Harley-Davidson — Did You Know?

Ted Gilbert on his Sport Model on top of Larch Mountain

Did you know, that in August 1919, Ted Gilbert became the first motorcyclist to ride a machine to the top of the rocky butte near Portland, Oregon?

His motorcycle of choice was a Harley-Davidson Sport Twin. Sitting at 4,045 feet above sea level, Larch Mountain is 11,000 feet of narrow, brushlined trail. Rugged and heavily timbered, with huge boulders, sharp stones, and logs lining its sides, it had previously withstood all attempts for anyone to reach its summit on a motor vehicle. The three-mile climb took 2 hours and 20 minutes and needed neither chains nor a tractor band to help the Sport Model along. A big sign measuring 4 feet by 6 feet nailed to the side of a huge fir tree marks the time, the name “Harley-Davidson Sport Model,” and the name of its rider, so that when Mazamas and various other organizations of mountain climbers would later reach the top, they would be able to see that a motorcycle could climb the hazardous cliffs of Larch Mountain.

“Hot Road” Perfume and Cologne

Did you know, Harley-Davidson offered a line of perfumes and colognes?

During the “Disneyfication” era which included branding any merchandise product such as T-shirts, leather jackets, caps, helmets, socks, gloves, knifes, signs, wedding cake decorations and key chains.  This was a product to complete the all-encompassing Harley-Davidson lifestyle and smell like your favorite bike at all times. The line of perfumes and colognes were called “Hot Road” and featured woody aromas with hints of tobacco.  It was 1996 and Harley-Davidson thought they’d attempt to capitalize on the company’s unique brand loyalty and decided to produce their own line of perfumes and colognes.

The woodsy scent with faint traces of tobacco did not make the top of the list for even the most loyal Harley-Davidson fans, yet you can still purchase some HERE.

Jeffrey L. Bleustein

Did you know, Jeffrey L. Bleustein is considered the “Father” of the Kevlar Belt?

Mr. Bleustein was Harley-Davidson Chairman from December 1998 to April 25, 2009.  He retired as Chairman of the Board in April 2009.  Previously, he served as Harley-Davidson CEO from June 1997 to April 2005.  He also served at Brunswick Corp in many capacities and was President of Tri-Hawk, Inc., a subsidiary of Harley-Davidson, 1984 to1985.  Mr. Bleustein was a technology consultant with AMF.  In 1969, AMF merged with Harley-Davidson and in 1975, AMF assigned him to help reorganize H-D engineering operations.  Led by AMA Hall of Famer Vaughn Beals and 11 other Harley-Davidson executives (including Willie G. Davidson), Bleustein helped execute an $81.5 million leveraged buyout of the company from AMF Corporation in 1981.

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

More on the CEO’s of Harley-Davidson HERE.

Harley Owners Group

Did you know, Rich Teerlink established HOG?

Mr. 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 tenure.  He started just two months after a group of 13 Harley managers had bought the company from its then parent company, AMF, in a leveraged buyout.  Mr. Teerlink’s greatest accomplishment was establishing the Harley Owners Group (HOG) in 1983.

More on the CEO’s of Harley-Davidson HERE.

Did you know, the birthpace of Harley-Davidson in Australia, is considered to be Morgan & Wacker in Brisbane?

Many people don’t realize that Harley-Davidson started operations in Australia just 14 years after the U.S.  At the Morgan & Wacker dealership is a 1917 V-Twin, the exact bike that was one of the first in Milwaukee, and it sits half-way around the world in Brisbane, Australia.  Bill Davidson recently visited and was photographed by the motorcycle.

Oregon Fueling Experts

Did you know, Oregon Regulation of gasoline dispensing recognizes the special fueling requirements of Harley-Davidson motorcycles and makes the motorcycle rider the expert at fuel dispensing?

