CONTENT

ARGUMENT ……………………………………………………...…2

PRECIS ……………………………………………………................3

INTRODUCTION ………………………………………………...…5

CHAPTER 1 THE HARLEY-DAVIDSON STORY ……..………7

CHAPTER 2 THE THREE M`S OF HARLEYS SUCCES …..…10

MANAGEMENT ……………………………………10

MARKETING ……………………………………….14

MANUFACTURING ………………………………..17

CHAPTER 3 HARLEY-DAVIDSON: A BUSINESS CULTURE

TRANSFORMED INTO A WAY OF LIFE ……………….………22

CHAPTER 4 H.O.G. …………….………………………………24

CONCLUSION ………..……………………………………………28

APENDIX …………..………………………………………………32

BIBLIOGRAPHY …..………………………………………………33

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ARGUMENT

Ever since I was a little child motorcycles represented an attractive domain in which I was very interested and the desire of having one of my own was irresistible. At the age of 16 I finally received one from my parents as a birthday gift and this made me realize what riding a motorcycle means. Suddenly I became much more interested in bikes. But the main reason for which I have chosen this theme is that Harley Davidson represents the peak in motorcycling experience. Even thought I don’t own a Harley and I will probably never afford one, I once rode a Harley Davidson motorcycle and that was the moment when I realized what a Harley really represents. It represents the American dream of freedom, the liberty of spirit

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Précis

The whole work is structured in four chapters all being focused upon the history of the Harley-Davidson trademark, the company which emphasizes heavy bikes designed for cruising on the highway and known for their distinctive exhaust note, and the marketing ideas and innovations that made it a living legend. In addition to this the work contains precious information about the Harley Owners Group (H.O.G.) a group which transformed a Harley-Davidson bike into a way of life due to organized group rides, exclusive products, product discounts and H.O.G. Tales newsletter.

The first chapter introduces us in the glorious world of Harley-Davidson with a short presentation of the manufacturer’s history. Arthur Davidson and William S. Harley were schoolmate friends that shared a mechanical passion and strong desire to join the other motorcycle pioneers. They rekindled their relationship while working at the same factory in Milwaukee. Together they began to study mechanics focusing on motorcycle engines. In 1901 they had four engines designed and ready to be fitted to bicycle frames. In 1903 the first Harley-Davidson motorcycles were built. The rest is history…

The second chapter points out three important factors that stood at the base of Harley-Davidson trademark success: management, marketing and manufacturing. Although all three methods are not new concepts in the business world, just-in-time inventory, employee involvement, and statistical operator control are the attributes of the productivity triad. Just-in-time inventory was the driving force of Harley's quality-improvement program.

No driver is more proud of their vehicle and more devoted to a brand than the owner of a Harley-Davidson... Having a Harley means much more than driving a motorcycle... It means belonging to a select group of people with similar characteristics and affinities, but, above all, with a common denominator: their devotion to the same brand. How did Harley-Davidson achieve the miracle of

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having the most loyal and devoted customers in the world? You cant find out in chapter three.

The final chapter is focused upon a much more detailed presentation of H.O.G. (Harley Owner Group). The group is dedicated to promoting responsible motorcycling activities for the Harley Owners Group members, through local and national H.O.G. events. H.O.G. members are concerned with helping those that share this earth with, as well as the obvious... riding bikes and having fun.

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Introduction

Motorcycles come in all sizes, several shapes, and plenty of colors.From the 50cc Gritzner Monza Super Sport to the 1300cc Suzuki Hayabusa, the only commonfactor is an engine and two wheels; although adding a third wheel in the form of a sidecar doesn’t appear toaffect the definition.They are motor and cycle. Getting the two to work effectively, and together, has always been a challengefor designers and engineers. Using them effectively has been the challenge for riders. Three bhp with nosuspension or brakes on rutted and dusty roads in 1990 was probably just as daunting as 120 bhp a centurylater. Motorcycles have always been more than just a means of transportation. From that moment in 1885 when Gottleib Daimler'sson set off on the first motorcycle journey, a 10-km trip during which the rider's seat caught fire (definitely the first "Hot Bike"),motorcycles have moved us literally as well as metaphorically. Motorcycles tickle something in boys and men especially, but in girlsand women too. It is probably to do with escape, excitement, and technology; the combination of their physical form, their extraordinaryability, and the meaning that they have acquired in the 20th-century culture. Throughout the history of the motorcycle there has been a common quest from rider and engineers -- performance. That is performancerelating to power, performance relating to reliability, performance relating to comfort. Motorcycle buyers have also had a more-than-passinginterest in good looks; what's the point of a great performing bike if it's ugly? Along the way some people also demanded economy, but it wasnever a top priority for anyone who was interested in chasing his mates down the by-pass or impressing girls. Racing and competition havealways driven the development of the machines and the desires of the buyers. From that bizarre moment when two pioneer riders met on

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a dusty road and immediately began boasting of performance of their bikes, there has been motorcycle racing. The direct result of thatcompetition has been technological leaps driven by the need for racing success, but which soon transfer to sporting road bikes and eventuallyto the simples moped. Sometimes those developments have been small, a change in the shape of a carburetor throat or a modification to thematerial used for the wheel spokes. Sometime they have been huge -- the appearance of disc brakes, float carburetors, or telescopic forks.Sometimes the manufacturers didn't move fast enough. Owners would fettle their bikes, improving performance, changing the looks,tailoring the bike to their needs whether for cosmetic or functional reasons. Few motorcyclist have ever been able to resist customizingtheir bikes in however small a way. And racers have always looked to make any allowable alterations to give them the competitive edge. Some people have built their own bikes. In the early years of 20th century, with little competition, it was comparatively easy to becomea motorcycle manufacturer. A selection of bought-in components thrown together with a unique name on the fuel tank was almost all you neededto qualify. Now you need a unique vision to justify the development process and cost necessary to produce even a few bikes with your own nameon the tank. Fortunately some people still have that drive and new names still crop up from around the world. Look at the amazing Britten. It is notjust a functional race bike, but an amazing high-tech sculpture.For most people, performance is not the only buying criterion. In fact, in the late 20th and early 21st century, when the performance of manymachines exceeds the ability of many riders, it is not even the main criterion no matter what the buyer may say. Looks, and what they mean, arevitally important. People have always been concerned about what their choice says about them. What did it mean to buy a Harley-Davidson comparedto an Indian in 1920s America? And what does it mean to buy a Ducati compared to a Suzuki in the 21st century? Psychologists can and do writethese on motorcycles and their owners. The motorcycle as cultural icon has been influenced by films like "Easy Rider" and "The Wild One", and although the bikesdepicted in these films weren't really performance machines, they have affected our ideas about why we want a motorcycle and how we want that biketo look. For me the most desirable bike is a Harley Davidson Road King, for others it is a Ducati 916. There are no rights and no wrongs, but in everyclass of machine, throughout the evolution of the motorcycle, there has been a class leader. An acknowledged champion to which people aspired.The hottest bike in the class.

