Harley-Davidson: Can the quintessential American brand ride out Trump's tweet storms?
Go hunting for the Harley-Davidson origin story, you'll end up in the black smoke and workshop tinkering of the early 1900s. But the true jumpoff point for understanding the modern American motorcycle manufacturer is May 6, 1987 -- the day the Gipper blessed the brand.
Wearing a light-colored suit as he bounced up a platform at the company's plant in York, Pennsylvania, President Ronald Reagan stood before a factory floor jammed with assembly-line workers, the Los Angeles Times reported at the time. He was there to deliver a limited-government victory speech.
Five years earlier, Harley-Davidson was in a corporate tailspin due to intense competition from Japanese manufacturers dominating the U.S. market. In 1983, the Reagan administration imposed five years of limited tariffs on Japanese bikes. The assist helped Harley-Davidson's management retool the company. Now in 1987, they were ready to again take on the Japanese competition alone. The company was the only American motorcycle brand left standing.
"American workers don't need to hide from anyone," Reagan told the crowd, the Times reported. But the president, a free trade hawk, walked an interesting line in his speech. While praising the "breathing room" the tariffs allowed the company to get back on its feet, he argued against further protections.
"Our trade laws should work to foster growth and trade, not shut it off," Reagan said. "And that is what is at the heart of our fair trade policy: opening foreign markets, not closing ours. The idea of going to mandatory retaliation and shutting down on presidential discretion in enforcing our trade laws is moving toward a policy that invites, even encourages, trade wars."
The workers -- many still fearing what international competition would do to their jobs later -- were silent, according to the Times.
Now the famous American brand is again the target of presidential focus -- this time with a much different intensity. On Tuesday, President Donald Trump blasted the company following Harley-Davidson's decision to shift some production overseas due to the administration's aggressive trade policy. As The Washington Post has reported, Trump's steel and aluminum tariffs will cost Harley-Davidson $20 million, the company says. Retaliatory tariffs could cost an additional $45 million.
A Harley-Davidson should never be built in another country-never! Their employees and customers are already very angry at them. If they move, watch, it will be the beginning of the end - they surrendered, they quit! The Aura will be gone and they will be taxed like never before!— Donald J. Trump (@realDonaldTrump) June 26, 2018
In a series of tweets, the president lashed out at the company, saying Harley-Davidson -- a brand he has embraced in the past -- was only using the tariffs as an excuse to take away American jobs. The bikes, Trump stated, should "never be built in another country-never!"
"If they move, watch, it will be the beginning of the end -- they surrendered, they quit!" Trump wrote. "The Aura will be gone and they will be taxed like never before!"
Trump's ire at a quintessentially American brand is noteworthy. So much of the Harley-Davidson story -- a company started by the sons of immigrants in what we now call the Rust Belt -- is wrapped up in the same concerns dominating the White House, from trade wars and broad-stroke nationalism to celebrity and image-maintenance.
In the late 1800s, motorcycles were a gag.
As Darwin Holmstrom writes in his book "Harley-Davidson: The Complete History," gasoline-powered bicycles were unwieldy at century's start due to the size of the engines -- more a "carnival freak" than actual mode of transportation, according to Holmstrom. In 1895, an entrepreneur named Edward Joel Pennington showed off his curious "Motor Cycle" on a street in Milwaukee. Neighbors rushed to watch. Two 14-year-olds who lived nearby may have been in the crowd, Holmstrom speculates: William S. Harley and Arthur Davidson.
By the early 1900s, lighter-weight engines made motorcycles a more feasible product. Harley and Davidson worked on designs and built bikes, eventually selling their first models in 1903. According to the company, the two tinkered on their early designs in a 10 by 15-foot wooden shed behind the Davidson house. "Harley-Davidson Motor Company" was scrawled on the workshop's door.
Demand was enough in 1906 for the friends to build a small factory in their Milwaukee neighborhood, Holmstrom writes. A year later, they officially incorporated the company bearing their names.
Harley-Davidson showed early on that the company could easily slip from one identity to another.
As Yahoo reported in March, the motorcycles were originally designed as a primary mode of transportation for riders. Starting in 1908, however, Henry Ford's affordable Model T began dominating that market. Harley-Davidson pivoted, pitching their products not as your ride to work or for the daily errands but a leisure craft. According to Yahoo, the company worked to start riding clubs for owners. In the cash-heavy 1920s, motorcycles were another activity of the rich.
A second market helped Harley-Davidson outlive the Depression: the military. The company's cycles had been used early on by various armies. According to Yahoo, one reason Harley-Davidson survived the bottomed-out 1930s were military shipments to Japan. When World War II ripped apart the world, the company was busy producing bikes for the Allies.
The postwar years were when Harley-Davidson stepped fully into the identity that's now welded completely to the brand: the outlaw.
Motorcycle clubs -- favored by World War II veterans eager for a jolt of adrenaline after combat -- started up in the 1950s. Thanks to screen time in movies like 1953's "The Wild One" and 1969's "Easy Rider," as well as reports of the leather-clad mayhem tied to groups like the Hell's Angels, the myth of the Harley-mounted, anti-social misfit stuck in the social consciousness. Whether feared or revered, Harley-Davidson riders -- bulling down the street with the V-twin engine's unmistakable roar -- became American fixtures.
And yet the outlaw image would also set Harley-Davidson on a path to economic disaster. Honda's own motorcycles were portrayed in ads as a clean, nice alternative to the Harley-Davidson's social menace. In 1959, the Japanese manufacturer only sold 1,700 bikes in the U.S. By 1970, after Harley-Davidson had become the highway's bad boy, Honda was selling 500,000.
Other overseas competitors also began piling into the stateside market. Harley-Davidson's then-president John Davidson, a descendant of one of the company's founders, would eventually accuse companies like Honda of "dumping" products in the U.S.
"The Japanese established production schedules that were much higher than Mid-Seventies demand for their products," Davidson once explained. "They chose the U.S. to unload their excess production."
The company's own mismanagement did not help Harley-Davidson's business at the time.
"'We were being wiped out by the Japanese because they were better managers," executive Vaughn Beals explained to Fortune in 1989. "It wasn't robotics, or culture, or morning calisthenics and company songs -- it was professional managers who understood their business and paid attention to detail."
But the company also executed another skillful identity change in the 1970s that would eventually help refurbish its image in bold red, white and blue strokes.
Feeding off the patriotic energy soaking the country for the Bicentennial, the company released a "Liberty Edition" bike in 1976 featuring patriotic coloring, the Statue of Liberty, and "Born Free" inscribed on the frame, Yahoo reported.
The new line suggested the idea that the brand's toughness and edginess were not anti-social values but inherent to American identity. That association had fully stuck by the time Reagan cheered the company's resurgence in 1987 after the tariffs were dismantled.
"As you've shown again, America is someplace special," Reagan told the crowd of workers. "We're on the road to unprecedented prosperity in this country -- and we'll get there on a Harley!"
Harley-Davidson's recent years have been difficult, leaving the company vulnerable to the global chaos Trump's trade policy may spark. As BikeBandit.com has reported, the motorcycle riders are getting grayer: in 2016, the median age for American motorcyclists is 47. In 1990, it was 32. In January, the company's postings showed worldwide retail had fallen 6.7 percent in 2016, with U.S. sales dropping 8.5 percent.
Yet the brand's iconography has been resilient to bad sales before. It's one of the few American companies hooked so firmly to the national identity.