According to Oregon’s legislature, ORS 480.330 it’s all about the inconvenience and hazards of self service.  I feel it’s just another step in the government ladder of dependancy.  At any rate, the law states that an owner, operator or employee of a filling station, service station, garage or other dispensary where Class 1 flammable liquids, except aviation fuels, are dispensed at retail may not permit any person other than the owner, operator or employee to use or manipulate any pump, hose, pipe or other device for dispensing the liquids into the fuel tank of a motor vehicle or other retail container.  However, on June 11, 2001, Oregon motorcyclists won the right to pump their own gas. Governor John Kitzhaber signed House Bill 3885 into law, which gives motorcyclists the choice of fueling their own bikes. Oregon and New Jersey are the only two states which prohibit “Self-Serve” gas pumps, and motorcycles are the only class of vehicle allowed to actually dispense fuel into their own tanks in Oregon, which was effective January 1, 2002.

The law recognized the special fueling requirements of various motorcycles which then made the rider the expert at fuel dispensing. This bill also removed a liability for gas station owners who permitted the common sense practice of allowing motorcyclists to fuel their own motorcycle.

Bruce McGill “D-Day”

Did you know,  Bruce McGill, “D-Day” character in Animal House, rides a Harley-Davidson Sportster motorcycle up the Delta House internal staircase?

The 1978 John Landis movie was filmed in Eugene, Oregon and starred John Belushi. Many campuses rejected the filmmaker’s location request, due to the raunchy content of the script, before the University of Oregon approved it. Then-President William Boyd even allowed his office in Johnson Hall to be used as that of Dean Vernon Wormer (John Vernon).

The movie’s Delta House was an early-20th-century Eugene residence that served as the home of the Phi Sigma Kappa fraternity from 1959 to 1967. Although it was demolished in 1986 and replaced by a suite of doctors’ offices, a large building outside the new building bears a plaque that commemorates the Delta House location.  Many of the interior scenes were filmed within the adjacent Sigma Nu house, which still stands today on East 11th Avenue; the exterior of the frat house was cast as a sorority house through whose window Belushi peered at half-naked coeds.

The movie’s climactic parade scene, featuring actor Kevin Bacon’s film debut, took place in downtown Cottage Grove, Oregon.

Did you know, Harley-Davidson has multiple manufacturing plants in Asia?

The motor company announced plans to build a manufacturing plant in Thailand where motorcycles will be assembled from parts manufactured and shipped from the U.S. The company said the plant will cater to the Asia-Pacific market, particularly China and Southeast Asia with plans to begin production in Thailand in 2018.  The factory is being erected in the Rayong province, Thailand which is geographically located southeast of Bangkok. This will allow the Harley-Davidson to circumvent Thailand’s tariffs of up to 60 per cent on imported motorbikes.

The Thailand plant is the second factory in Asia as Harley Davidson has a plant in Bawal, India, where the Street 750 model and Street Rod is produced. In addition, Harley-Davidson manufactures motorcycles at a plant in Brazil and has a wheel factory in Australia.

Tri-Hawk, Inc.

Did you know, Harley-Davidson sold a no-doors, no-roof, no-regrets, Polaris Slingshot knockoff back in the 1980’s?

Called the Tri-Hawk it was viewed as a semi-automobile.  Harley-Davidson acquired the company in 1984 and the cost for a Tri-Hawk was nearly $12,000.  Jeffrey L. Bleustein — who had a long tenure at Harley-Davidson, served at Brunswick Corp and was President of Tri-Hawk, Inc., a subsidiary of Harley-Davidson, 1984 to1985. Mr. Bleustein was also a technology consultant with AMF.

For many years Harley-Davidson made three-wheelers in the form of utility and police “trikes,” but they were not like the svelte looking Tri-Hawk’s.  They product appeared only briefly in Harley-Davidson showrooms as it was determined to be a marketing miscalculation and they were quickly pulled from the motor company line-up.  The two-passenger Tri-Hawk had already been in limited production before Harley-Davidson decided to take it on to fill some niche. In 1983, prior to acquiring Tri-Hawk, Harley-Davidson made a deal with an Austrian Rotax company for engine-gearbox racing units destined for 500 cc short track racing, but the Tri-Hawk was powered by a French-built Citroen four-cylinder motor.

