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VANCOUVER — It is a gorgeous West Coast day and for the next 48 hours we have six very different motorcycles to ride — starting with this Fat Boy I am astride on the famed Sea-to-Sky Highway to Whistler, B.C.
Rolling into and out of sweeping corners, taking in the "fjords" of British Columbia right there beside the highway, twisting the throttle to unleash all the Fat Boy's torque — all these together blend to create magic on a sunny September day.
But truthfully, what is most on my mind amidst the thundering "chug-chug-chug-chug" of the 1,600-cc Twin Cam 98 engine between my legs, is how 22 years ago I missed a chance to get really rich by riding the Harley-Davidson wave.
You see, a $100 (U.S.) investment in Harley-Davidson Inc. at the end of 1986 was worth $15,687 at the end of 2007. That means a $10,000 investment grew to be worth $1.569-million in 21 years.
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Of course, in 1986 few would have believed Harley-Davidson would be around in 2008 to celebrate the company's 105th birthday last August. And even fewer would have predicted that Harley would be bringing in revenue of $1.57-billion in the most recent quarter (though that was down from $1.62-billion a year ago, and profit fell 23 per cent).
But Don James was a true believer. He's one of the owners of Deeley Harley-Davidson Canada, which holds the sole distribution rights for Hogs in Canada. James parleyed an initial $3,000 investment in 1973 into a multimillion-dollar company with 74 Canadian dealers today.
James, Harley's Canadian president, bought those rights with the late Trev Deeley and together they started down a very successful road together. Another partner, Malcolm Hunter, joined in 1979. Today, the Deeley family retains a small ownership stake in the company, but it's James and Hunter who control things.
James is with us on the ride to Whistler. Fit and in his 60s, James clearly knows how to play at business — and just plain play, period. When we stop for coffee, the former ski bum from Edmonton — who joined the Deeley company long before Harley came into the picture, back in 1967 when Deeley was distributing Yamaha products, including the skis James was hired to sell — talks mostly about selling Hogs one at a time through the 74 dealers.
They are the genius of the company, the link with customers who typically not only buy the bikes, but get tattooed with the Harley name.
"When we started, it was tough," says James, who still is an avid skier and is also the longest-serving member on the Harley-Davidson Inc. board of directors (since 1991). "I used to tell our retailers, 'Just take the bikes. You don't have to pay me unless you sell them.' And that wasn't easy."
Moving the iron today is nothing like it was back then, though. Harley-Davidson is on track to sell more than 300,000 bikes this year worldwide.
Sales in Canada are up 12 per cent so far this year and in Canada Harley owns 40 per cent of the over-650 cc market where it competes against bikes from all the major players, from Honda to BMW, from Suzuki to Yamaha.
The truth is, Harley at 105 is a smashingly successful story. The oldest and most successful American motorcycle company would not have survived, however, if not for savvy brand marketing, a rejuvenated line of motorcycles, protective tariffs put in place with the help of the U.S. government, smart, visionary corporate leadership and the motoring tastes of baby boomers.
All these factors fell into place to create a company that really is more than just a manufacturer. All very nice, but I can't help but come back to share value and my own missed opportunity.
I knew about Harley back in 1986 and laughed it off as disaster. Yet since '86, Harley's stock has grown and split five times following Harley's second public offering in 1986.
James and Deeley Canada bought plenty. That explains the Whistler condo, the hobby farm on Vancouver Island where he and his wife raise Arabian horses, and the helicopter he flies as a commuter from the Island to Deeley's offices in Vancouver's Lower Mainland.
James has come a long way, but not as far as Harley-Davidson itself. More than a century ago, 21-year-old William S. Harley and 20-year-old Arthur Davidson made available to the public the first production Harley-Davidson motorcycle in 1903.
Today, both Harley bikes and its licensed products are popular with buyers and their investment advisers, at least in part because this motorcycle company is a master of marketing its brand in the many ways that fatten the bottom line.
Want officially licensed Harley toilet paper? It's available. A Harley Barbie? Absolutely. Sure, Harley sells gorgeous, iconic bikes, but Harley also sells a lifestyle — one complete with a warehouse of clothing stamped with the Harley-Davidson logo.
In Canada, James argues that the secret has been marketing that focuses on supporting dealers who in turn connect directly and regularly with customers. It's not a new idea.
Back in 1975, James and Deeley went on a coast-to-coast motorcycle expedition to introduce themselves to their new Canadian Harley dealers. Naturally, wives Joyce and Ruth were along for the ride.
Fast forward to August of this year and James and his wife made the trek to Harley headquarters in Milwaukee, Wis., for the company's 105th birthday celebration. This time, Ruth rode her own Hog.
I'm on one, too, today and it's the Fat Boy motorcycle that really shot to fame after being the Terminator's choice of escape vehicle with Guns N' Roses blasting in the background. Get it? Smart product placement in big-time Hollywood movies has also helped create the iconic status Harley enjoys.
It wasn't always that way, though. By the late 1960s, an onslaught of affordable, reliable and interesting Japanese bikes, not to mention Harley's own horrendous quality, nearly destroyed the company.
In fact, by 1969 Harley was in trouble. Cash was low and annual sales had dropped to just 15,000 motorcycles. Harley-Davidson's reputation for durability and quality, built through decades of racing triumphs, had dipped to an all-time low, as well.
In stepped AMF, a diversified conglomerate, to buy Harley-Davidson. AMF had no real success at turning the business around, so in 1981 a group of 13 managers cobbled together $80-million to buy back the company. There were pay cuts and layoffs, but the new managers were committed — so much so they went out riding with customers and formed the Harley Owners' Group (HOG).
The U.S. government also got on board, instituting a tariff on the sale of all imported Japanese motorcycles of 700 cc or larger to the United States for five years until 1988. This gave Harley some breathing room.
Still, the lowest of the lows came on Jan. 2, 1986: Citicorp called in its loan and Harley-Davidson prepared for bankruptcy. At the last moment, a white night, Heller Financial Inc., took over the loan and worked with management to renegotiate its terms.
Next came an initial public offering of stock, which brought in more cash for business operations and product development. By then, baby boomers had found Harley and the brand hasn't looked back since.
James today paints a rosy picture, but there are plenty of storm clouds on the horizon. The United States is in a full-blown recession and the many buyers who used cheap home loans to buy Harleys and other luxurious toys now face foreclosure.
The competition for those buyers has never been tougher, too, as we learned in a recent test of five other motorcycles.
Then there is the environmental issue. Harleys are big, gas-guzzling motorcycles that seem a little out of tenor with the times. And, of course, the baby boomers who made Harley a big success are now starting to slide into retirement. Some are even trading in their big bikes for more manageable scooters.
Indeed, I'm one of those boomers, though a younger one nowhere near retirement and not interested in owning a scooter at all.
But I will say that after three hours sitting low in the saddle of a Fat Boy, with my knees higher than my hips and my tailbone planted on some fairly thin padding, it seems to me this bike is better suited to a nearly indestructible Terminator robot — at least for rides of more than an hour.
No wonder James avoided the low-riding Softail-style Fat Boy for a trip up the Sea-to-Sky. He chose a far more comfortable Touring Harley, the Electra Glide Classic model, if I'm not mistaken.
Today, like he did decades ago when the Harley brand was being reinvented, James made the right choice. I didn't and it's James who owns his own helicopter and horse farm, not me.
