at Harley-Davidson.  Walter Davidson’s sons Gordon and Walter C.; and William Davidson’s sons, William Herbert “Bill” and Allan; and Bill Harley’s sons, William J. and John.

In 1942 from his death bed,  Walter Davidson named his nephew William Herbert “Bill” Davidson as president and his own eldest son Gordon, as vice president of manufacturing.

Historical Principal H-D Subsidiaries: Holiday Rambler Corporation; Utilmaster Corporation; B&B Molders; Creative Dimensions; Nappanee Wood Products.

Article References:

Vaughn Beals Jr. – Wikipedia

Growing Up Harley-Davidson – Jean Davidson

Harvard Business Review – Harley Leadership U-Turn
Jeffrey Bleustein – Wikipedia

The Morning Call – Harley Is A Classic Turnaround Story

Rodney C. Gott Obituary
Gus Davis Obituary

Cycle World Magazine – Interview with CEO, Matthew S. Levatich

Cycle World Magazine – Rodney C. Gott Motorcycle Museum

Chicago Tribune – The Real Harley-Davidson Story

James Ziemer – Northwest Harley Blog

People – Buy Back Article

Rick Barrett – Journal Sentinel

Richard Benson – Wired UK

Harley-Davidson (Buyout) Management Team

**The Harley-Davidson managers post buy-out option: left to right standing: John Hamilton, Dr. Jeffrey Bleustein, Kurt Woerpel, Chstopher Sartalis, and William G. Davidson.  Left to right, seated: James Peterson, Timothy Hoelter, David Lickerman, Peter Profumo, David Caruso, Ralph Swenson, Charles Thompson, and Vaughn Beals Jr.

 

Photos courtesy of Harley-Davidson

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The Harley-Davidson $10 Million Dead End

Harley-Davidson V-4 NOVA Model

It’s not a discovery that ranks up there with the Egyptian tombs, but there are plenty of ‘skeletons in the closet’ about Harley-Davidson products that never made it to production.

One such item from the motor company was the NOVA Project which dates back to the late 1970’s and early 1980’s.

The company made a decision to start a program for a new family of modular engines built with two, four or six cylinders, and in displacements ranging from 500 to 1500cc.  Design and development of the engine was in collaboration with Porsche in Germany.

Sound familiar?

This was “revolutionary” stuff back in the day when AMF owned Harley-Davidson and AMF Corporate initially supported the Nova Project with $10 million.  Keep in mind that in June of 1981, AMA Hall of Famer Vaughn L. Beals Jr. and other Harley-Davidson executives (including Willie G. Davidson), were in the middle of executing an $81.5 million leveraged buyout of the company so, AMF protested at the additional millions that would have been required to make the motorcycle a reality.  Harley-Davidson was unwilling to explore other alternatives and officially shelved the project in 1983.

Harley-Davidson V-4 NOVA Engine

The only known NOVA Project motorcycle was a “test mule” and it’s unclear how the final version might have looked or been re-styled for a product launch.  However, the prototype reveals a lot.

The engine was an 800cc water-cooled V-Four, with chain-driven dual overhead cams and wet-sump oiling.  Fuel was delivered by Bosch Jetronic fuel injection.  The horizontally split crankcases were made provisionally for a balancer shaft, though one may or may not have been fitted to the prototype.  The deep finned cylinders and heads revealed the fact of liquid cooling, as did the apparent lack of a radiator.  The radiator was, in fact, located above the engine shrouded by a false gas tank that would duct air across it.  The real gas tank was located beneath the seat. The fuel filler cap was mounted on the right side of the rear fender.

As previously mentioned, Vaughn Beals Jr. was chairman and CEO after the buy-back, and one of the company’s exec’s who actually rode an operational prototype of the Nova motorcycle.  Wayne Vaughn was one of the engineers that worked on NOVA under Mike Hillman. The motor company had completed the first phase engine development, and tooled production crankcases.  It’s estimated that Harley-Davidson invested between $10 million and $15 million on the entire project including the expensive tooling necessary to manufacture the NOVA before shelving it in favor of redesigning the company’s traditional V-twin engine.

Harley-Davidson V-4 NOVA Model Instrument Cluster

Though NOVA never went into production, the program clearly “paid it forward” on future motorcycles and designs.  For example, the fairing that was designed and wind tested for the NOVA made it into production the first time and was used on the 1983 FXRT Sport Glide.  The NOVA Project was a precursor for the eventual development of the liquid-cooled VRSCA Revolution V-Rod engine.  And some elements of the NOVA liquid-cooled design and fuel injection were leveraged in the Twin Cam 88 and Twin Cam 96 to help meet ever tightening emission and noise standards.  It’s interesting to speculate about how NOVA may have changed the market dynamics of motorcycle industry at the time and the effects these Harley “projects” may have made on future motorcycles and their engines.

Harley-Davidson likely finds itself in a position today with the Milwaukee Eight in spite of—or perhaps because of—the no-go decisions and the rejections it’s made in it’s NOVA engineering past.

