After a year, the Harley-Davidson motorcycle entered its very first motorcycle race at Milwaukee.

The first years came in so quickly for the company that after 3 years, Harley-Davidson motorcycle production was transferred at Chestnut Street (that was later become Juneau Avenue). This is still the Harley-Davidson headquarters up to this time.

In 1907, William received a degree in mechanical engineering at University of Wisconsin. This helped them to development of better Harley-Davidson engines in the future. The same year also provided them a much needed factory expansion for the growing motorcycle demands. The year 1907 introduced the 45-degree V-Twin engine which has become the sole Harley-Davidson engine for a very long time.

Over the years, the company has gained so much popularity that was converted into sales output. During the First World War, Harley-Davidson was commissioned to provide more than 20,000 units for military use. The story of the Second World was the same for the company. They produced thousand upon thousands of motorcycle.

Before the entry of the 70′s, AMF or the American Machinery and Foundry bought Harley-Davidson. Policies had changed that resulted to labor strike and substandard bikes. The popularity and reputation of the company was severely damaged.

In the 80′s, it was sold to a group of investors headed by Willie G. Davidson and Vaughn Beals. The provided innovations such as the introduction of the “Sturgis”. The costumers began to return and the company had seen clearer promise.

Since then, the popularity of Harley-Davidson motorcycles was unquestionable. They regained their leadership in motorcycle industry as they create a unique line of motorcycles, different from the conventional Japan made. Now, after more than a hundred years of existence, Harley-Davidson motorcycles have become an attraction in every road around the world.

http://en.wikipedia.org/wiki/Harley-Davidson#History

This was the day when William S Harley and Arthur Davidson designed and built the first single-cylinder engine (400CC) right out of a tool shed in Davidson’s backyard.

Although though the first motor was reliable, it was enlarged because it was underpowered. The initial frame was too weak to hold the new engine so it was replaced with a stronger, more substantial structure that was built similar to the prototype. In 1903 they produced two more bikes and three the following year. By 1907, Harley Davidson’s growing reputation for their reliable product helped to push their annual production rate to over 150. The year was also 1907 when Harley Davidson decided it was time to raise money for expansion. They became a corporation and divided the shares among seventeen employees. They moved themselves out of the Davidson’s shed and into a much bigger premise which is still their location – Juneau Avenue in Milwaukee.

The early models of Harley-Davidson motorbikes had no lights and no suspension. Within a few years after production began, Harley’s soon had fitted leading link forks a magneto ignition and a carbide gas headlamp. The model 5 produced in 1909 had about 4bhp from its 494cc inlet over exhaust engine, with a speed of 45mph. Bicycle petals were used to start the engine. Once the bike was in motion the leather drive belt was tightened using a hand lever. (To have a more contemporary view of what Harley Davidson parts now look like, please visit our website).

The first V-twin Harley was built in 1909. It was the model 5D but was not an immediate success. The V-twin produced close to 7bhp, which was almost twice as much as the single engine but it was difficult to start and suffered from a slipping drive belt. Two years later, in 1911, they introduced the 45-degree V-twin with a revised valve gear, new frame and had been fitted with a full floating seat and chain drive. These new improvements made a huge difference which caused the V-twin’s popularity to grow. By the year 1913 the model 9E’s 1000cc power plant was producing 10bhp which gave the bike a top speed of 60mph.

Initially Harley-Davidson was reluctant to get themselves involved in racing, such as reliability runs however, by 1914 they changed their minds and entered a factory team. The firm’s Milwaukee crew, the “Wrecking Crew” rode powerful 8-valve V-twins which were very competitive against the rival Merkel and Excelsior, and Indian. This became a great period for Harley-Davidson as production rose to more than 22,000 bikes and 16,000 sidecars in 1919. These numbers were cut in half in the upcoming 2 years mainly because of the Model T Ford, which put the majority of American motorcycle companies out of business.

Harley-Davidson is known for its large capacity V-twins but the smaller 45ci Forty Five played a vital part in the history of the company. The Forty Five, produced in 1928, was the first machine with a total loss oil system. It was restyled and updated 9 years later to create the W series. It was the simple and strong Forty Five that kept Harley-Davidson in business through the Depression of the 1930′s. The WLA model proved to be a useful military machine in which close to 80,000 were being used in the Second World War. These “war bikes” were converted for civilian use after the war was over which helped to popularize worldwide.