Tri-Hawk

The Tri-Hawk design was developed by race car engineer Robert McKee with deep pockets by millionaire sportsman Lou Richards who was underwriting the project . The Trip-Hawk was assembled in a small plant located in the beachside town of Dana Point, CA. The 1299 cubic inch flat four air-cooled engine rode up front while the frame and suspension echoed McKee’s racecar experience. Borrowing even more from French technology, the builders incorporated a hydraulic braking system manufactured by Renault.  Weighing over 1300 lbs., and powered by 80 horsepower through a 5-speed transaxle transmission, theTri-Hawk had what marketing called, “exhilarating performance characteristics.”

The product had appeal, but the motor company decided not to sell them through their dealers, leaving only the factory in Dana Point and three other franchise locations to sell all the Tri-Hawk’s.  With limited availability and about eleven Tri-Hawks leaving the factory per month they became a sales failure.  Not from design flaws, but from management and company neglect.

Photos courtesy of Harley-Davidson; Harley-Davidson perfume photo courtesy of Sofie Lindberg; photo of Bruce McGill courtesy of IMBD, photo of Ted Gilbert on his Sport Model on top of Larch Mountain courtesy of Motorcycle Enthusiast;

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Harley-Davidson And The “The King of Good Times”

I’m talking about Kingfisher.

Beer was introduced into India by the British, who eventually set up a brewery that produced Asia’s first beer — a pale ale called Lion. However, these days, lager is the only type of beer you’ll find available in India and “The King of Good Times” is Kingfisher.

It’s India’s most recognized and widely available beer. Its name has been associated with sports, fashion, and even an airline.

And sooner than anyone would have thought… in Bawal, India a Harley-Davidson assembly line worker will be having a Kingfisher and relaxing with co-workers.

But, I’ve gotten ahead of myself…  let’s jump into the the way back machine and set the dial for — 2009.

“The fact is we must focus both our effort and our investment on the Harley-Davidson brand, as we believe this provides an optimal path to sustained, meaningful long-term growth,” said CEO Keith Wandell at the October 15, 2009 announcement to discontinue production of Buell motorcycles.  On October 30, 2009 the last Buell (Lightning XB12Scg) rolled off the company’s East Troy, Wisconsin. assembly line.  It was the last of the 136,923 motorcycles built in the company’s 26 years of operation.

Harley-Davidson Street 750

It was a combination of factors in making the decision, but essentially the global recession forced a reckoning and Harley-Davidson decided to refocus on its tent pole products or what I’d call doubling down on its core lineup of heavyweight bikes.  As a result, the motor company abandoned entry level motorcycles (Buell Blast), exited the sport bike (Buell and sold MV) and thumb their noses at the adventure market (Buell Ulysses).   In the process the motor company made a lot of motorcycle enthusiasts upset about what looked like a myopic approach of only looking at spreadsheets versus doing a bit more market research and addressing a need.

Jump ahead 4-years and witness the financial rebound of the company and the launch this week of the new Harley-Davidson Street 750 and Street 500 motorcycles.  Could it be a Buell Blast ReDeux?  The smaller 500cc motorcycle basically fills a void left when they discontinued the Buell motorcycle line which included the 492cc Buell Blast.  More important in this announcement is the fact that the motorcycles will be made both in the U.S. and Bawal, India, marking the first time the company will manufacture a complete motorcycle at an overseas facility.  I’ll repeat that… the first time the company will manufacture a complete motorcycle outside the U.S.!

Harley-Davidson Street 750 (Side View)

The manufacturing news in of itself will be fodder for many future blog posts, but sticking to the motorcycle announcement, the new ‘Street’ bikes are the first Harley-Davidson motorcycles to be designed from scratch since the V-Rod 13 years ago.

It makes this Road Glide owner wonder if that’s an indicator of where all the engineers were redirected in lieu of updating the ‘Glide’ with the all new Project RUSHMORE features that were incorporated into the new 2014 touring models?

The fact is the company has aggressively expanded its marketing efforts because realistically, there is no replacing white Baby Boomer men. And this means they have to attract younger men, non-Caucasian men, women, and do that from countries as disparate as India, Italy, Brazil and the U.S. with much more success.  By turning inwards, relying on a single-brand tradition and nationalism over the last 4-years and divesting itself of brands that were dimming the lights on a brighter future–the motor company can and now has expanded into other segments.

