Mellowtonin
Old Enough to Know Better
youtu.be/EOwxxsPaogY
Not always a FortNine guy, but found the contents of this new video fascinating...
What do you think? Is he :deadhorse
A Lesson in HOG Economics
- Thread starter Mellowtonin
- Start date
youtu.be/EOwxxsPaogY
Not always a FortNine guy, but found the contents of this new video fascinating...
What do you think? Is he :deadhorse
Mellowtonin
Old Enough to Know Better
I feel you Chris, he is pretty cringey on the narration :laughing
But the information was eye opening for me, a former once upon a time Harley fanboy:thumbup
cheez
Master Of The Darkside
Reagan's 50% tariffs on 750cc+ bikes in the 80s let Harley stop innovating and fail to develop products that appealed to younger riders as their target demographic aged. Starting in the late 80s they benefitted so much from the protections that when the Japanese and Europeans finally brought big-displacement cruisers to the market to compete around Y2K they were caught flat footed and lost their low-end sales, and haven't ever recovered them.
DataDan
Mama says he's bona fide
The tariff was in effect from 1984 to 1987, when it ended at Harley's request.
From 1969 to 1981, Harley was owned by AMF (American Machine & Foundry, or "adios, motherfuckers" to victims of downsizing), most famous at the time for bowling alley machinery. At the time I worked for an oil drilling service company bought out by AMF. It was a corporation still wallowing in the 1960s conglomerate phenomenon, when lack of focus was a seen as a feature, not a bug.
By 1981 AMF had run Harley into the ground, feeding on the cash it generated as motorcycling boomed, but strangling progress. Products were crap, and 70 years of goodwill in the market was being pissed away. HD management, however, believed in the brand. They put together an offer and bought the company from AMF. To make it work, they needed new products and better manufacturing--you can't sell bikes that leak oil on the showroom floor when you're competing with the likes of the Honda Gold Wing. Independence spawned the Evo motor, HD's all aluminum Big Twin.
Meanwhile, Japanese manufacturers in the early 1980s had wildly overproduced and were swimming in excess inventory going into a US recession. The monthly US magazines sometimes ran two-page ads for previous model-year bikes at drastically discounted prices. That was the competition the newly freed HD was facing when Reagan ordered the tariff.
It's not clear to me how much of an advantage the tariff gave Harley. Responding to it, the Big Four spread the cost of the tariff over their product lines so 700cc+ bikes didn't take too much of a hit, they downsized some 750s to tariff-beating 700s (actually 699s), and Honda and Kawasaki built US manufacturing plants not subject to it.
Whether it was an actual boost or mainly a psychological stimulus that drove HD to improve and innovate, it steered Harley into an incredible roll, first surviving and even thriving in the US motorcycling depression of the early 1990s, then feeding the boom that saw the market skyrocket from the mid 1990s until the recession hit in 2008.
I was no fan of the tariff; it undoubtedly increased the price I paid for my 1986 Yamaha FZ750. But in the end, it didn't do much damage to the Japanese manufacturers and it helped propel US motorcycling to an all-time high.
From 1969 to 1981, Harley was owned by AMF (American Machine & Foundry, or "adios, motherfuckers" to victims of downsizing), most famous at the time for bowling alley machinery. At the time I worked for an oil drilling service company bought out by AMF. It was a corporation still wallowing in the 1960s conglomerate phenomenon, when lack of focus was a seen as a feature, not a bug.
By 1981 AMF had run Harley into the ground, feeding on the cash it generated as motorcycling boomed, but strangling progress. Products were crap, and 70 years of goodwill in the market was being pissed away. HD management, however, believed in the brand. They put together an offer and bought the company from AMF. To make it work, they needed new products and better manufacturing--you can't sell bikes that leak oil on the showroom floor when you're competing with the likes of the Honda Gold Wing. Independence spawned the Evo motor, HD's all aluminum Big Twin.
Meanwhile, Japanese manufacturers in the early 1980s had wildly overproduced and were swimming in excess inventory going into a US recession. The monthly US magazines sometimes ran two-page ads for previous model-year bikes at drastically discounted prices. That was the competition the newly freed HD was facing when Reagan ordered the tariff.
It's not clear to me how much of an advantage the tariff gave Harley. Responding to it, the Big Four spread the cost of the tariff over their product lines so 700cc+ bikes didn't take too much of a hit, they downsized some 750s to tariff-beating 700s (actually 699s), and Honda and Kawasaki built US manufacturing plants not subject to it.
Whether it was an actual boost or mainly a psychological stimulus that drove HD to improve and innovate, it steered Harley into an incredible roll, first surviving and even thriving in the US motorcycling depression of the early 1990s, then feeding the boom that saw the market skyrocket from the mid 1990s until the recession hit in 2008.
