“As he struggled to save Harley-Davidson Inc. from financial ruin in the mid-1980s, Vaughn Beals got a bit of help from Uncle Sam in the form of temporary tariffs on imports of Japanese motorcycles,” writes The Wall Street Journal (Sept. 1-2, 2018). But the CEO’s success in preserving one of America’s strongest brands owed more to one of his insights: The real problem wasn’t the Japanese. It was Harley’s inefficient factories and slipshod quality.
As CEO for most of the 1980s, Beals, who passed away August 18th at age 90, declared war on defects, slashed production costs and aimed marketing at a colossal opportunity: Baby boomers, reaching middle age, were itching for a way to feel young and rebellious again, if only on weekends. “For years we tried to figure out why the Japanese were beating us so badly,” Beals said in 1988. “First we thought it was their culture. Then we thought it was automation. Then we thought it was dumping. Finally, we realized the problem was us, not them.”
Beals told workers to inspect every Harley motorcycle as it came off the line, rather only a sample, and sought suggestions from workers on improving quality. Meanwhile, Harley honchos toured Japanese plants and came back with ideas. Previously, Harley made parts in huge batches and stored them. Inventories were so bloated that workers sometimes couldn’t find a part by the time it was needed. Now the company began making parts only as needed, to match current motorcycle production.
As part of the effort to attract customers who didn’t fit the old Hell’s Angels image, Harley made the motorcycles more comfortable. It reduced vibration on touring bikes by mounting engines on rubber. One thing didn’t change: The rumbling sound from the tailpipe. “It makes your heart thump a bit,” said an Arizona dentist.
We feature Harley in our Global Company Profile in Chapter 7.
Classroom discussion questions:
- Describe Harley’s production process (see Ch. 7).
- What changes has Harley made over the past decades?