The essential American story

This is the story of a genuinely American company. Conceived in a 10’ by 12” wooden shed, sired by a 21-year-old kid with a penchant for speed and a talent for mechanics.

It was in 1901 when William S. (Bill) Harley penciled out a drawing for a small engine intended to be mounted onto a bicycle frame. He showed his drawing to school chums Arthur and Walter Davidson. Together these men built the first American motorcycle. Two years later they sold their first to another school chum. The Harley-Davidson Motor Company was open for business, and Bill shepherded the company from upstart, through war, into legend.

In 1943, at the age of 66, the kid with the dream died. Bill Harley's concept had become a great success, built a great company, and made the American motorcycle king. It would reign for several more years, but the beginning of the end came in 1965. With all of the original founders now dead, the Harley-Davidson Motor Company, privately held for over 60 years, became a publicly traded company.

Many would consider this to be the pinnacle of success, but historically similar stories have not always had dream-like ends, and Harley-Davidson would be no exception. In 1969, only a few years after going public, Harley-Davidson announced a “merger” with the American Machine and Foundry Company (AMF). The die was cast.

The next ten or so years would prove nearly fatal for Harley-Davidson. Under AMF management, the original American motorcycle company sacrificed quality for expediency, innovation for mass marketing, and reputation for short term profit. Investors made big bucks for a time, but as both sales and reputation plummeted, the profit takers cut and ran. Shares were sold in volume and the company’s value sank nearly as low as employee morale. The company product, once the envy of every hairy-legged country boy, became all but reviled in the American marketplace. As Harley slid to near oblivion, innovative new Japanese bikes took over the bulk of the market share. The imports bikes would never look back.

As anyone even the least bit interested knows, the Harley story did not end there. They were down, but old-time Harley management knew they were not out. In 1981, a group of 13 employees purchased the company from AMF in a leveraged buy-out, and began an undertaking that has surprised even die hard skeptics like me.

The next five or so years of Harley history saw renewed focus on quality and technology. Outsourced, low bid parts purchasing and mass marketing policies were replaced by improved, in-house manufacturing techniques, strict quality control, and targeted marketing. Many of Harley’s new processes were learned from the Japanese, their greatest competitors. As product quality improved, sales and employee morale followed. Today the Harley-Davidson is again the Great American Motorcycle.

The dichotomy that is Harley-Davidson is well illustrated by comparing the 75th Anniversary bikes, produced in 1978, against the fine fine craftsmanship and high quality of 2003’s 100th anniversary bikes. It has taken a long time for Harley to rise from the ashes, but the company has restored not only their reputation, but some small faith in American innovation. We must hope that Harley-Davidson sets an example, and that this is not too little, too late.

Though a tale of great rebound, this story begs a question. Where has American innovation gone? Harley-Davidson did not hold an exclusive to the profits over quality story. Looking around it seems that as America becomes more a culture of consumption and less a culture of innovation, all the great success stories are crumbling. Look at big names like General Motors and General Electric, or products such as Master padlocks, Black & Decker power tools and Hoover vacuums.

American companies are being sold off to foreign interests or taken over by managers with a decidedly low-tech mass-market mentality. The philosophy seems to be "Make them faster and cheaper, then advertise the hell out of them so everyone will want one." This is a dead end philosophy that will eventually bankrupt any business... if it doesn't bankrupt this country first. Harley-Davidson's rebound may represent the rare exception to the rule, but only because a handful of employees were more interested in quality than short-term profit.

More products manufactured overseas are imported and sold in stores such as Wal-Mart and Home Depot, and more American factories are shuttered. Americans demand low prices, and quality goods no longer sell well because they are more expensive. American companies responded by cutting quality and out-sourcing production. This shored it up for a time, but not long. There are very few Made in America products left. The American automobile manufacturers seemed solid enough at first, but even those are threatened by this most recent recession. Cash for Clunkers sold more imports than Chevrolets, Chryslers and Fords.

Look to the boardrooms to understand this phenomenon. The heads of most major American manufacturing and technology companies are salesmen and bean counters, with no knowledge of, or interest in the quality or technological innovation required to make a product of quality. Instead they rely on the often-told-lie and slick, weasel-worded advertising to maximize profits, moving cheaper products in shorter time.

Discussing Microsoft and the technology sector in general, Badtux offers an interesting corollary to this over on his blog.

“…this is true of most big companies today in the United States. They're run by salesmen, cronies of the oligarchs who control half the wealth of the US, and salesmen are not by nature reflective souls and are chosen for loyalty, not for intelligence. They arrogantly believe it is not necessary to understand technical details of what they're selling in order to make proper judgments about its content and scope, all they have to do is sell, sell, sell and it all works out in the end. The problem is that since they don't understand the technology and worse yet have no desire to understand the technology, they're ill equipped to make critical decisions about product direction and feasibility. They fall prey to yes men, fads, and scams, and pour company resources into directions that are not productive.”

The roots of the tree of greed are beginning to grow large under the foundation of our country, and the cracks are showing. If it all falls down around our ears, I wonder where the bankers will run. You can't eat money.

[I have a friend with one of those AMF Harley's, which sits in my shop waiting for parts more frequently than it spends time between his legs. That was the reason for this piece, which has been sitting unfinished and idle in my drafts folder for a couple of months. The penguin's piece prodded my writer-blocked muse off the couch... Thanks Tux.]

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