Next time you’re at a cocktail party, and the subject, and you know it will, comes up as to why as to why AMF sold Harley-Davidson in 1981, you the informed will impress the multitudes in attendance with this short history from the book “Well Made In America,” that I spoke of last time.
First off, AMF saved Harley-Davidson. Bangor- Punta was trying to buy Harley in 1969 when AMF stepped in with a better and more palatable offer to counter BP’s.
Bangor –Punta, as it had done many times in the past, would have chopped up Harley and sold the pieces to other manufacturers. No more Harley-Davidson as of 1969.
AMF wanted to expand its line of leisure products, so it bought the struggling motorcycle company. AMF poured in millions of dollars during the next ten years or so in new manufacturing equipment, moved the assembly line to York, Pennsylvania, and improved the salaried workers lot in pay and benefits.
Fast forward to 1981. AMF had grown tired of trying to build motorcycles as fast as they built bowling balls. The company was pumping out defective AMF-Harley-Davidson’s at such a rate that it wasn’t uncommon to have fifty bikes sitting at the end of York’s assembly line in various stages of not working!
So in 1981 13 Harley-Davidson executives (including Willie G Davidson) put up money, a lot of it their own including pensions, to purchase it in a leveraged buyout (LBO).
These were the facts that kept these guys up at night according to “Well Made in America”:
You’re company in 1981 is losing sizable chunks of market share to much bigger Japanese competitors.
The economy is beginning to slide, and many blue collar workers- HD’s core customers in 1981-are facing layoffs.
Sky-high interest rates in 1981 are also making it hard for people to buy motorcycles.
The AMF manufacturing systems, by 1981 are already outdated and product quality are in-adequate to meet world class competition.
Harley’s product line is seriously out of date.
The product has been stereotyped for years with a rough, tough image.
Japanese competitors are unloading thousands of products on American shores that compete directly with HD’s.
Wow, it didn’t seem like such a good deal. To most investors, it looked like another case of an old-line U.S. manufacturer being hammered into oblivion by Japanese competitors whose basic strategy was to invade American markets with a high-quality products at substantially lower prices.
Despite all these negatives, consider what happened when the 13 Harley-Davidson managers still went ahead and bought the company from AMF in an $81.5 million LBO:
The market for heavyweight motorcycles declined by 20% within a year.
Harley lost more market share as the Japanese ramped up its invasion with Harley look-alikes (clones,) at discounted prices.
For the first time in almost fifty years, Harley lost money.
Harley had to lay off more than 40 percent of its workforce.
Saddled with a staggering LBO debt, Harley-Davidson Motor Company had to borrow even more money just to service its debt and keep going.
Harley’s major lender, Citicorp, seriously considered withdrawing its support and taking steps to liquidate the company for whatever the assets would bring.
But why did these astute businessman buy a company that was being blown away by competition from the Evil Empire? It was both emotional and rational according to “Well Made.”
Harley did have a few things going for it. Like now, the company had an extraordinarily loyal customer base, a well-established dealer network, a high-value product, and a strong, in-place management team.
These factors may or may not have been enough to explain the buyout. Other factors may be the Harley-Davidson “mystique.” Or as one Harley rider, an investment banker calls it “the value of intangibles.”
Harley-Davidson, from its start in 1903, has been unique, one of the few consumer products (like Corvette,) to evolve into an American institution. To Harley owners, the bikes have heart and a soul. Harley’s have raw power and a “voice,” a potato-potato thump that the company once tried to patent.
Harley riders run the gamut from blue collar types to doctors, lawyers, entertainers you name it. Actor Mickey Rourke has written, “It’s a personal thing that can’t be described. It’s part of you.”
It’s the number one corporate logo tattoo in the world. Once, in deepest darkest Africa, several outlines of corporate brands were shown to people whose transportation was still their feet. Of the hundred or so images that were shown to the village elders, Chevrolet’s bowtie, the Playboy rabbit head,and Harley’s bar and shield were in the top ten most recognized.
These are some of the reasons the executives chose to buy the company. But one of the original team got cold feet at the last minute and backed out, wanting to save his pension and other assets. I think he jumped off a building or something in the nineties.
Last but not least, Harley had a trump card. The Evolution (Evo) engine came out just in time (1983) to save the company as the Knucklehead engine did after the Depression in 1936. Oil-tight and reliable, it’s still installed in the Sportster line to this day.
Some of you know my old friend Brad Savage. He’s famous for many reasons one of which being that he rode a 1977 Harley-Davidson XLCR Café’ Racer back in the Disco era. You might remember this machine; it was black, black, and black. It had short handlebars kind of like a British bike. “Siamese” exhaust, and had cool written all over it.
But it didn’t sell.