Photos take by author at and courtesy of Harley-Davidson Museum.

All Rights Reserved (C) Northwest Harley Blog

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Thinking Snow And Wishful Drinking

Think Snow Bumpersticker - HD Advertising (circa: 1972-74)

It was a big year for Harley-Davidson as they shifted from downsizing, labor agreements and weathering the recession to now looking forward to growth in 2011.  With freezing temperature and snow falling in many parts of the U.S., I’ve compiled some 2010 highlights to provide you some entertainment as you warm up with hot chocolate:

January
1.    Downtown H-D Renton, WA., one of the northwest dealers named among top 100 (Link: HERE)
2.    H-D reported its first quarterly loss since 1993 (Link: HERE)
3.    H-D announces the new, but “old” Forty-Eight Sportster (Link: HERE)

February
1.    H-D donates 28 new Buell and H-D motorcycles to assist in the earthquake disaster (Link: HERE)
2.    H-D marketing continues to pitch brand with young-rebel-with-tats ethos (Link: HERE)
3.    H-D internal documents indicate 382,000 absenteeism hours in the factories (Link: HERE)

March
1.    H-D promotes danger as Seth Enslow breaks Bubba Blackwell’s jump record (Link: HERE)
2.    H-D dealer (Shumate) in Kennewick, WA., closes under a mountain of debt. (Link: HERE)
3.    H-D CEO, Keith E. Wandell 2009 compensation package becomes public as the $6M dollar man (Link: HERE)
4.    H-D marketing pulls out all stops on innovation and launches Super Ride II (Link: HERE)

April
1.    H-D consolidates motorcycle testing in Arizona Proving Grounds (Link: HERE)
2.    H-D files mass layoff notice with Wisconsin department of workforce development (Link: HERE)
3.    H-D CEO, Keith E. Wandell is “encouraged” as Q1 motorcycle sales revenue declines 20% YOY (Link: HERE)
4.    After 26 years of service Bill Davidson is put in charge of the Museum (Link: HERE)

May
1.    H-D CEO, Keith E. Wandell states in interview that H-D is like GM…a fading American industrial might (Link: HERE)
2.    H-D threatens to leave the state of Wisconsin (Link: HERE)
3.    H-D CMO, Mark-Hans Richer is no man crush of this blog (Link: HERE)

June
1.    H-D launches XR1200 Refresh (Link: HERE)
2.    H-D launches Wii based-game: “Road Trip” (Link: HERE)
3.    H-D at the National Law Enforcement Museum (Link: HERE)

July
1.    H-D opens Hyderabad, India showroom to pandemonium (Link: HERE)
2.    H-D reports Q2 earnings with financial services being largest money maker (Link: HERE)
3.    H-D launches the 2011 model lineup of 32 bikes vs. 38 the prior year (Link: HERE)

August
1.    H-D announces closure of sidecar business which operated since 1914 (Link: HERE)
2.    H-D announces 1-MILLION fans on Facebook (Link: HERE)
3.    H-D sold back MV Agusta to its previous owners (Link: HERE)
4.    H-D announces that after 31 years they’ve parted ways with PR firm Carmichael Lynch (Link: HERE)

September
1.    Erik Buell releases teaser ads promoting a new street bike based on 1190RR (Link: HERE)
2.    H-D gives away free posters of any of their 32 models (Link: HERE)
3.    H-D under threat of moving out of state announces ratified 7-year labor agreement (Link: HERE)
4.    H-D “spins” the fact that massive branding efforts result in a 24% brand value decline (Link: HERE)

October
1.    H-D reports Q3 earnings with motorcycle sales declining 7.7% worldwide and 14.4% in the U.S. (Link: HERE)

November
1.    H-D management “negotiates” with Kansas City plant to accept a new labor agreement or we’ll leave state (Link: HERE)
2.    H-D turns down a $25M tax credit deal by Wisconsin State (Link: HERE)

December
1.    H-D never disclosed a $2.3 BILLION deal with Federal Reserve (Link: HERE)
2.    H-D announces first ever “Crowd Sourcing” for new marketing ideas (Link: HERE)

Photo courtesy of H-D.

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40 Years After The Moon Walk

LEM

Anyone who grew up in America in the ‘60s must find the present state of space travel a major disappointment.

It was the year Harley-Davidson merged with AMF, the cool movie was Easy Rider which portrayed hippies who rode choppers and Neil Armstrong walked/bounced on the moon.   Forty years ago the crew of Apollo 11 squeezed together over an eight day period and a half-million mile journey to place a plaque on the moon that said “came in peace for all mankind.” I was a child, but like others of my generation, I fully expected there to have been massive space stations orbiting the earth and colonies on the moon by now.

