Harley-Davidson ready to rumble into its second century
By Melisa McCord
Associated Press
MILWAUKEE — Harley-Davidson is in an enviable position for a U.S. company — it has a brand and reputation known throughout the world, and orders for its motorcycles well into 2004. And its stock price is holding up even as the overall market plunges.
Associated Press
The company has just started a yearlong celebration of its 100th birthday, with motorcycle festivals planned in big cities around the world. But there's a serious marketing side to the partying: attracting younger buyers who will buy Harleys and succeed baby boomers as the company's core market.
A sea of Harley Davidson motorcycles filled the front parking lot at Atlanta Motor Speedway in Hampton, Ga., July 19 as visitors attended festivities marking the company's 100th anniversary.
Harley-Davidson started in 1903 when 21-year-old William Harley and 20-year-old Arthur Davidson built their first motorcycle in a shed. The company survived the Depression, two world wars and the 1980s, when Harley faced quality problems, debt and slow sales.
It has grown into a company that earned $437.7 million in 2001, continuing a 25 percent average annual earnings growth in the past five years. Forbes magazine named it the top company of 2001.
"As long as we stay hungry and not let ourselves get complacent, then I think we can continue to be successful," said Jeffrey Bleustein, CEO and chairman.
The company has a legion of loyal fans who shun sleek foreign performance bikes in favor of Harley's big cruisers with their distinctive "potato, potato, potato" rumble.
"It's about an image — freedom of the road, hop on your bike and go, independent living, the loosening of the chains," said Dave Sarnowski, a teacher and Harley rider from La Farge, Wis.
That image, so appealing to boomers, has powered Harley's growth, but the company knows it needs to hook younger riders. It is counting on its V-Rod and Buell lines to help do that.
Harley introduced the high-performance V-Rod last year, its first new line in more than a decade. The sleek silver motorcycle has a liquid-cooled engine, making it faster than other Harleys and without the signature rumble.
The company's Buell subsidiary, known for its sport-performance bikes, launched the Firebolt this year. The bike has a frame that doubles as a fuel tank, which designers believe will let riders take fast curves easier.
"Time will tell if it actually works, but they're moving in the right direction," said Joseph Yurman, analyst at Bear Stearns. That direction has some longtime fans worried the company will stray from its rough-and-tumble image.
"The old Harley traditionalist gets on that (new) motorcycle and doesn't feel the rumble and the roar," said Ron Catronio, a motivational speaker and Harley rider from Fort Lauderdale, Fla. "But if there's a way to keep that rumble going, Harley'll do it."
Harley, which has the top market share in the United States, hopes the new bikes will also make inroads in the European market, where motorcyclists tend to prefer sportier, speedier bikes made by Honda, Suzuki and BMW.
In the United States, many Harley dealerships are sold out of bikes until 2004, but some worry they will experience a post-anniversary slump — although the company saw an average 20 percent sales increase the year after its 85th, 90th and 95th anniversaries.
That's why it was so important that the company introduce the V-Rod in 2001, Yurman said.
"The message is, 'Although the 100th anniversary is a big deal, look at what we'll do in any old year,"' he said.
Faye Hall, who owns a Harley dealership in Fremont, Calif., said: "I have a lot of faith in Harley-Davidson as a company. They're going to keep life exciting."
The anniversary celebration, including a festival in Atlanta last weekend and similar events planned for Baltimore, Los Angeles, Toronto, Dallas and Mexico City, also should attract new riders, Bleustein said. The festivities will continue into the summer of 2003.
Still, the celebration is coming at a time when companies nationwide are feeling the fallout of Enron, WorldCom and other corporate scandals. Harley is no different, but Bleustein called the company's finances transparent.
"You can see how we're making money. It's not smoke and mirrors," he said. "The quality is showing through. That's why our stock price has held up as well as it has."
Harley stock is trading around $45, about midway between its 52-week high and low, despite the slowing economy and weak consumer confidence. Some industry analysts, though, wonder whether the stock is overpriced and whether the company can keep up its sales growth.
Bleustein believes the company's biggest challenge is to focus on turning out bikes that excite people, but he's confident the company has the products, ideas and passion to last.
"No one wants to be the one to let Harley-Davidson stop growing," he said. "When you're in a company that's been around a 100 years, there's a whole bunch of tradition, of legacy. You don't take it lightly."