The bike was only produced for two years and is highly collectable today, if you can find one. The designer, Willie G, could not understand the lack of interest in the bike by Harley folk. But, it was too non-Harley for the Orange and Black diehards. It was too Harley for the “bar hopper” or true “café racer” crowd. It was about twenty years too early, today it might work. HD riders today are more forgiving about design changes, and we already have the V-Rod, which is a visual, as well as mechanical change in direction for the company.
Anyway, my friend (Brad Savage) worked in bars on formally cool (in the seventies) upper Greenville Avenue. In those days there was a dance club on every corner. I‘m talking clubs built for that purpose, not like now where you might have a small corner or they clear out tables for a make-shift dance floor.
The Disco era was just hitting Dallas, which at the time was always five years behind the times. He worked at a place called “Packard’s which was in Old Town shopping center. He had once worked at Annie’s Santa Fe, Andrew’s and other haunts of this writer’s early adulthood.
It was during his Packard’s day’s bartending that he rode his Café Racer. He was a popular guy with the chicks (now grandmothers, hard to believe,) since he could hand out free drinks to a select few who lived in the Village nearby (not too far to go after the club closed,) and he had that strange Harley that was parked near the front door. It didn’t hurt that his name was, well, Brad either. If his name was Woodrow it wouldn’t have had the same effect, except everyone might call him “Wood.” Not too bad a nickname during the morally loose “Disco Era.”
Some of the women who packed Packard’s, which like the Pet Shop Boys tune says (in clubs,never actually look at each other,) would ask the bouncer who the black bike belongs to. The ladies would put two and two together at this point. The guy has a cool, unusual Harley, doesn’t look like a typical 1970’s Harley rider (forgive me,) and his name is Brad. Better to tell their girlfriends the next day at work after going home with a guy on a Tuesday night (it was the Disco era after all,) that his name was Brad, and not Millard.
Yes, Brad had an apartment in The Village, which to this day is amazingly still a pretty good place to live. Just don’t get lost on the north side of Northwest Highway after dark. The XLCR was his only mode of transport, and he rode it daily. He was and is a trust fund kid from an old northeastern family, but he was disowned in the seventies by his family for going into the Army, serving in Vietnam, getting a few medals and shrapnel along the way, and marrying a Playboy bunny from the L.A. club, and living in the hills above the Sunset Strip hanging out with the early, early Doobie Brothers.
All this instead of going to college.
Everything is patched up nowadays but back then he was strapped for cash. Luckily, he knew all about booze and making drinks from his starter ex-wife the bunny, and he could sling drinks like Tom Cruise in that movie I forgot what the name is. Brad parked his machine in the living room of his ground floor apartment. This was about 1978 when I was sweating in an ill fitting bullet-proof vest in East Dallas.
I remember that most of the time, girls would gladly pick him up for a date. This was amazing to me in those days, now not so weird. Sometimes he would pick them up on his black bike, sometimes forgetting to say that he was picking them up on two wheels. To some ladies, he was their ultimate bad-boy hero , others would ask “How do you turn on the AC?” They would promptly be off the list!
These were the waning days of Hot Pants. Think of early Southwest Airlines. My friend waxes poetically about blasting up Greenville Avenue with the girl in the orange hot pants screaming to go faster! Yes, the bike was fast, and with the new-for-Harley dual front disk brakes, it could stop on a dime.
Brad was not really into the big bad Harley crowd of the time. Few big bike riders were named Brad in those days. They would normally look down their noses at the strange black bike. But, just sometimes, these guys would look at Brad’s newest soon to be ex-girlfriend, and tell themselves; maybe this dude HAS something there. It also helped because some people thought Brad looked like the guy from the TV show, “BJ and the Bear.”
And, he would promise them free drinks at Packard’s.
Unfortunately Brad sold the XLCR later on. He quit Packard’s, became a sales rep, moved to an early Fox and Jacobs house in an early Plano, had his second marriage come and go, got married for a third time to a much younger model, and got divorced again. So there you go.
A few years ago at a Starbucks on Greenville (no not that Starbuck’s, the one across the street!) he told me he had a line on another Café Racer. It was going for big bucks, but his trust fund had kicked in finally.
There is a book called “Ed Roth, His Life and Times, Cars, and Art.” It was written by Pat Ganahl in 2003. If you’ve ever seen the “Rat Fink” character you will know who I’m talking about. If you don’t, you’re too young! I met the man (Ed) at a car show once. He moved to Utah when he discovered that California dreaming wasn’t what it once was. I volunteered that I went looking for the house the Beach Boys grew up in at Hawthorne, California. I found out the house was gone and paved over by the 405! My personal vision of the imaginary California Dreaming legend was somewhat dimmed. He tried to act like he was impressed, and I came away thinking he was a really nice guy. Ed “Big Daddy” Roth died on April 4, 2001.
Willie Hank
Panther Creek Historian
Youths gone astray 1955
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