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Chapter 1

The Harley-Davidson Story

In the world of motorcycling there is a manufacturer and their bikes that stand out over all the rest. Harley-Davidson motorcycles are the best motorcycles in the world because of heritage and tradition, the come back after a difficult era, and the support from the bike owners that is a carefully maintained cult.

Arthur Davidson and William S. Harley were schoolmate friends that shared a mechanical passion and strong desire to join the other motorcycle pioneers. They rekindled their relationship while working at the same factory in Milwaukee. Together they began to study mechanics focusing on motorcycle engines. In 1901 they had four engines designed and ready to be fitted to bicycle frames. In 1903 the first Harley-Davidson motorcycles were built. The brand appeared in ads and articles describing the motorcycle that would become a legend. Three motorcycles were produced between 1903 and 1904 and were sold before they were even built. During this time Walter C. Davidson Sr. and William A. Davidson joined Arthur Davidson and William S. Harley and on September 17, 1907 the Harley-Davidson Motor Company was officially registered with the U.S. Trade and Company Register Office. The management rolls were assigned at the registration with Walter C. Davidson as President, William A. Davidson as Vice-President and Works Manager, Arthur Davidson as Secretary and General Sales Manager, and William S. Harley to serve as Chief Engineer and Treasurer. Even though the titles were assigned, each person could intervene in all sectors.

Harley-Davidson began participated in motorcycle racing in 1904 and benefited from commercial implications of the numerous victories won by their bikes. It was not until 1913 that the company decided to establish an official racing team. Early racers such as Ralph Hepburn and Eddie Brink put Harley on the track and won races with these machines, later Joe Petreli and Red Parkhurst. Joe Petreli first raced on an Indian motorcycle, and then made a name for himself by racing Harley-Davidson's. Harley interrupted their racing from 1926 to 1931

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and Petreli raced for the Excelsior Company, which shut down in 1931. Petreli again race for Harley when the company started their race teams back in 1931. Red Parkhurst became a big winner for Harley and had a long career of motorcycle racing for Harley. Participating in motorcycle racing gave Harley an edge on research and development of their motorcycles.

In 1914, war broke out in Europe and in 1917 the United States declared on Germany. During this difficult period of time Harley-Davidson equipped many of their machines with military equipment. Harley studied the needs of the military and adopted their motorcycles to meet the needs of the soldiers in the field. During this time period Harley established a service school to train mechanics to repair the machines that had breakdowns from a hard and demanding use. Twenty thousand motorcycles were used in this conflict.

In this time period, which was the beginning of motorcycling in America, there was the big three in motorcycling, Indian, Excelsior and Harley-Davidson. Excelsior disappeared in 1931 and Indian in 1953 leaving only Harley-Davidson. Almost one hundred years later the legend continues.

This year Harley-Davidson introduced a new motorcycle, which they have named the V-Rod. Harley has always enforced a considerable amount of research and development when introducing a new model and the V-Rod was put through the works. The V-Rod has a new engine, which is built around the engine that the Harley-Davidson race team has been using. V-Rod had to have a special frame to accommodate the new engine and so began the design. After the machine was built it was driven several hundred thousand miles and then ran through testing which included water testing. After being sprayed with high-pressure water nasals for over twenty-four hours, the V-Rod started immediately. The V-Rod was in development for six years. No other motorcycle company spends the kind of time and money in development that Harley-Davidson does.

In 1960 Harley-Davidson negotiated with an Italian company to build and distribute lightweight motorcycles. The American company was only making the big V-Twins and there was thought that to be more competitive they needed to be producing a mid-size line. People begin to see Harley's that they did not recognize, bringing to question where the company was going. There were younger people who were interested in more of a leisure machine and these lightweights met their needs.

In 1967 the Harley-Davidson Company after several lean years was threatened by bankruptcy and accepted an offer to buy out the company by AMF (American Metal Foundries). This buyout ended sixty-two years of the private family owned company. AMF realized some of the problems the company had

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and decided that the way bring it back to the top was to produce large numbers of motorcycles quickly and cost-effectively. For the first time three letters appeared beside the Harley-Davidson name on the gasoline tanks, AMF. Harley was now trying to compete with the Japanese, which they could not do on their own ground, which was mass production. With the speeding up of the assembly line, it became apparent that the quality control which Harley had always been so concerned with was not deteriorating. As production increased there was a significant drop in quality. Since there was not enough space for working on this amount of machines, they were pushed through without adequate time or careful assembly. From this analysis, the only solution was to keep developing motorcycles that had built the company's success and legend, solidity, quality and reliability.

In 1981 the Harley -Davidson executives who were disappointed with AMF decided they would try to buy the company. Because the company was considered to be beyond recovery, they were able to purchase it at a good price. After the buy, some critised AMF for not taking better care of the classic company. Harley-Davidson began its new beginning and reclaimed its good name.

The people that ride Harley's have always supported the motorcycle and the company, even through the lean years when they did not agree with management of the company. There are Harley riders that believe that riding this brand of motorcycle is a way of life, which is the American way. There are several big events that take place every year that celebrate the glory of Harley-Davidson motorcycles. A lot of these events began as gatherings for all kinds of motorcycles but now have mostly Harley owners attending. There is the Daytona Bike Week and the Sturgis Rally in South Dakota, which regularly attracts over one hundred thousand participants.

In 1983 Harley-Davidson started the official club, which is know by the acronym H.O.G. that stands for Harley Owners Group. Ten years after the club was established the club had more than one hundred fifty thousand members and almost 700 chapters. These chapters have organized rallies and drives with the profits going to several charities all in the name of the famous motorcycle company. The evidence shows Harley riders clearly love their bikes and the company that for almost one hundred years has been producing the motorcycle that has been called Milwaukee Iron.

