The Harley-Davidson Motor Company had a small beginning, but has risen to unimaginable success. The road to success has not been simple and the company has been faced with many hardships. The support of outrageously loyal owners have allowed the company to struggle but maintain its composure. Harleys top management has implemented plans to achieve prosperity, which has lasted throughout the years, and they are constantly looking forward. To understand this companys success it is important to know a brief history.
H-D began meagerly in 1903 and is the brainchild of two men, William S. Harley and Arthur Davidson. Their first shop was a small wooden shed in their hometown of Milwaukee, Wisconsin. The shop was more of a hut, not much larger then a Moravian College dorm room. On the front door there was roughly carved sign that read, The Harley-Davidson Motor Company. From this tiny beginning H-D grew to become the ruler of the American motorcycle industry (Harley-Davidson. com). Arthurs brothers Walter, and William Davidson soon joined up and they began expanding the motorcycle industry.
About this time H-D filed articles of corporation, and the stock was spilt four ways amongst the Harleys and the Davidsons. This begins a family tradition that still thrives today. H-D rapidly expanded and grew in popularity. In 1953, following the demise of its last American competitor, Indian (Hendee Manufacturing), Harley-Davidson becomes the sole producer of motorcycles in the United States. Harley remains alone for forty-six years. After World War II, in which H-D produced 90,000 bikes for military use, Harley began to experience its newest and most competitive foe, foreign manufacturers.
The introduction of Japanese motorcycles into the United States drastically affected H-D. Japanese bikes were more efficient and cheaper. Also the Japanese marketed their bikes as clean and wholesome, and tried to pit Harleys badboy image against them. Now Harleys management faced a difficult situation, either to evolve or face elimination. At this time, late 1960s, H-D was still a privately owned corporation, but to avoid takeover and also to gain financial backing H-D merged with the American Machine and Foundry Company (AMF).
The AMF was a producer of large leisure equipment, and the financial support appeared to be just what H-D needed, at the time. The AMF completely took over control of H-D operations. Under AMF control H-D was now overproducing shabbily built bikes, in several different classes (lightweight, middleweight, heavyweight, etc. ) attempting to keep up with the Japanese. The already successful AMF was simply using H-D to increase their wealth, and they cared little for quality or customer satisfaction. In 1981 several top managers, and true motorcycle advocates, acquired H-D from the AMF in a leveraged buyout.
This group was lead by a man named Vaughn Beals. Beals and his associates in the company saw how poorly the AMF was doing and they felt they could significantly improve Harley-Davidson and bring it back to its family-owned, superior built roots. This is where Management becomes the richest asset in Harleys empire (Harley-Davidson. com). Vaughn Beals and his associates could see why H-D was failing under the AMFs management. The AMF disregarded the expertise of true motorcycle riders, even within the company.
Currently H-D was cranking out far too many motorcycles with way too many complications. For longtime riders and motorcycle advocates this was not a problem, because they would simply purchase a new bike, strip it down and properly reassemble it to there liking. The only reason H-d stayed alive was because of the thousands of loyal H-D supporters who would, and could do this. If H-D was going to continue to grow they needed to improve the quality of the bikes they produced; not everyone can disassemble and reassemble a motorcycle (Reid p. ). Beals slowed demand for production and the management spent more time and resources on improving quality. One step they took was touring Japanese plants both in and out of the United States. What they saw nearly knocked the wind out of them. The Japanese were significantly more efficient in production, and their production costs were almost nonexistent compared to their own. Their percentage of bikes assembled, but defective was one-fifth of Harley-Davidsons.
The most shocking discovery of all for the Harley group was that the Japanese were doing all this without a single computer (Reid p. 13)! After extensive research, management discovered some of the main reasons for the success of the Japanese in a once All-American industry. Three practices were pinpointed: Employee involvement (EI), Just-in-time inventory (JIT), and Statistical operator control (SOC). Employee involvement is a practice of calling upon all of your employees to aid in problem solving and controlling the quality of their work.