I was no fan of the tariff; it undoubtedly increased the price I paid for my 1986 Yamaha FZ750. But in the end, it didn't do much damage to the Japanese manufacturers and it helped propel US motorcycling to an all-time high.
Jalopyshoppe
idiot
You're a little off base with the effect AMF had on HD. AMF bought into a company that had been bled for every penny by the Davidson family. In the 60's Harley was building bikes in a 5 story building. There was no assembly line, and bikes made trips up and down the elevator from start to finish. AMF invested huge amounts of cash into Harley Davidson. They upgraded production lines and fed lots of money into product development. The bikes that were being produced (Shovelheads) were top notch 1936 technology, assembled by a staff that portrayed every assembly line stereotype there is. There was absolutely a difference between a Monday bike and a Friday bike. My dad worked at a dealer for those years. Some bikes suffered from such poor casting that they had to be torn down and have the cases and heads painted to keep them from oozing oil through the metal.
While that was going on, AMF was working with Porsche to develop the Evolution engine, which went on to be revered by many as the engine that saved the company.
AMF also hired Willie G Davidson as a designer. He tried to diversify the company with bikes like the 71 Super Glide (boat tail), and the XLCR Sportster. Both bikes were considered flops, but the Super Glide went on to be a huge success story. The XLCR frame carried over into the Sportster that sold until 2003.
Harley needed a scapegoat to dump the terrible business decisions of the previous 40 years on, and they couldn't disgrace the Davidson family name, so AMF took the hit. Meanwhile, the developments that the employee owned version of the company succeeded on were all accomplished with AMF money.
Too bad they didn't learn from any of those mistakes.
nickb
Unfair weather rider
Watched a couple times - interesting look at HD history & economics.
I realize I occupy a tiny microclimate in the MC world, but up here in NorCal I hear the sound of an HD with straight pipes going by every 5 or 10 minutes, competing w/suburban drone of gas powered leaf blowers & lawn mowers. I understand economic laws of supply & demand, an aging market, and that economies are global - but anecdotally, living where I live, hard for me to fathom that HD could fold. There are just so damn many of them.
I realize I occupy a tiny microclimate in the MC world, but up here in NorCal I hear the sound of an HD with straight pipes going by every 5 or 10 minutes, competing w/suburban drone of gas powered leaf blowers & lawn mowers. I understand economic laws of supply & demand, an aging market, and that economies are global - but anecdotally, living where I live, hard for me to fathom that HD could fold. There are just so damn many of them.
SFMCjohn
13
:thumbup
enjoyed the vid and the comments here ... have a recreational interest in history and economics and H-D’s history from 1903 onward is more complex than can be addressed in a short vid, imo ...
also, some folks here will remember better than me, but I feel like Harley’s racing program, and the factory’s relationship with the AMA and class rules, had as much impact on holding back product development as the tariff, which as has been pointed out were relatively short lived ...
iow, factory could have better used a racing program to stay more relevant, cf Ducati or BMW’s WSB racer ...?
anyway, idk ... fascinating stuff ... :blah:ride
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quicksparks
Well-known member
You're not in a microcosm -- that's most places. I've been to many states in the US in the past year: Nevada, Oregon, Utah, Idaho, Texas, Michigan, Illinois, Minnesota, Georgia, Kentucky, Indiana, Tennessee. Harleys are popular in all those places. So I agree with you that it's hard to believe they're in trouble. Maybe it's true that their bikes only appeal to a certain generation, but I'm a millennial who put a few hundred miles on a rented Road Glide and decided I will own one of those in the near future -- after I move to a house in the burbs and have kids. So maybe the thing is, they appeal mostly to middle aged people, not just a single generation. And no, I'm not considering a metric cruiser instead. They just don't compare.
DataDan
Mama says he's bona fide
Thanks for that.
I know about the Porsche-developed "Nova" V4, but I did not know that the Evo was a Porsche design that predated the buyout.
Developments begun in the 1970s but never went into production, which were bought, paid for, and turned into successful products after the management buyout with no help from AMF.
Help me out on "mistakes"... Post-buyout, the company went from $5 million in net income in 1986 up to $1.1 billion in 2013 (though now down to $423 million). That's an extraordinary 35 years of success and $14 billion in earnings.
DataDan
Mama says he's bona fide
:dunno Meh.
The VR1000 debuted in 1994, I think. I bought a T-shirt from the HD dealer in Pacheco and rode down to Pomona to cheer them on in their first race. IIRC, it was in February, before the Daytona 200.