Hog Tales is a bi-monthly magazine, which is strictly for Harley-Davidson owners. In the magazine you will find articles that relate to Harley owners and the motorcycles they love so much. So many of these owners have brought their families in to circle of motorcycling and you can find stories that relate to wives

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or even daughters who have started riding with their husband or father. The magazine keeps Harley owners in touch with what is happening such as the rides and rallies, which are taking place across the country and where they will take place. It also describes rallies that have past and all the happenings that went on for those who were unable to attend. There are articles that feature riders, introducing them to the rest of the Harley family describing something special they participated in. Harley riders love nothing better then to get on their machines and with a group or even solo ride to some special place to see another part of this beautiful country. The magazine describes special programs such as the fly and ride program which allows people to fly to a shop to buy the Harley of their dreams and ride it home.

The Enthusiast is a magazine that Harley has been publishing since 1916, which offers articles like Hog Tails but also highlights different machines.

The 1960's brought a lot changes to the American civilization such as the wider spread of Rock and Roll, the thought that if it feels good do it and Harley owners begin to change the way their motorcycles looked. Harley's became the chose of motorcycle in which to modify, thus appeared what was known as the chopper. The chopper was a Harley-Davidson motorcycle, which had the frame, cut and re-welded to extend the front forks. These motorcycles were covered with as much chrome as the owner could afford and was always a works in the making. Few other motorcycles offered as much custom attraction and only Harley's were know as true choppers.

These are some of the reasons that Harley-Davidson motorcycles are the best in the world. There are no other motorcycles being built that can compare with a Harley.

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Chapter 2

THE THREE M'S OF HARLEY'S SUCCESSMANAGEMENT

MARKETINGMANUFACTURING

Management

Although Harley was very profitable during World War I and World War II, this status quickly changed during the 1970's. After the leveraged buy-out, Harley's new owners realized that in order to make the necessary improvements, they had to determine what went wrong. After careful analysis, the management team developed the following list of practices which were main contributors to the problems previously experienced:

Corporate management focused mostly on short term returns. Management did not listen to its employees or give them responsibility

for the quality of what they made.

High inventories of parts gobbled up cash and reduced productivity.

Belief in quick fixes for problems, such as throwing in computers and state-of-the-art machinery to improve productivity.

High break-even point that left the company vulnerable to unpredictable market fluctuations.

Management that woke up too late to the threat of foreign competition because of the "it can't happen here" syndrome.

As with anything in life, recognizing the problems to any given situation is only half the battle. The development of methods for improvements and gaining company wide support for implementation was the key. The first accomplishment was for management to learn the importance of relationships. Strong relationships with workers can aid in the advancement of new company practices. A good example can be seen in the following conversation between a

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machinist and the Vice President of the power train plant at Harley. "You are new here, aren't you?" asked the machinist. "Let me buy you a cup of coffee!" (Filipczak 38). It was a simple gesture which quickly taught the new VP how important "relationships" were in the workplace; one of the major components of Harley-Davidson's corporate culture.

Harley's new management realized to survive they needed to become a perpetual learning and improving organization. Open communication between all levels of employees was essential. Everyone needed to understand their roles and the consequences their roles contributed to the company. But to develop employees to a greater degree, management had to get them to understand the business environment of the corporation.

Harley-Davidson wanted the ability to develop processes and people which would ensure employees would have the capability for rapid, effective change based on an understanding of the whole business environment in which they operated. In order for that to happen, Harley-Davidson realized that individuals needed to have a shared vision of the company values: tell the truth, be fair, keep your promises, respect the individual, and encourage intellectual curiosity. Management needed to earn the respect and trust of their employees. Incorporating all of these high moral values into the entire company structure and expecting nothing less from employees, at all levels, helped emphasize Harley's commitment to its team of workers. Since Harley's workers were unionized, this could have been a major problem. But, because the unions stuck to Harley-Davidson when times were tough, Harley today sticks to them. The unions even censure their workers for shoddy performance. This commitment allowed for Harley to switch to "self-managed" teams. The plan was to create semi-autonomous workgroups, who were cross-trained and could set their own work schedules. Therefore, Harley-Davidson created the Harley-Davidson Learning Center. This is a facility dedicated to life-long learning. Its primary role is to serve employees who want to keep their skills current. In some cases, this means remedial training in basic skills, but mostly the Learning Center is a place to come with requests for specific job-training courses.

Continuous Improvement

Harley-Davidson is driven by a constant vision of what an excellent company should be: one that is never satisfied with the status quo but is always searching for ways to do things better. This is best exemplified by a manager's comment, "The day we think we've arrived is the day we should all be replaced by managers of greater vision" (Reid 38). All companies can and should learn from this position and adopt the idea of continuous improvement.

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Continuous improvement demands involvement from employees. Management's dilemma was how to align employee motivation with company goals. In Harley-Davidson's case, all employees take part in a gain-sharing program and are paid cash incentives for attaining and maintaining quality, profitability, and product delivery goals. In 1995, more than 2,000 of Harley's 4,694 employees took training and education programs from the Harley-Davidson Learning Center. These courses helped the company to be more competitive and to foster employees' personal growth and development. Extensive team-building has taken place at all levels of the company, including team-building for union leaders, negotiation committees, and stewards. Open communication, at all levels, is used as a major key to achieving teamwork and employee participation. For example, engineers are located right in the plant, within walking distance of machine operators. The practice of open communication is also represented in the relationship between top management and the union.

Harley Davidson has an untypical relationship with the union. Continuous improvement techniques could have been stopped if the company did not have a good relationship with the union. The union viewed management as a partner instead of an adversary. Management's good-faith dealing's with the union was a factor in this special relationship. Harley-Davidson has a history of in-sourcing; it tries to bring as much work as possible into the plant to forestall any layoffs. The union has considerable control over what kind of work is outsourced to other companies. So the union is able to create a "job security" by choosing the work that is done in-house. Bob Klebar, the president of the union stated, "When times are good, we´d outsource it. But if things get tougher, we´d look at those projects and maybe bring them in-house to keep the employment" (Filipczak 41). He also mentioned that "instead of focusing on what we think we have a right to, his people work closely with the production department, and everyone concentrates on the final customer. It really binds us together and makes us go in the right direction" (Filipczak 41). Teerlink, Harley-Davidson´s CEO, said that total employee involvement (EI) cannot exist until management and labor can agree that they have a mutual goal: the long-term success of the company (Reid 173). In this joint process, joint union-management study groups identify issues or problems and then research all possible solutions.

