Harley Davidson facing the competition historically.

The 1990s: Facing the Competition Head-On The early 1990s brought the company some minor setbacks. Though sales in 1991 rose to $939.8 million, profits fell slightly, marking the first decrease since the 1986 refloatation. In addition, the company's motorcycle division experienced a work stoppage at the York plant, and sales and profits at the Holiday Rambler Corporation continued downwards. Harley-Davidson instituted new labor and fiscal policies in the late 1990s under the leadership of Jeff Bleustein, policies that revitalized production and sales. The company's stock has grown steadily and attracted many new investors while keeping the old. Kiplinger's Personal Finance Magazine reporters Steven T. Goldberg and Nancy Stover declared in May 1998 that "Harley stock is now selling at 23 times this year's estimated earnings. Earnings are expected to grow 15 percent in 1998 and an annualized 18 percent over five years," and named Harley-Davidson, Inc. to their list of 12 stocks "that keep growing & growing & growing." Envisioning Harley-Davidson as a wise stock pick in spite of the motorcycle's rebel image is not misinformed: the company announced in April 1998 that they had realized record sales and earnings for the first quarter of that year. While the company had 32 consecutive quarters of growth, it had to absorb some of the costs of a new Kansas City plant, seen mostly in the decline of the gross margin from 32.4 percent to 32.1 versus the previous year. While company officials warned that further costs would have to be absorbed from plant openings and refurbishings, "the introduction of two new Europe specific Harley-Davidson motorcycle models, a new European marketing campaign, a full year of Buell sales, and additional dealers will result in increased sales for 1998," according to an article on the corporate web site. There would be no profit without the product, and Harley-Davidson management has explored and incorporated new labor-friendly production techniques that reflect respect for its manufacturers. As the company borrowed management ideas from the Honda plant in Maryland, so also did it take a close look at GM's Saturn plant, with its great success through worker empowerment. Harley-Davidson opened a new plant in Kansas City in January 1998, at a cost of some $85 million, but that was only the tip of the iceberg. For two years, the company interviewed some 2,000 applicants for 300 positions. They were put through hours of rigorous personality and aptitude training. Those few who earned a place with Harley-Davidson enjoyed collective decision-making and a strong voice in the production process. Dealernews reported in March 1998 that Fortune magazine had named Harley-Davidson as one of the top 100 places to work in the country. Harley-Davidson wisely selected merchandising that reflected the changing profile of the motorcycle-worshipping customer. "It's one thing to have people buy your products. It's another for them to tattoo your name on their bodies," the web site crows. Harley-Davidson has gone far beyond tattoos in hip merchandising. The Jacksonville Business Journal interviewed a third-generation dealership owner who planned to dedicate almost a fourth of his floor space to merchandise including, "Anything from blue jeans and T-shirts to leather jackets and boots. It's not just leather anymore," said Chris Adamec. He pointed to a new and wealthy clientele, the so-called "Rolex" riders, as a new source of demand. VH1, the MTV for yuppies, debuted a commercial in June 1998 raffling off four vintage-style Harleys and leather jackets in their "Chrome on the Range" contest. Smiling mothers holding babies posed in front of the bikes (and the American flag) at the close of the commercial suggested a new generation of Harley riders yet to grasp their first Gold Card. With the approach of the millennium, Harley-Davidson roared into cyberspace. Besides a Lollapalooza of a party, Harley-Davidson's 95th anniversary was celebrated with a virtual Harley tour online. Visitors to Harley-Davidson's web site were invited to partake of video and audio journals of actual motorcycle mamas and daddies from Washington to Pennsylvania. Harley-Davidson has proved that heavyweight motorcycles are not just about nostalgia, whether for the early days of motorcycles or the freewheeling 1960s; the classic appeal of the Harley-Davidson motorcycle would certainly continue into the next century, and the company was poised to support continued growth. Principal Subsidiaries: Holiday Rambler Corporation; Utilmaster Corporation; B&B Molders; Creative Dimensions; Nappanee Wood Products. Source: International Directory of Company Histories, Vol. 25. St. James Press, 1999.