The program was doomed. Management didn't give a shit. HD diehards gave even less of a shit. And the whole idea of building a race bike and race team from scratch to compete against teams that had lived and breathed motorcycle roadracing for many years was, it became clear, futile. Even with Miguel Duhamel.
SFMCjohn
13
:thumbup
it was a huge meh ... :laughing
I understand that ivy league business schools spend a lot of time contemplating why fortune 500 companies make the decisions they do. Ironic that HD has been on the wrong side of a tariff war since 2018 ... :afm199
Wasn't a big part of H-D's march to being a $1B company their success in securing military contracts unrelated to motorcycles (bomb casings)? In any event, first became a fortune 500 company only in 2001 ... neat chart if you scroll down the link.
having said all that, who ever thought BMW would have a WSBK podium-worthy racebike ... remember BMW's reputation and product line pre-S1000 RR? or Ducati's rep pre-916 ...? H-D coulda woulda shoulda ...
imo, failing to invest in racing is where H-D went wrong over the decades, not Reagan-era tariffs ... :dunno
not paying a whole lot of attention, but think H-D's involvement with Mr. McGregor and e-bikes is pretty cool ...
maybe that will be the factory's path into the future ...?
anyway, idk ... :gsxrgrl
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sjuels
OldMan
At first I was no fan of FortNine, but I find his information to be solid, and what is much more important: He rings true with a much younger group of riders, whom I want to stay interested and engaged in motorcycle riding.
I appreciate the historical perspective, especially the information given in this thread, and I find it interesting that Polaris has been able to compete in this segment, while innovating and coming up with solutions that are much more modern.
I think the FTR1200 is the most interesting motorcycle to come out of the US recently - and HD had the concept all along, but did for one reason or another not execute on it.
/Soren
I appreciate the historical perspective, especially the information given in this thread, and I find it interesting that Polaris has been able to compete in this segment, while innovating and coming up with solutions that are much more modern.
I think the FTR1200 is the most interesting motorcycle to come out of the US recently - and HD had the concept all along, but did for one reason or another not execute on it.
/Soren
Jalopyshoppe
idiot
The Evo carried over most of the developments from the Nova.
All aluminum cylinders, head studs that clamped the heads and barrels together rather than a barrel to case and head to barrel fastener design. Better placed and more effective cooling fins, and the bent connecting rods were all Porsche design. Harley as it was then had no engineering wing when they bought the company out. They did expand the design and styling department.
The mistakes the Davidson family made are what I was referring to. The current board is riding on the engineering and design of a past market. They went decades without real technical advances, and the ones they made received so much pushback from the old guard within the company that they failed.
The Vrod is a great example of a bike that could have had huge appeal, but marketing it as a faux drag bike with clamshell ergos doomed it to have hugely limited appeal. Higher ups did not want to to offer competition to the Dyna or Softail models, so it always looked like an afterthought when it hit the showroom.
It's a top down corporate culture of arrogance and fear. They don't want to create offerings in markets that they aren't good at, so they stick to the diminishing market they have.
berth
Well-known member
Honestly, it's hard to imagine that the tariffs from almost 40 years ago were the cause of H-Ds current problems.
Seems to me it's more a diversification, marketing, and image issue.
They rode the "Culture of HD" thing high with with the renewal by Forbes and the "RUBs" (Rich Urban Bikers) who were trying to catch up to the Diner restaurants and pretend to live the lifestyle.
As good (or not) as their machinery is, they've been selling the HD lifestyle for a long time that just happened to to include motorcycles.
Honestly, we all have our cliques, but HD and the HD crowd segregated themselves from the riding community rather than embracing the "motorcyclist" lifestyle vs the "biker" lifestyle.
Then they just kept hammering the "HD" demographic rather than branch out to other demographics.
It doesn't help that the dealers aren't on board either, given the assorted anecdotes around Buell's historically, as well as simply the marketing of local HD dealers I hear on the radio. "Hey Harley Guy, come buy another Harley"
Seems to me it's more a diversification, marketing, and image issue.
They rode the "Culture of HD" thing high with with the renewal by Forbes and the "RUBs" (Rich Urban Bikers) who were trying to catch up to the Diner restaurants and pretend to live the lifestyle.
As good (or not) as their machinery is, they've been selling the HD lifestyle for a long time that just happened to to include motorcycles.
Honestly, we all have our cliques, but HD and the HD crowd segregated themselves from the riding community rather than embracing the "motorcyclist" lifestyle vs the "biker" lifestyle.
Then they just kept hammering the "HD" demographic rather than branch out to other demographics.
It doesn't help that the dealers aren't on board either, given the assorted anecdotes around Buell's historically, as well as simply the marketing of local HD dealers I hear on the radio. "Hey Harley Guy, come buy another Harley"