Management Involvement

Management through its words and actions must demonstrate continuous improvement of quality and efficiency is a way of life, not just another "program". Management must be firmly committed to the people-building philosophy - the belief that employees are thinking, rational human beings and therefore should be encouraged to develop and grow. All management must be

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totally committed to the EI program and demonstrate that commitment by fostering a mutual trust between employees and management. Don't let management "Solutions" become the problem: their job isn't to hand down solutions to every problem. Management's obligation is to communicate the problem. When management and labor develop solutions together, they both have a stake in making those solutions work (Reid 172).

At Harley-Davidson, they believe being a leader in business includes contributing to the betterment of society. They support community causes as a corporation, and they encourage employees to get involved as donors or volunteers. Charitable contributors are investments in the quality of life, benefiting all their stakeholders: customers, employees, suppliers, shareholders, government, and the community at large.

Eagelmark Financial Services

Eagelmark Financial Services, a majority-owned subsidiary, provides private label financial services programs, including Harley-Davidson Credit. Harley-Davidson Credit, Eagelmark's largest division provides wholesale financing and insurance programs, including motorcycle floor-planning, parts and accessories trade acceptance and commercial insurance brokerage to Harley-Davidson's US dealer network. It also provides the private Harley Card, an exclusive credit card for use in Harley-Davidson dealerships. In addition, Harley-Davidson offers its domestic dealers from time to time quarterly special discounts and/or 120 day delayed billing terms through Eagelmark in order to carry sufficient parts and accessories inventories and to counteract the seasonality of the parts and accessories business.

MARKETING

Harley-Davidson enjoyed a monopoly in the motorcycle industry for many decades. In the 1970's, Japanese manufacturers flooded the market with high quality, low priced bikes. From 1973 - 1983, Harley's market share went from 77.5% to 23.3% with Honda having 44% of the market by 1983. Harley-Davidson could not compete on price against the Japanese motorcycle producers, so it had to establish other market values and improve quality.

Simultaneously, the United States consumer base was undergoing a revolution which mandated consumer driven products. Harley had to change from a company which dictated what its customers could have to strategies based on direct input from customers. A marketing philosophy was developed based on the customers desires, gathered through surveys, interviews and focus groups.

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Image

"The real power of Harley-Davidson is the power to market to consumers who love the product" (Executive Excellence 6). Harley-Davidson's President and CEO, Richard Teerlink says the bike represents to America, "the adventurous pioneer spirit, the wild west, having your own horse, and going where you want to go - the motorcycle takes on some attributes of the iron horse. It suggests personal freedom and independence" (Executive Excellence 6). Brand loyalty for Harley-Davidson is emotional. They are considered more than motorcycles-they are legends. It is an American icon brand. The Harley-Davidson symbol is based on a pattern of associations that include the American flag and the eagle; reflective of the passion and freedom Americans enjoy.

It is difficult to define an average Harley-Davidson buyer. The demographics range from a blue-collar worker to a high-power executive located all over the world. The common thread is

a desire to escape the routine and become anyone you like. While their competitors base their advertising on product technology and features, Harley promotes: a mystique appearance, individualism, the feeling of riding free, and the pride of owning a legend. With Harley, you can live out your fantasies, as well as experience camaraderie with fellow bikers.

Customer Relations

When a person buys a Harley-Davidson motorcycle, they receive a free 1-year membership to the Harley Owners Group (HOG), which was developed in 1983 as a program to keep people active with their Harley. Simultaneously, it keeps the company close to its customer. HOG has 295,000 worldwide members, 900 local chapters and is the largest company-sponsored motorcycle enthusiast group. They conduct four US national rallies, two touring rallies and 44 state rallies. These rallies encourage people to use their motorcycles and to share in the excitement of riding. The people are given demonstration rides, have the opportunity to ask questions, register their bikes and buy merchandise. According to Michael D. Keefe, director of HOG, these rallies are considered "more like customer bonding. If people use the motorcycle, they'll stay involved" (Berry, 104 ). " What the Harley management crew, who are masters of marketing, do well is listen to their customers. The result is that Harley cannot keep up with demand at current production levels" (Croghan 31). Company executives learn from their customers by maintaining a database to track consumer desires. Company officers spend almost every weekend from April through October at motorcycle events and dealerships accumulating this information.

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Promotion

The primary promotional tool for Harley-Davidson motorcycles are the HOG activities. Not only does it serves as a customer relations device, but as a way to showcase and demonstrate new products. As discussed in the image section, Harley develops a strong impression within consumers. In 1983, the company developed a trademark licensing program which provides income for dealers and the factory while expanding the total Harley experience. The company program put a stop to bootlegged Harley Davidson merchandise and offered priceless advertising.

Harley has capitalized on the fact its product/image is chic. There are numerous examples of fashion models draped over the bikes and wearing company T-shirts. The company is starting to advertise in magazines geared to the general public. Twice a year, a Fashions and Collectibles catalog is produced with various Harley merchandise. Clothes sold in stores such as Bloomingdales and J.C. Penny exposes Harley-Davidson to people who may not have thought about visiting a dealership. Another marketing strategy, Harley-Davidson Cafes, have been opened in or near many dealerships to lure people into the showroom. In fact, the Harley-Davidson Cafe in New York City won one of the 1994 Restaurant and Institutions Interior Design Awards for its American appearance. Also, Harley-Davidson's advertising techniques are so successful they were one of the 1995 finalists of the Kelly Award for advertising. The company is able to promote the sale of its motorcycles by the financial services offered by Eagelmark, a wholly owned subsidiary. The dealerships are becoming a one stop shop for bikes, accessories, clothing and financing.

