If there was ever an American icon of the highways it’s the Harley-Davidson motorcycle. 2003 is the year the company celebrates its 100th anniversary with a series of motorcycling events around the world.
The company also announced record revenue and earnings for its second quarter ended June 29, 2003. Revenue for the quarter was $1.22 billion compared with $1 billion in the same quarter of the previous year. The U.S. dealer network sold more motorcycles in this quarter than in any other quarter in its 100-year history.
It may seem hard to believe now, but not that many years ago the company was on its way out the door.
The story of how Harley-Davidson went from being a loss-making relic of the American motorcycling past to a profitable company that now holds its own against fierce competition from overseas manufacturers is both inspirational and educational.
In the early 1980’s Harley-Davidson was selling every bike it could make – but at a loss. Japanese motorcycles were taking over worldwide markets and setting better quality standards. Harley loyalists kept the factory alive, but the market was really going elsewhere.
Harley had speeded up their production volume to meet the Japanese challenge, but as output went up quality went down. The challenge soon became about technology and quality more than production volumes.
As a classic example of manufacturing failings, the 1976 model Cafe Racer had so many faults that it cost over $100,000 just to get the first 100 bikes ready to ship to dealers.
Existing Harley-Davidson customers stuck with the brand despite its faults. But even if the antiquated production facilities could produce more bikes, there would be little growth against the Japanese makers until a new customer base was developed.
It took a Harley designer, the now-legendary Willie G., to redefine Harley-Davidson. He changed how the bikes looked, how they were made, and more importantly how they met the needs of Harley’s customers, particularly those who had never before owned a Harley.
William G. Davidson was the grandson of one of the company’s founders. He “found himself” with Harley, and established a rapport with their customers that enabled him to design a new generation of red-blooded American motorcycles that sold more units and finally generated profits for the company.
Willie G. designed Harleys that broke the mould and opened up whole new markets. As a talented designer he still managed to retain the Harley-Davidson image in all his models.
Everything Willie G. did was based on his personal contact with Harley customers. As he put it: “Our customers really know what they want on their bikes…Harley riders see their bikes as art objects and they want them to look a certain way.”
Harley-Davidson also initiated employee involvement in company planning, inventory control, and ways of measuring output per employee. Giving the customers both quality and the products they wanted became corporate goals.
Harley formed riders’ groups to establish closer bonds with its customers. The company was able to translate the findings from rider groups into product improvements that found their way onto the market in a remarkably short time.One of their most important findings from mixing with their customers was that Harley riders put a lot of money into customizing their bikes. If Harley-Davidson could build these customized attributes into their factory models they’d get a better price and greater customer satisfaction.
Throughout the early and mid-1980’s Harley-Davidson went through many trials and tribulations, especially in the financial field. At one stage in 1981 they were just one week from bankruptcy, but by 1987 their restructuring had paid off and they were back in the black, this time to stay.
The showroom of a typical Harley-Davidson dealer will have many different models on display, each appealing to a different segment of the motorcycle-buying market. Customers can range from executive types to hard-core bikers. What’s really important is that these models appeal to the customers – not to factory accountants or production planners. That’s why they sell.
Harley-Davidson got off-track producing what they wanted to make and not what a world full of potential customers wanted to own. Now they’re doing better than ever against the stiffest competition in the world because they found out what their customers wanted and gave it to them.
Copyright 2003, RAN ONE Inc. All rights reserved. Reprinted with permission from www.ranone.com.
Chris’ combination of academic credentials, career experience and temperament ideally suit his calling as a business development advisor. Clients say he has a mind for business and a heart for service.