At the Street 750/500 announcement the Harley-Davidson, CEO Keith Wandell said, “The younger riders don’t want their dad’s chromed-out Harley,” “They want the Dark Custom, sinister look, the ability to rebel.”

Sounds like a bit of marketing spin, but with more than half of its dealerships outside the U.S., Harley-Davidson has really put a lot of investment behind a push to expand and broaden its customer base including new motorcycle buyers–worldwide.

Photo’s courtesy of H-D and Kingfisher.  Note: Kingfisher, “The King of Good Times”, is India’s most recognized and widely available beer. Its name has been associated with sports, fashion, and even an airline.

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Harley Pulls In New International Business

"Mob Scene" at Harley-Davidson Hyderabad Opening

India is mostly known for Mohandas Gandhi, who fought for Indian independence with non-violence.

But, in Hyderabad last week it was the sight of a near mob scene thanks to Nandamuri Taraka Rama Rao or more popularly known as Jr. NTR.  The film actor was present for the inauguration of the first Harley-Davidson showroom opening in the country.  You can watch the pandemonium HERE.

Should we care?  Given that one of the major tenants of Mr. Wandell (CEO) and Harley-Davidson board’s growth strategy being international expansion I think it’s fair to follow India’s success.  India has culture, spiritualism, yoga, spices, multiple languages and now Harley-Davidson Hyderabad.  With four more dealer/showrooms in the pipeline at Chandigarh, followed by New Delhi then Mumbai and Bangalore the motor company could be set to capitalize on any untapped heavy cruiser market.  Clearly the company is betting on India to help grow sales.

Interesting to me is that India is the world’s second-largest motorcycle market.  However, most sales are of small, inexpensive scooters that can weave through traffic in the heavily clogged cities.  India does have some open roads outside the large cities but many are marred with potholes and don’t make for easy riding.  As part of Harley’s long-term commitment to the country they chose to enter India as a subsidiary rather than through a pre-existing dealer network.  With the motorcycles being made in the U.S. and shipped to India they face hefty custom duties.  In fact, the cost of a basic Sportster starts at 695,000 rupees ($14,917)… all this does make one wonder just how many India customers are willing to pay for ownership bragging rights.

I also found it intriguing that buried in the announcement was the point that the company plans to relocate a 20-year service veteran from Harley’s headquarters.  Talk about a culture change…  Miller vs. India Pale Ale (IPA).

UPDATE: July 14, 2010 — Anoop Prakash (H-D Managing Director, India) told reporters during an announcement about securing the ICICI Bank for vehicle financing that the size of the market (800cc and larger) for 2009 was about 700 units and was growing at double digits.

Photo courtesy of HD and TV5.

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Keith Wandell Gathers With Washington Elite

Meetings.  Talking.  Meetings.

We’re always being reminded that political leaders, policymakers and industry leaders are “gathering” to hash out ideas on how to get the mojo back and what the key is to unlocking innovations and jobs of the future.  We’re suppose to feel good, but from my vantage there is little visible in the way of action.

The White House has made a quiet but extensive effort to reach out to corporate executives in a series of dinners and lunches at the White House with President Barack Obama.  Attendees have largely been kept secret or at minimum very quiet… until now!

Politico.com states Keith Wandell (Harley-Davidson CEO) had dinner with Obama’s chief of staff Rahm Emanuel and other top White House officials.  Another comprehensive list is available HERE.  It’s not clear if it was at an off-site local restaurant or something more elegant in the White House.  Given the state-of-the-states, I seriously doubt the motor company will be creating any new jobs soon. In fact, the recent ratified agreement calls for a drawdown of nearly 50% of the employee’s base at the York, PA operations.  Asia or India look like expansion alternatives and I suspect it won’t be long before we hear about plants being set up there.  So, what did Mr. Wandell share w/ the White House chief of staff?  Would H-D coming to the government to offer ideas on how they can help be a startling conversation changer?  Does H-D have eyes and ears on future trends that they can grab and then be able to exploit?