Product

Harley found its strength was in the heavyweight division. They also identified and exploited mini niches, such as customized, touring, sport/touring and sport/street motorcycles, in the heavyweight end of the market. When Harley-Davidson was formed, it only offered one color of motorcycle - gray and three basic styles. The company learned it needed to give the customers a choice and now offers a variety of models, including Sportsters, Super Glides, Low Riders, Softails, Sport Glides, Tour Glides and Electra Glides, in numerous vivid colors. Many of these models and changes were developed when Harley realized their customers were customizing the bikes and none of the revenue from the work was going to the company. When a style is changed or developed, Harley always develops it around their signature image to make sure that the product is not only a high quality piece of equipment but is also charismatic.

Price

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Harley-Davidson quickly learned it could not compete with the foreign manufacturers on cost. Not only did Honda have a low priced product, it was able to defeat Harley in advertising 40-1. Therefore, Harley developed a strategy of value over price. This was created through the development of mini-niches and the heavy construction of the parts. Japanese manufacturers used plastic while Harley used steel, which is able to be rebuilt and rebore. Harley was careful not to exceed demand in production of their motorcycles. Currently, people must wait six to eighteen months for a new motorcycle and the price for a year-old Harley is 25% to 30% higher than a new one. By not being able to meet demands, an attitude of must-have has developed. Therefore, Harley has plans to double capacity to 200,000 motorcycles annually by 2003.

Distribution

Harley-Davidson motorcycles are sold by 1,065 dealers worldwide. The company owns 54 percent of the market share in the USA, 16 percent in Japan, 10 percent in Europe, and 38 percent in Australia. The foreign markets could be larger, but the company has an agreement with American dealers not to sell more than 30 percent of the bikes overseas, if the domestic demand is not met. The company implemented in 1983 a program to concentrate on helping its dealers develop the up-to-date business skills they need to sell motorcycles more effectively. The headquarters sponsored training programs are dubbed "Harley-Davidson University". The dealers are considered to be business partners and the headquarters plays an active role in developing programs, financing improvements, implementing support and management consultants. The dealers also invest their own money into these programs which allows them to feel like apart of the company. Harley-Davidson treats the dealers not only as partners, but also as customers. Harley has developed a very effective marketing strategy, but it is the responsibility of manufacturing to produce high quality and reliable motorcycles.

Manufacturing

"Vroom, Vroom" this was the sound of the first Harley-Davidson motorcycle that came off the assembly line in 1909. As we have already discussed, Harley-Davidson started off as a family business but was bought by AMF in 1961. However, during the late 1970's Harley was loosing all of its business to Japanese competitors. Harley was unsuccessful at making a reliable, quality product. After going public in 1981 and losing the financial backing of AMF,

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Harley was forced to make a change. Harley could no longer improve quality through expensive technology. "The traditional US management view of the relationship between quality and productivity, as well as the view of many managers throughout the world, was that they were inversely related" (Mefford 137). However, quality experts such as Deming and Crosby have researched these principles and learned the important relationship between quality and productivity, "Productivity is a measure of output divided by the inputs required to produce it.....for every unit of defective output produced that must be scrapped or reworked inputs are wasted. Labor hours, machine time, material and energy inputs are wasted on poor quality product" (Mefford 138). Realizing the validity of Deming and Crosby's theories and the complementary relationship between quality and productivity, Harley had to learn to simplify and master their production process. With this revelation and through hard work and intense commitment, Harley's production process has become a source of renowned excellence.

Original Process

Initially, Harley's manufacturing plants were designed to use a batch process in the flow of material on its plant floor and the frequency of products made. "The batch format has neither inflow or outflow of materials while the process is running, and has the disadvantage of high labor costs per unit production and is difficult with large-scale production" (Folger 8,15). Harley's batch operation was illustrated by its grouping of machinery. "Harley's production system was a huge, maze-like operation in which parts were tooled in large batches and moved from one machine to another all over the plant" (Reid 156). As illustrated in figure 1 in appendix (Reid 156), operators had to use forklifts to move the materials around the facility. There was no straight flow process; therefore, setup times were very high and output rates were very low causing financial concerns for AMF. With Harley's transition from a privately financed company into a public company, they were forced to seek an alternative method of production to achieve quality and productivity. The first step was to determine the specific areas which needed improvements. It was important for Harley to understand all aspects of the business would need to be examined for flaws in order to develop an effective flow process. An improved process was determined and implemented, successfully, only after the synergy of what is known as the productivity triad was conceived.

Just-In-Time

Although all three methods are not new concepts in the business world, just-in-time inventory (JIT), employee involvement (EI), and statistical operator control (SOC) are the attributes of the productivity triad. Just-in-time inventory

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"was the driving force of Harley's quality-improvement program. Very simply, as you operate with lower and lower inventories, it becomes essential that all your inventory is usable. If you're only going to get a few parts, they all have to be good ones" (Reid 150). Suppliers of Harley had to implement JIT into their production process in order to compliment Harley's system. Previously, Harley utilized a complex, computerized inventory system, Material Requirements Planning, which was based on maintaining high levels of stock, to offset any manufacturing problems, so the assembly line would not be halted. This system was inefficient because it did not address the manufacturing process problems, instead "it was a little like sweeping dirt under the rug" (Reid 151). But with JIT, "as each problem is exposed, you are forced to identify its cause, fix it, and move on to the next problem that is revealed" (Reid 151). After being renamed MAN (materials as needed-to differentiate from ineffective JIT's processes implemented by other companies.) and concentrating on "setup reduction, focus flow processing, containerization, parts control and operator preventive maintenance" (Reid 151), Harley recorded impressive improvements:

1. Inventory turns up from 5 to 20. 2. Inventory levels down 75 %.

3. Percentage of motorcycles coming off the line completed up from 76 % to 99 %.

4. Scrap and rework reduced by 68 %.

5. Productivity up by 50 %.

6. Space requirements down by 25 %. (Reid 148)

Although MAN had top management support, without full employee participation in the planning and implementation, Harley's JIT would not have been effective.

Employee Involvement

Successful implementation of any company program occurs when there is a commitment at all levels of the organization. Top management must not only direct but take direction from the lower level employees. In order to feel comfortable with this, top management must encourage education for employees of company objectives and develop a trust that employees will execute the right decisions. Simultaneously, employees must learn that their job

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stability is dependent on the overall health of the company. Their dedication must be expressed in learning techniques to continuously improve the quality of Harley's manufacturing processes. Harley has set the following nine guidelines to follow for successful employee involvement (Reid 163).

