Posted on 12/09/2008 12:01:23 PM PST by longtermmemmory
Harley-Davidson Visionary
Vaughn Beals Was One Of 13 Harley-Davidson Execs Who Rolled The Dice On Buying The Company From AMF—And Built H-D Into A Brand Known Around The World.
It may be a textbook case of turning around a company that’s routinely taught in business schools these days, but when Vaughn Beals and 12 other Harley execs bought the then-troubled manufacturer from AMF with hopes of a turnaround, it was anything but a sure thing.
On the risk involved in buying Harley- Davidson in a leveraged buyout:
You know that if you bet your net worth at an age when you’re approaching retirement, that’s scary. And we fully understood the Japanese threat. We had visited the Japanese manufacturers, and we saw what they did and what they didn’t do, which sometimes is more surprising. It was a tremendous challenge. The good news is that it worked.
On the constraints imposed on day-today operations in the early years:
We ran the company for five years—five years—with zero cash. When we collected for a motorcycle—when a motorcycle was sold to a dealer—we paid the bank. When we needed money, we went to the bank. The management group and the employees understood how this worked, and made it work, and the results are what they are today. For the company to get from 23 percent to 46 percent marketshare in a five-year period against new Japanese heavyweight motorcycles, that says that what we did worked, and we put those guys in the minority.
That’s when I retired with my fingers crossed—and legs crossed. That was well rewarded because the market share is still there today, in the mid- to high-40s.
This is only avalable as a PDF with a bunch of other unrelated motorcycle icons.
This is appropriate to consider as we ponder socializing the auto industry.
Remember the horrible reputation of the 1970's Harley motorcycles. Today they are amazing works of art and very reliable. These are lessons lost on Detroit and their unions.
I seem to recall Harley got some legislation protecting them from imported competition, which ain’t a great idea btw.
HD is in almost the same mess as is Detroit. Subprime loans to riders, massive over capacity, overpriced (and a toy, not even needed), sales going over a cliff, etc.
Thanks for posting this!
An import tarriff that still exists on large bikes also helped Harley survive.
Not really apples to apples here.
A. Harley was then, is now, and will always be, a cult of sorts.
...One could hardly say that about GM, Ford or, Chrysler.
B. Reagan implemented a tarrif on all imported motorcycles over 700cc to protect Harley’s market.
...Congress will not offer any protection to Detroit. Nor could they offer any type of protection that would help in this situation.
C. There were good people, extremely experienced, who were (and still are) passionate about motorcycles, in general, and Harley’s in particular, working at Harley before, during, and after their suit, and the buyout.
...Detroit only has suits interested in personal ego and gain, the real passion left on a bus years ago.
Check those "promo" financing terms carefully. If the monthly payment is less than the purchase price divided by the number of months, something is fishy. On closer inspection at the Yamaha showroom, I found the incredible monthly payment "OAC" was for a 24 month period. After that the loan "adjusts". The same arrangements that screwed the housing market.
When I went to my bank for a loan on a brand new 2007 Piaggio BV500, the dorks at the bank labeled it "used" and gave me a terrible rate of 11.72%. The bike had 2 miles on it. Suffice to say, they won't be getting more loan business from me. Nor will they make much as I'll be paying the loan off within 90 days.
A tariff on bikes over 600 cc, leading to the development of the 600 class crotch rockets. Unintended results aren’t always bad.
Gotta love those donor cycles
Do us all a favor by naming the bank and city.
Ping
Wow, we made it to 10 posts befroe some idiot pipes in about ‘donor cycles’.
Great input, thanks.
And first quality, water-cooled, fuel-injected, high compression 400cc road bikes as well. My wife's BV500 (460cc) is a "maxi scooter", yet nicely appointed in the fashion of a touring motorcycle. Not to mention the 250cc Ninja sport bike. There are also "cruiser" style bikes in the under 600 cc class to grab the market that isn't ready for a 2nd mortgage to own a Harley.
“A tariff on bikes over 600 cc, leading to the development of the 600 class crotch rockets. Unintended results aren’t always bad.”
And Honda and Kawasaki started making large motorcycles in the USA. Also not a bad thing.
So Im an idiot now
Wells Fargo, Pocatello. Yellowstone & Alameda branch. BTW, their "online" application suckered us into expecting a lower rate. I was sitting in the bank office with the dealer delivering the bike from Idaho Falls as the final paperwork was being printed. I was down to 10 minutes to receive the check for the agreed price before the bank office closed and the bike arrived.
I seem to recall Harley got some legislation protecting them from imported competition, which ain’t a great idea btw.Really? Who lost? Can you still buy a Honda, Yamaha.
I guess you don't mind when foreign manufacturers dump their products to eliminate the American competition from the market...that's a good idea I suppose.
Thank you. Wells Fargo is not on my list of acceptable corporations to do business with. Hasn’t been for years.
Anything from the Yamaha Star line is superior to any of the junk HD produce.
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