I’m not sure, but do you think the U.S. is still the world’s center for innovation, or is it falling behind countries such as India and China?  Fueling the debate is a new poll on innovation published by Newsweek. One interesting finding: while 82% of Chinese citizens believe the U.S. remains a technologically innovative country, only 74% of Americans feel the same way.

At any rate,  the other industry officials who joined Mr. Wandell at the June 16, Rahm Emanuel dinner were:

Penny Pritzker, CEO, Pritzker Realty
Mark Gallogly of Centerbridge Partners
Mike Fascitelli, CEO, Vornado Realty Trust
Klaus Kleinfeld, CEO, Alcoa
Dave O’Reilly, CEO, Chevron
Richard Smith, CEO, Realogy
Mike Ullman, CEO, J.C. Penney
Keith Wandell, CEO, Harley Davidson

I’m not attacking or implying that only favor-curriers are “sitting at the presidents table” but I’m not reading a lot about how the voice of the average lower and middle class American are being heard.  As the White House National Economic Council Director Lawrence Summers has recently urged attendees at these dinners to “think about what your institution should be called on to do, not in its own interest, but in the broader national interest.”

Photo courtesy of Presidential inauguration.

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Are You Significant

This is the question I’ve been pondering over after having an opportunity to spend a couple of hours with “No Barriers” founder Neal Petersen.

To save you some time the short version of Neal’s story is — He is a black South African who grew up poor and disabled during apartheid yet achieved his dream of racing/sailing solo around the world.  He now does motivational speaking and is involved in peace talks in multiple countries across the world.  During Mr. Petersen’s speech he routinely ask the audience; “Does what I do on a daily basis at work have a positive impact?”

This resonated with me and while I personally reflect on this I can’t help, but ask the question of Harley-Davidson’s CEO, Keith Wandell.

Today, Harley-Davidson reported out the Q3’09 quarterly results and announced a massive 21.3% decline in revenue for the 3rd quarter and an 84.1% decline in net income from a year ago quarter.  Apparel and general merchandise represents 23% of H-D revenue to date.  Then the news got interesting.  They announced that 14 dealers have closed year-to-date and set the expectation that 15-30 additional dealers will close in the next 6 months as the company reduces inventories to match sales.  They discussed the HDFS bad loan/delinquencies and financial progress.  The Harley-Davidson brand value (note: its moved down from 43 to 71 position) and the more important announcement was to shutter the Buell product line as well as divest its MV Agusta unit.  A busy day of spin as Mr. Wandell went on to discuss the going forward 4-piller strategy of: growth; continuous improvement; leadership development and sustainability.

On the Buell front I can’t say that I’m not surprised because it was reported a couple weeks ago in the Milwaukee Journal-Sentinel that Erik Buell didn’t renew his employment contract with the motor company and there were a number of rumors circulating as to what that might mean.  I want to personally thank Erick Buell and the Buell employees.  I believe what they did on a daily basis at work had a positive impact.  They should be proud of what they accomplished.  They are an American innovation poster-child and represent what passionate and inspired people can do through engineering and manufacturing some of the best-handling bikes in the world.  But, in biker speak… it’s WTF?  An American designed and manufactured motorcycle that out performed Asian manufactures all year in the AMA Pro Roadracing circuit and Mr. Wandell dumps it?  This is forward thinking?  2009 marked the first year H-D had a non-motorcycle enthusiast running the company and I have to ask if he really got out there to see what all that (Harley) race stuff was about and how it enhanced the brand?

Since I was rather harsh in a blog post last year about the $108 million MV Agusta deal and describing it as a train wreck, I agree with the decision to abandon it.  Sure this happened under ex-CEO James Ziemer shift who retired shortly after cutting the deal, but the board members clearly approved Mr. Ziemer’s compensation package who walked away with only $5.6M compensation, up 26.5% from 2007.   And in part the compensation was based on the boards admiration of the MV Agusta deal, right?  The board members should be put on notice as there are now another 180 employees set to hit unemployment due to the management of the company and we all know they had line of sight just 12 months ago to the economic issues.