Management, through its words and actions, must demonstrate that continuous improvement of quality and efficiency is a way of life, not just another "program."

Management must be firmly committed to the people-building philosophy-that is, the belief that employees are thinking, rational human beings and therefore should be encouraged to develop and grow.

All management must be totally committed to the EI program and by demonstrating that commitment foster a mutual trust between employees and management.

Employees must be thoroughly trained in specific problem-solving and quality-control techniques.

Managers must encourage participation from everyone.

Employees must be given responsibility and authority for production, quality, preventive maintenance, and other aspects of their jobs.

Individual employees must help each other develop and grow.

Employees must attack problems, not each other-that is, there must be no finger-pointing when things go wrong.

Creativity must continuously be encouraged through a free, non-threatening atmosphere.

Statistical Operator Control

In the beginning Harley-Davidson believed that their present machinery was unable to produce quality products. But, with the implementation of the Statistical Operator Control (SOC) process they soon realized that it was not their equipment but their methods. "SOC involves using simple statistical techniques and control charts to monitor the variation in a work process" (Reid 179). Harley realized that this process would only work if the responsibility of quality was placed upon the persons who had direct contact with the materials (operators). Therefore, Harley decided to hand the SOC approach down to its employees on the floor. However, it took some time for Harley to understand that they also needed to provide their employees with extensive training in mean charts, histograms, and other statistical methods in order for their efforts to be a success.

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With statistical methods , the operator was now able to answer two crucial questions about the process as it was going on: Is the process in control (operating in a stable, predictable range of variation)? and Is the process capable (able, consistently, to remain with in the specifications) (Reid 179)?

The employees eagerly took on the "ownership" of quality in order to make improvements they have long thought necessary. With the combination of Employee Involvement and Statistical Operator Control these workers were able to successfully monitor the process. If they found problems they could immediately stop the process and fix or quickly inform management about the problem. All of these concepts together lead to an improved quality in Harley motorcycles. Over time, these old techniques, synergized, led Harley to a production method that has turned the company around.

Improved Process

Harley's continuous flow process proved wrong the belief that "continuous improvement in quality and productivity was an attractive concept but likely to be uneconomical" (Mefford 137). Moving from a batch process to a continuous flow process can be difficult. However, Just-in-time inventory, Employee Involvement, and Statistical Operator control combined to make it possible. For Harley's continuous flow process, U-form lines were used as illustrated in figure 2 in appendix (Reid 157). These lines consisted of 1-4 people working together to produce a finished part. The group had containers at the starting end which held the raw materials/ products and were taken through the "U-line", eliminating a need for a stock room. In the example shown, you can see how the different stages of machinery are all arranged in a "U" shape making access easier and taking up less floor space. Each manufacturing department has a number of these "U-lines" arranged on its manufacturing floor as illustrated in figure 3 in appendix (Reid 157). Therefore, many different types of products can be made at one time. The original "batch" took six weeks to four months to produce a product, now it can be accomplished in just minutes with the continuous flow methods. A reduction in lead time, inventory, and defects greatly improves the quality of the merchandise. The new system also allowed engineers to improve methods more rapidly and effectively. These new methods have lead to a source of renowned excellence. Harley-Davidson's techniques were proven to work when their productivity levels rose to record levels. Other companies realizing "The Story of Harley's Success" wanted to learn these new tactics. Therefore, Harley holds training seminars to teach other company management personnel their improved manufacturing techniques which enabled them to overcome stiff Japanese competition and lead themselves to excellence.

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Chapter 3

Harley-Davidson:

a business culture transformed into a way of life

No driver is more proud of their vehicle and more devoted to a brand than the owner of a Harley-Davidson... Having a Harley means much more than driving a motorcycle... It means belonging to a select group of people with similar characteristics and affinities, but, above all, with a common denominator: their devotion to the same brand. How did Harley-Davidson achieve the miracle of having the most loyal and devoted customers in the world?

Though its hard to believe, the company went through a traumatic economic situation in the 1980s, but it has been able to overcome the situation in recent years and return the brand to all its glory, simultaneously getting all Harley drivers to purchase, on top of the bike, its famous jackets, sports shoes or cowboy boots.¦

What is its secret? Among others, creating expectations. Harley Davidson generates desire among the public and controls its launchings perfectly. With over 60% of the market share of heavy motorcycles in the United States, Harley-Davidson takes its time in putting its products out. It produces them as a

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tailor would, and it knows that these delays contribute to making its motorcycles an extremely coveted product.

More secrets. HOG (Harley Owners Group) brings together more than 900,000 people all over the world in a peculiar club that goes far beyond a typical consumer group: its members share a passion for making the Harley style a way of life. HOG members receive magazines like HOG Tales and Enthusiast, and they always have the possibility of participating in rallies, excursions, events.

Members of HOG have access to a motorcycle rental program (Fly & Ride), facilities to send motorcycles, a roadside assistance program Only in Europe, between April and July 2005, there are a dozen events scheduled for Harley lovers that participate in HOG. And that is not counting European Bike Week, which in 2004 gathered more than 100,000 motorists in the Austrian Alps. In September of 2005, Harley-Davidson hopes to break attendance records again for this enormous European meeting.

Very recently, Jeffrey L. Bleustein, one of the thirteen founding fathers of Harley-Davidson who acquired the company in 1981, after his dreadful crisis, announced his coming retirement as president and general director of the company. Bleustein has been one of the architects of Harley-Davidson’s rebirth and of the accurate strategy that avoided the brand’s submission to the extremely strong Japanese competition, with brands as powerful Suzuki, Honda, Yamaha, and Kawasaki...

Under Bleustein presidency, Harley-Davidson went from 1.5 billion dollars in revenue in 1996, to more than 5 billion dollars in 2004, with a net profit close to 900 million dollars. Part of Bleustein’s success is owed to his correct decisions when it came to turning Harley drivers into true devotees of the brand.¦ What company can boast that its customers wear tattoos of its brand name on their bodies?

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Chapter 4

H.O.G.

Things have come a long way since 1901 - 1903, when William S. Harley and brothers Arthur, William and Walter Davidson built their 28 x 80ft "factory" in Milwaukee. Or since 1907 when the first experimental V-twin was constructed.