H-D was now asking those people directly involved in the production and assembly to give feedback on what was and was not working well for the company. This gave employees an even greater pride and satisfaction in their work, so they did not simply work for H-D, they became an essential part of every bike that rolled off the lot. Earlier, especially in the AMF era, employees were simply told what to do by management and they followed, even if they believed what they were doing to be wrong. This new practice accounted for the expertise of the workers and made production more effective and more efficient.
Just-in-time inventory is a method of stocking materials for assembly in small quantities and reordering small quantities only as they are needed. The group that toured the Japanese plants could not believe how clean and uncluttered the assembly lines were. Currently H-D was ordering parts in bulk, which causes need for more and more storage space, and more and more confusion on which parts are where. In these large inventories parts would sit for weeks or months at a time often rusting or becoming damaged, sometimes to the point of uselessness.
When JIT was first discussed, several Harley employees burst out laughing, so after careful rethinking management came up with a less sophomorically humorous, more Harley-like name. They renamed JIT, materials-as-needed or MAN, to keep in line with the ruff-and-tuff Harley image. The third practice, Statistical operator control, helped to tie everything together. This was a practice of giving employees all the training and know-how to accurately measure the quality of their own work. Now workers could better understand why some methods worked well while others did not.
Also they could more easily explain the situation to their managers. Harley employees are trained to use Microsoft Windows and programs such as PowerPoint to more accurately convey exactly what it is they are doing. Before H-D studied the Japanese techniques management believed most of their production costs arose from labor and materials. As it turns out they were looking at the situation all wrong. The Japanese had greater number of employees that where taking orders from a smaller number of managers. The largest cost that Harley incurred came from paying their top managers.
By installing these new practices H-D could greatly reduce managerial cost while improving production at the same time (Reid p. 64). One of Harley-Davidsons newest plants in Kansas City, Missouri is a great example of this new employee-management democracy. Workers have the ability to decide on what they feel would be best for the company, and it appears to be working quite well. The number of parts or assembled sections that are defective and rejected is much lower then any of the other finishing plants.
This is in part due to the technology within the plant itself, but mainly it is a result of these practices in use (McLaughlin p. 1). Harley workers are proud of work and it shows. Many feel the company is so dear to them that they have H-D logos tattooed on themselves. (The Harley-Davidson logo is one of the if not the most popular tattoo in the world. ) This pride is evident in the companys success. In 1986 Harley-Davidson once again became publicly traded with the issuance of two million shares of stock and is listed on the American Stock Exchange.
On October 9, 2001 H-D announced record sales and earnings for its third quarter ended September 23, 2001. There 3rd quarter sales were $850. 8 million, which was an increase of 19. 1% from last year (Harley-Davidson. com). Harley-Davidson is where it is at today because management refocused on what is important; worker and customer satisfaction. By sliming product lines and focusing in on their most successful line, heavyweight and super heavyweight bikes, they have kept themselves ahead of the competition.
Also H-D has flourished by connecting their logo and brand name to items such as T-shirts, jackets, saddles and hundreds of others. Recently H-D lent their logo and a few designers to Ford to create some special edition pickups. The trucks are already collectors items and amazing pieces of machinery (Jackson p. 74). H-D is looking ahead and expects to make great strides to improve production. Currently it can take between three to eighteen months on a waiting list to receive a new bike. Some believe that the wait is what makes Harleys so sought after and unique.
With a new product being introduced, a new V-rod engines, H-D hopes to regain its number one position in U. S. sales. Honda just last year surpassed Harley, but Honda cannot touch H-D value on the stock market. Harleys creative engineering, styling and technology are what set it apart from its rivals (Eisenberg p. 47). Within the last twenty years the management of the Harley-Davidson Motor Company have managed to take essentially a good product and make it an icon of American manufacturing.
People of all backgrounds and lifestyles appreciate the craftsmanship and performance of H-D motorcycles. Harley has endured strong Japanese competition, weak parent companies (AMF), and numerous production difficulties. Through all of their trials and tribulations H-D most valuable asset has been its enormous cult following of die-hard bikers. With such positive brand image and tremendous success in the stock market, I think it is safe to say that the patented sound of Harley-Davidson motorcycles will be heard for as long as this country stands.