The shocker in the financial call was the statement of investing more in emerging markets up to and including local market design and manufacturing!  Is this a precursor to moving manufacturing off-shore?  A lot of talk about taking Hogs to China and India, but nothing about how well the strategy has worked to woo women, African-Americans and Latinos.  The value of the brand was weaved into the growth strategy, but nothing about why it dropped 43% in 2009.  They’ve talked for two quarters about reducing inventory yet made little progress.  And loans made to iffy borrowers aren’t just taking down housing.

The push by H-D corporate for dealers to build increasingly larger and high-end-glamorous retail outlets meant more dealer debt and subsequent failures.   Chapter 11’s continue to stack up across the northwest.  Three locations of Shumate H-D with one in Kennewick (owner hub), another in Spokane and a satellite location in Lewiston, ID.  I blogged earlier this week about Dave Tuomisto’s, $16M and 6-acre mega-expansion at Timpanogo, UT which went under.  It’s not clear when or if any of these dealers will reemerge and the real downside will be H.O.G. groups folding, lengthy drives for service or to hang and drop in which overall effects customer service and having a healthy Harley community.

Harley is in major trouble.  The spin, baby, spin from Mr. Wandell is not good enough, my friend.

Photo courtesy of H-D.  Financial call transcript courtesy of SeekingAlpha.  Disclosure: I have no investment in HDI

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Mango Countdown

In two days the Indian “Alphonso” mangoes will hit the U.S. supermarket shelves for the first time in 18 years!

I’m reminded of that Jimmy Buffett song “Last Mango in…”

I went down to Captain Tony’s to get out of the heat

When I hear a voice call out to me, “Son, come have a seat”

The “seat” in this case is attached to a Harley-Davidson.  In exchange for importing mangoes, H-D will be allowed to launch its 883 Sportster and Fatboy in the “land of a billion people” (a.k.a. India) on August 27th as long they comply with Euro-III emission norms. In a country that snaps up more than 6 million new motorcycles a year, H-D is a bit late to the party, but they have to be optimistic given the successes of Yamaha, Suzuki, Honda and Ducati “superbikes” (anything over 800cc are referred to superbike in India).  The bikes will be shipped to India and available as a CBUs (Completely Built Units).  Previously the Indian government had not specified emission standards for motorcycles over 500cc which effectively prohibited the import of H-D motorcycles who could not meet the standards set for scooters.

Speaking of standards…  I’m talking about a country that after more than six decades of independence, over 55% of the population (~660Million) defecate in the open! Given these statistics it’s no surprise the government was slow to specify emission standards on 500cc motorcycles when they clearly are busy with sanitation issues.

New Deli Traffic

Until this week Royal Enfield (owned by Eicher Group) was the only motorcycle maker to offer cruisers in India.  Consistently large orders from the Indian government led to establishing a factory back in 1955 in the town of Chennai, India.  Even after production stopped in England they continued in Chennai.  Here is a 5 min video of them building a motorcycle.  There seems to be a fondness of following the old British tradition and use of a mallet to assist in the precision parts fitting!

Anyone who has visited India knows that the large cities of New Deli, Bangalore, Hyderabad, or Mumbai have traffic that defies amazing.  It’s extremely densely packed roads with stop-n-go vehicles and engines idling most all of the time.  Then there are the rickshaws (phat-phatis), bicycles, jay-walkers, street-car peddlers, cows, donkey carts and at any given time each traffic lane supporting triple the number of vehicles that it should so, what you end up with is pure chaos.  Even with astronomically high traffic-death rates, scooters and motorcycles are the more practical method of getting around on these packed roads.

Matt Levatich, President and COO of Harley-Davison reportedly will be on hand at the launch and annual Society of Indian Automobile Manufacturers (SIAM) to welcome back H-D to India for the first time since World War II.  At that time thousands of motorcycles were shipped to the eastern Assam state of India with the intention of transporting men and deliver mail.

India is a prime target given the sheer market size and I want to wish them success as they work to diversify their revenue base.

Photo courtesy of H-D India and Flickr.

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