Bucks County, named by William Penn in 1681, is one of three original counties in Pennsylvania and enjoys a lengthy tradition as an important region in the state. Langhorne, the alternate name of our chapter, was incorporated as a borough in 1874 although many of its buildings date from the 1700's when it was known as Four Lanes End. The sister borough of Penndel, was incorporated in 1899 as the Borough of Eden. It was a portion of the land grant first settled in 1686-1687 by Thomas Langhorne, a Quaker preacher from County Westmoreland. In 1947 "Penndel" was supposedly suggested by Mary Keating, a contraction of William Penn and Delaware Valley.

In 1983 the Harley Davidson factory sponsored a club to make new riders feel at home, and so began the Harley Owners Group. At 33,000 members, it was a pastiche of the traditional bike club, with leathers and sew-on patches, but without the oily fingernails and bad-ass attitude. 1985 saw the formation of the first chapters and in 1999 National H.O.G went electronic with the National office introducing their web site at hog.com. Today, no other enthusiats group sponsored by a manufacturer can boast over 550,000 members worldwide.

Brian's Harley Davidson opens in 1984.

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The Harley Owners Group Chapter of Bucks County, Pennsylvania, formed in October 1986. The group is dedicated to promoting responsible motorcycling activities for the Harley Owners Group members, through local and national H.O.G. events. H.O.G. members are concerned with helping those that share this earth with, as well as the obvious... riding bikes and having fun. They congregate for weekly rides as well as annual rallys, social and charitable events. Membership is open to anyone who shares the enthusiasm for motorcycling.

In 1988 Harley Davidson (Eastern Harley-Davidson Dealers Association) became a major contributor to the Muscular Dystrophy Association. Bentley (Owner, Brian's HD) was instrumental from the inception and the resulting annual "Ride for Life" run. In 1994 RfL was generating $332,000, of which BC HOG was credited for $28,374. By 2001 the amount had grown to $550,000 and $42,000 respectively.

The BC HOG Ladies of Harley formed in January of 1994. In 1995 the first annual "Covered Bridge" Poker Run was established, a theme well aligned tothe club and one which would aptly attract visitors. Also in 1995, the L.O.H division was eliminated in order to concentrate on events geared for everyone. L.O.H would reform several years later. BC HOG has also been a long time contributor to the "Penndel" Poker Run, also known as the "Camp Joy" run. Penndel not to be confused with our next door neighbor is a contraction of Pennsylvania and Delaware and the dealers who sponsor Camp Joy.

New Hope began enforcing the "one vehicle per space" law around November of 1996 (SB238 would overrule in October 2002). That was the year of the first club PicNic. Ironically, tickets were $25 the following year which was more than in 2001 when the PicNic was cancelled due to lack of support!?

Club meetings were first held at the German Hungarian Club in April of 1997. Prior to that, they were conducted at the Hilltop Club. The first club Xmas party was also 1997 and tickets were $24. In July of 1998, the new Bucks HOG Hot Line was introduced, although this was not the first hot line the club maintained.

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Riding on the History of a Hog

Elvis Presley had one. A true bad boy rides one. Your mom told you to stay away from them.

As of 1995, over 100,000 people ignored their moms and bought a Harley-Davidson motorcycle. For the year 2000, Harley-Davidson motorcycles hopes 198,500 more people will put aside Mom’s wishes and purchase a famous “Hog.” How could they do that to Mom?

The mechanical design of the bikes is one reason. The V-twin engine and trademark rumbling sound of a Harley make them the ride of choice for many. With 24 models to choose from, all with different mechanical designs, Mom just might want one for herself.

In Milwaukee, Wisconsin, four men designed the first model of a Harley-Davidson motorcycle in 1901: William Harley and Arther, Walter and William Davidson. The men redesigned the frame of a standard bicycle and constructed an engine more suitable for the new frame.

In 1903, three motorcycles were built this way, but William Harley wanted to learn more about automotive engineering. He left Milwaukee to study at the University of Wisconsin-Madison in the School of Engineering. To pay for his education, he waited on tables and did drafting for a local plant. He also continued to develop designs for Harley-Davidson motorcycles. He specialized in internal combustion engines and developed a major component for Harley-Davidson motorcycles, the bottom link fork, which became part of all the 1907 models of motorcycles and was known as the best in its day.

From there, the new business of Harley-Davidson motorcycles expanded. In less than fifteen years in the motorcycle business, the men who founded Harley-Davidson had become known as one of the world’s leaders in motorcycle manufacturing. This was attributed to the V-twin engine that owners of the

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present day have grown to love.

Harley-Davidson wanted to increase the engine size of their motorcycle, so they decided to add an extra cylinder. Adding the extra cylinder meant a new engine design for the motorcycles. Before 1912, Harley-Davidson motorcycles used an engine with an inlet valve and a light spring, pushed by the pressure of the falling piston. It was a simple engine design, but it did not make the motorcycles go fast. With the V-Twin engines, a crankshaft and case were used to join two single engines. The new design also added a mechanical exhaust valve so engine revolutions could be increased, making the motorcycles go faster.

Today, the V-Twin engine has evolved into the Twin-Cam 88. The engine has more torque than other Harley engines and has the traditional 45° angle overhead valve layout. It was designed with the world’s best computer-aided technology. Before introducing the new engine, Harley ran 2.5 million test miles. It would not be a Harley engine without the rumble, but the Twin-Cam 88 is quieter mechanically despite the 85-ft-lb. torque the engine creates. The Environmental Protection Agency limits the amount of noise a bike can make, but Harley-Davidson found a way to make the engine more powerful and stifle the loud rumbling of the bike.

For the power within the engine, engineers used a free-flowing exhaust, but compensated the mechanical noise of this system by installing quieter chain driven camshafts, stiffer crankcases and a new design of the engine covers. Harley engineers also considered emissions efficiency with the Twin-Cam 88 and reworked the exhaust and intake ports and valves.

Engines are not the only components of design within Harley-Davidson motorcycles. There are four main lines of Harley-Davidson motorcycles that include six different models. The Dyna has a low riding posture and features a smooth ride. The Sportster has a narrow frame and lots of power. The Softail is a classic body design that has a lot of potential to customize it. The other line of Harley-Davidson motorcycles is the Touring, which also has a classic style, but is built for riding a long distance.