What a rush the space race was. Using German WWII rocket technology, both the Americans and the Russians innovated like mad to launch the first satellite in 1959 (Russia’s Sputnik); to put the first person in orbit (Russia’s Yuri Gagarin in 1961); and finally the first person on the moon (Armstrong in 1969). Clearly lunar bases and spaceships in the solar system was expected by the Twitter-first century, right?

In reflecting about the time and place I realized my path is connected.  Sort of a Six Degrees of Kevin Bacon thing.  First were the years I lived in El Paso, TX and my father worked at the White Sands Missile Range (WSMR).  He spent 1968 in Vietnam working with Hawk Missiles, but on his return to Texas they were involved in some Apollo testing.  I didn’t fully know or understand the significance at the time.

And later like many who graduated from college, I joined the electronic masses at Tektronix.  In 1980 Tek sold the Patient Monitor business to pharmaceutical conglomerate Squibb (a.k.a., Vitatek) and I moved into the healthcare arena.  Squibb was on a buying frenzy of medical devices and services so it was anticipated to be a good career move.  Little did I know what it would be like working with Carl A. Lombardi (CEO) and his not so interesting view of business.  The next year Vitatek merged with Spacelabs Medical (originally out of Chatsworth, CA).

Spacelabs was co-founded by Ben Ettelson and James A. Reeves in 1958 for the express purpose of working with NASA and the U.S. Air Force on systems to monitor the vital signs of astronauts in space.   The company manufactured and delivered prototypes of miniaturized signal conditioners which measured astronauts’ temperature, respiration, and cardiac activity. In July 1969, just days after Neil Armstrong become the first man to walk on the Moon during the Apollo 11 mission , NASA’s Manned Spacecraft Center (now Johnson Space Center ) honored Spacelabs Medical with a certificate of appreciation for its “outstanding” contributions to the Apollo Program—contributions which proved vital for the Nation’s goal of landing men on the Moon and returning them safely to Earth.

When I worked at Spacelabs we adapted the technology it originally developed for NASA for the first bedside arrhythmia-monitoring system which allowed physicians to view real-time arrhythmia data, at the patient’s side, for the first time.

Congrats to Armstrong, Aldrin and Collins on your 40th anniversary and historic return to Earth with moon rocks!

LEM Photo from a visit to Redstone Arsenal, Huntsville, Alabama.

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40 Years After The AMF Acquisition

This year marks a couple of interesting historical points on the Harley-Davidson calendar.  It’s coincidental that 2009 marks the first time a non-motorcycle riding enthusiast (CEO, Keith Wendell) was hired to run the company, and this occurred exactly 40 years after Harley-Davidson merged with American Machine and Foundry Company (AMF).  I don’t know if that is ironic or just business karma?!

At any rate, back in 1965 Harley-Davidson went public when the two families decided to give up control and put the company’s shares on the market.  Four years later, in January 1969 it merged with AMF.  The AMF merger started in 1968 when HD was looking for someone to buy the company.  In May of that year Bangor Punta (BP)** stepped in with an offer of $27 per share.  The HD board was skeptical of BP’s reputation and tenacity in pursuing acquisitions.  They continued to shop the company around.  In October they announced that AMF had struck a deal (at $29) and then a bidding war erupted.  Finally on December 18, 1968 there was a shareholder’s meeting to vote on the AMF merger at $40 per share which was $9 less than the BP offer.  The HD board like AMF’s motorcycle fanboy, Rodney C. Gott, and believed AMF had better alignment.  It was approved and in January 1969 the acquisition became final. 

At the time of the AMF merger, Harley-Davidson was producing 14,000 motorcycles per year.  AMF used the merger as a marketing opportunity to slap the Harley logo on many non-motorcycle-related things they produced, such as their golf carts. Management at HD was overrun by AMF personnel and they streamlined production, and slashed the workforce. The tactic resulted in a labor strike and lower quality motorcycles. The bikes were expensive and inferior in performance, handling, and quality to Japanese motorcycles. Sales declined, quality plummeted, and the company almost went bankrupt.

The marriage between motorcycles and one-time tobacco production equipment company lasted but 12 years.  The 1981 recession severely threatened HD’s share of the market for heavyweight bikes and AMF began to lose interest in keeping the struggling business afloat.  Then Vaughan Beals – who had joined HD in 1975 as VP – and a group of 13 HD exec’s raised $100M and bought the company for $81.5M from AMF on June 16, 1981 and restored the company to an independent status. The marketing phrase “The Eagle Soars Alone” became a rallying cry.  In 1986, HD again went public.

Given that HD is laying off and previously asked the union to approve wage cuts and reduced benefits for everyone in exchange of factory expansion… it’s easy to draw a parallel toward the AMF days?  What do you think?  Will HD roll strikes during this economic recession or gutter balls?

**Bangor Punta Corporation (abbreviated BP and was traded on the NYSE under BNK) was an American conglomerate and Fortune 500 Company from 1964 to 1984. It owned a number of well-known companies primarily in the pleasure craft, firearms and general aviation industries.

Photo courtesy HD.

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