In January 2010 this page published an article titled “Harley Is Doomed.” If you missed it, or you are just in the mood to kiss the past’s ass, you can find that article here.
In case you just got paroled by the Taliban, the good news is that Harley is still alive. The bad news is that Harley is still doomed. What has changed in the last four and a half years is that the motor company has largely betrayed its implicit contract with its workers; it has started to chase what the zombies who run the company call the “outreach” and “international” markets; and those zombie managers have cynically mistaken the key to Harley’s success over the last 30 years for just so much hollow rhetoric.
The success is a good place to start.
The Outlaw Machine
The secret to Harley-Davidson’s survival is summarized in the title of Brock Yates’ book Outlaw Machine: Harley-Davidson and the Search for the American Soul. Harley became an “American cultural icon” because its motorcycles were symbols of “defiance and liberation.” And the company had some help from its customers along the way.
The depression era motorcycle clubs transformed into much edgier fraternities after the Second World War. World War veterans who bought cheap, war surplus motorcycles collected themselves into clubs that emulated small combat units. The clubs were seen as gangs of highly mobile, marauding mercenaries until the mid-sixties when they began to acquire a romantic glow. Harley-Davidson has been living off that romantic glow for the last 50 years.
As hostile as clubs may be to one another, all of the motorcycle club world endorses the same world view and lives by the same set of rules. In the beginning, in the 50s, clubs insisted their members ride heavy motorcycles built by America or her allies. The first motorcycle outlaws might have flaunted their war souvenir swastikas but they refused to ride German bikes. Within a decade, club patch holders were required to ride American motorcycles with engine displacements of 1000 cubic centimeters or more. And, that meant if you were going to ride with a club you had to own a Harley.
The symbiosis between outlaw motorcycle clubs and Harley-Davidson intensified when the United States was flooded with cheap, light Japanese motorcycles and when Harley became a division of a bowling alley supplier called American Machine and Foundry. The Japanese bikes were fun and hip. The AMF Harleys were poorly made and notorious for marking their spots but Harleys were made by American workers who fed American children and the outlaws were stubbornly patriotic. Harley was the last American motorcycle and for decades it seemed worth saving if for no other reason than that.
The iconic outlaw image was further embellished in the 1960s and 70s by Hunter Thompson, by the proliferation of motorcycle clubs founded by Vietnam veterans and by dozens of biker movies culminating with Easy Rider. By the time AMF sold Harley in 1981 the outlaw biker had become a stock character.
The new Harley-Davidson commoditized that independent, fearless, dangerous, self-reliant, patriotic, anti-authoritarian outlaw image. The company started its own motorcycle club called the Harley Owners Group. Harley-Davidsons became symbols of both an earlier America and a waning style of masculinity. Prosperous professionals could redefine themselves by posing on a Harley. Poorer men could redefine themselves by putting on a Harley tee shirt.
The image of the motorcycle outlaw on his outlaw machine is more potent now than ever but it is exactly that image and that set of values that Harley wants to discard. The company seems to think that image is growing stale as the baby-boomers, who most enthusiastically embraced it 30 years ago, grow old. The outlaw image is certainly at odds with Obama era ideals about how the world should work and who Americans should be. But then how do you explain the Devils Ride or No Angel by Jay Dobyns. Apparently, the people who run Harley are the last to notice who actually watches Sons of Anarchy. The “core” customer base Harley wants to replace isn’t nearly as inclined to watch Kurt Sutter’s show as are young men and women.
The smart money is betting against Harley. A report released this week by an investment company called RBC Capital Markets adds some details about why Harley is doomed.
The people running the motor company think the outlaw appeal of their machines is limited to baby boomers. In other words they think mostly old white guys watch Sons of Anarchy. And, those old white guys aren’t getting any younger. In 1990 only ten percent of Harley’s customers were 50 or older. Today 38 percent of the company’s customers are at least 50. Twenty percent of them will be dead by 2030. Fifty-nine percent of Harleys customers are over 40 which is double the percentage in 1990.
Only 11 percent of Harley’s customers are in their early 30s. In 1990 a quarter of the people who bought Harleys were under 25 and 41 percent of Harley’s customers were under 30. Now about 19 percent are under 30. In 1990 most young men who wanted to do so could get blue collar jobs. Now not so much.
Hey Everybody, Let’s Commute
Anybody who has seen Harley’s ads for its new 500 cc and 750 cc “Street” bikes knows who the company wants for customers. The models who pose on those motorcycles are predominantly Asian, Black and female. They are anti-outlaws. They don’t have helmet hair. And they do not tour Monument Valley. They do not get their kicks on Route 66. They park downtown. They don’t have adventures. They commute. People who identify with those models are the people Harley wants to attract with its new electric motorcycle, grandly called “Project LiveWire.” The Street bikes are not outlaw machines. The LiveWire is not an outlaw machine.
What Harley is signaling with its new products and its new advertising is that the motor company now believes it will go broke if it continues to try to sell an independent, fearless, dangerous, self-reliant, patriotic, anti-authoritarian outlaw image. Maybe the company’s marketing geniuses are right. But there is a problem with abandoning what has worked up until now.
If Harley-Davidson doesn’t make uniquely American outlaw machines then what does it make? Does it just make motorcycles like Honda. Do you now “meet the nicest people on a Harley?” The motor company seems to be particularly keen on making commuter motorcycles. In order to do that successfully Harley will have to compete with other motorcycle manufacturers on price. The 2014 Street 500 has a suggested retail price of $6,800. Is that cheap enough?
One problem for Harley is that there are fewer Generation X Americans than boomers so the company’s potential market is shrinking. Another, bigger problem is that Americans are facing a declining standard of living. Harley is part of that problem because it has lowered its workers salaries and it has cut jobs. In the last seven years most American manufacturers have done the same thing.
Worst of all, the young, urban hipsters Harley is courting face declining job prospects and when they enter the job market many of them are already burdened by huge student loans. The University of Phoenix already owns the money the next generation might have used to buy a motorcycle.
So who cares if their commuter motorcycle is made by Harley? What makes Harley different from every other soulless multi-national? What is it exactly that Harley is selling now? And how is Harley’s next generation of customers going to pay for Harley’s next generation of machines? Harley doesn’t seem to know. And that’s why Harley is still doomed.