Harley-Davidsons have become a part of world history; from being used by allied forces in World War II, to being the motorcycle Elvis Presley owned or the motorcycle that Arnold Schwarzenegger rode in Terminator II. Mom might even like them. Harleys have style, unmistakable sound and a strong history of mechanical design and engineering.

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Conclusion

You can call it a brand, a cult, or a phenomenon, but it's much more than a motorcycle.

For 100 years, the burning legend of Harley-Davidson has been fanned by the winds of change and fueled by an American spirit of freedom, individualism, and the quest for adventure.

What William A. Davidson, Walter Davidson Sr., Arthur Davidson, and William S. Harley put together in the little work shed behind the Davidson house on Highland Boulevard in Milwaukee was more than a machine. It was the beginning of a way of life.

Even that long ago, it became apparent that Harley-Davidson® motorcycles had a unique emotional connection to the soul of its rider. What may have started as an economic alternative to the motorcar and a speedier conveyance than the bicycle soon took on a wind-in-the-hair sense of freedom and exhilaration. Early advertisements proclaimed "Get the most out of life" (1916) and "Get a kick out of life" (l925).

This thing was fun.

Oh sure, there would always be rational reasons to buy a Harley-Davidson. But what chance would competitors in other sports have compared to an ad that argued "Motorcycling: The Greatest Sport of Them All" (1931)? It's that timeless attraction, that sense of wanderlust, that's resonated deep in the genetic makeup of every freedom-loving rider on earth. It's what makes Harley-

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Davidson motorcycles relevant today in the lives of motorcyclists all over the world. The promise is simple and true: How you feel on a Harley® is like nothing else in the world.

Those who understand this best are Harley-Davidson's core customers, lovingly called the "Enthusiasts." They come from all walks of life, although they would prefer, thank you, to ride.

To see the faithful converge on their annual pilgrimage to Daytona or Sturgis is to see America's "melting pot" culture at its blast-furnace best. A lifelong member of Hell's Angels. An accountant from Atlanta. A group of riders from London. A retired couple from Michigan with their dog. A CEO who would never be mistaken for a CEO. Six women, who teach school in Arizona, dressed in leather. A H.O.G.® chapter from Akron, Ohio. A newlywed couple from Germany. Some guy in buffalo horns.

What holds them together are their common values, shared with one another and with the Motor Company. Freedom. Individualism. The quest for adventure.

This deep and abiding sense of what Harley-Davidson represents to its customers has been the strength of the Motor Company, and maintaining that connection is one of its guiding principles. Throughout its history, whenever the Company forgot that central reason for its existence, its fortunes waned. But every time it reveled and celebrated in that connection to its customer, it would succeed.

It's the principle they would return to, time and again. Through wars and peacetime. Through ownership by AMF (American Machine & Foundry) and the buyback. Through Panheads, Knuckleheads, Shovelheads, Evolution®, Twin Cam 88s, and the Revolution V-Twin® engine. Through the introduction of the Harley Owners Group, MotorClothes Products™ and Genuine Motor Accessories, and an expansion of the brand's global appeal. Through it all, Harley-Davidson would strive to remain connected and loyal to its riders. Harley-Davidson's reward for this loyalty would be loyalty in kind.

Harley-Davidson is the one brand, the only brand, that is burned into the skin of its enthusiasts, the famous Bar & Shield tattoo second in the world only to "Mom." (Somehow, an advertisement in a magazine pales by comparison.)

Those of us who love the brand can only aspire to be Keepers of the Flame. We cannot create it, we can only tend it. The brand really belongs to the riders. The flame burns in their souls. In-2003, upwards of 500,000 of them will ride to Milwaukee to be part of the 100th anniversary pilgrimage. Similar celebrations

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will happen on five continents. The riders will heed the call from points all over the great wide world. Just to be a part of it. Just to feel the earth rumble.

Harley-Davidson may build it, but it's the riders' motorcycle. Their brand. Their way of life.

That's why when Willie G. Davidson and his styling team work on the next new bike design, they are just as likely to do it at a roadside rest stop surrounded by bikers as they are in the gleaming confines of the new Willie G. Davidson Product Development Center. When they're done, they will have created the newest incarnation of a legend. Just the sight of a Harley-Davidson pushes buttons deep inside the faithful. And the sound of it can make them downright misty-eyed.

Ads? Who needs ads?

A Harley-Davidson motorcycle is the perfect advertisement. It grabs the eyeballs and pounds the eardrums and pushes a wake of attitude in front of it. A Harley has presence. It is impossible to ignore. The easy, loping potato-potato-potato of the V-Twin sets up some kind of harmonic between your pulse and red blood cells. The machine seems to know it has a soul, and when it intertwines with yours, you are hopeless to resist it.

By comparison, the attempts of we mere mortals to capture the mystique of Harley-Davidson in two-dimensional advertising may seem small and insignificant.

But over the years, Harley-Davidson Motor Company has found those ads that hit the mark, those that Harley-Davidson enthusiasts pull out of the magazine and hang on their garage walls, those that hit with a resonant "thump" deep in the chest. Such ads can do as much to reinforce the Harley-Davidson mystique as the next bike week at Sturgis, or a Saturday morning at the dealership, or a wave from a brother in the other lane.

It reaffirms who you are. Or who you want to be.

The advertising is for those who get it, whether they own a Harley-Davidson motorcycle yet or not. Don't chase those who don't understand. Don't exclude those who want to understand. We're not trying to sell you a Harley-Davidson. We're trying to connect with the people who want to buy one "It's not a rational decision" (1985).

So we thought you'd enjoy seeing the 100-year journey of Harley-Davidson Motor Company captured in the advertising signposts along the way. The

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people who work at the Motor Company engineered the dramatic turnaround that happened at Harley-Davidson in the 1980s. It was their drive their spirit, their refusal to let this great name die. All the advertising was ever able to do was reflect the confidence they felt in the brand.

Historians can debate over when and how the brand caught on and became the legend that it is today. Moto-journalists will all have opinions about which Harley was the perfect combination of engineering and tradition to define (or redefine) its success. Advertising experts will argue over the potency of any given ad. But one thing is sure. As you page through the 100 years of Harley-Davidson advertising that follows, you will begin to experience that feeling unlike any other. Unless you're planning to buy your next Harley soon, you may want to take it a few pages at a time.

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APENDIX

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BIBLIOGRAPHY

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