In 1936, while still suffering the effects of the Depression, Harley-Davidson introduced the Model 61E. This model’s 61cc V-twin engine was a huge advancement over other models due to its overhead valve design and recirculation oil system. The neat style of the 61E helped it become a huge success. It became known as the knucklehead because of the shape of the engines rocker covers. It gave it a technical advantage over its rival Indian and became the ancestor to modern Harley’s.

Harley-Davidson will forever be synonymous with producing great bikes. What started as a dream, survived the Depression, and is still going strong today. There is nothing quite like hearing the rumble of a Harley as you’re heading for the highway.

They may not ride, but they know the logo. The Harley-Davidson brand has recognition status rivaled only by the great multi-national brands like Coca-Cola.

As if that weren’t enough there is great financial performance. Since going public in 1986, Harley has increased earnings at an average annual rate of 37 percent. Only one other company that went public that year has done better. That other company is Microsoft.

It’s just about all a business could ask for. A brand that has achieved cult status and outstanding financial performance. That’s what makes the story of Harley-Davidson so interesting. We want to know how they got there. And the answer is not in one story but in three.

The first story starts at the beginning. In 1903 William S. Harley (21) and Arthur Davidson (20) were acting out the story of inventor/entrepreneurs and tinkering in a 10 foot x 15 foot shed with a hand-lettered sign on the door that read, “The Harley-Davidson Motorcycle Company.” They produced their first motorcycle right there.

Arthur’s brother, Walter, joined them in 1907. Soon the business was going so well that his brother William, who had a great job with the railroad, came on board, too. “Firsts” followed one after the other.

The bar and shield logo was used for the first time in 1910. The first issue of Enthusiast magazine came out in 1916. It is now the longest continuously published motorcycle magazine in the world.

Brought World War I to the United States and hardly skipped a beat. They sold twenty thousand motorcycles to the U. S. Army and emerged from the War even stronger.

By 1920 Harley-Davidson was the largest of more than one hundred motorcycle companies in the world. Sales peaked at 27,000 motorcycles a year. Then came the Depression.

The Depression hit everybody hard but it devastated motorcycle companies. By the end of it there were only two companies, Harley-Davidson and Indian, manufacturing motorcycles in the United States. At the bottom of the Depression only six thousand motorcycles were sold in one year in the entire United States.

But World War II revitalized Harley’s fortunes. The company sold almost 100,000 of their WLA model to the US military. After the war ended it took just two and a half months to resume civilian production.

That’s the first story. As the post-War economic boom began was in good shape. They’d grown up, survived the depression, and they were ready to grow even more.

In 1947 Harley-Davidson introduced the classic black motorcycle jacket. It was the start of the Wild One Era and Harley’s second story.

In 1953 the Hollister incident was immortalized in the movie “The Wild One.” It was Marlon Brando’s first lead role. The incident and the movie established an “outlaw” view of motorcyclists in the popular mind.

Even though Brando rode a Triumph in the movie lots of folks associate the film and the outlaw motorcycle culture with Harley-Davidson. That’s been fueled by the fact that Harley has been the motorcycle of choice for real motorcycle gangs like the Hell’s Angels. For years Harley did pretty well, linked in popular imagination to Brando, the Hell’s Angels, and outlaws in general.

When Honda began importing its motorcycles into the United States in 1962 they took the position that motorcycles in general, and their smaller motorcycles in particular, were for nice people, not outlaws. They told their story in one of the most effective advertising campaigns of all time, “You meet the nicest people on a Honda.

As one advertising historian says, “This breakthrough advertising shattered the myth that motorcycles were only for tough guys and rebels. It reached out and made Honda and motorcycling appeal to everyone.”

Meanwhile, back on the economic front, conglomeration was the order of the day. Managers believed that they could manage any kind of company even without knowing much about the business. Harley bought a boat company. In 1969 a conglomerate named AMF bought Harley. That’s where our third story begins.

Things just seemed to keep getting worse. Competition was hurting sales. Harley quality was pretty awful. And being part of AMF seemed like less and less of a good idea to both parties.

In 1981 thirteen senior executives of the Harley-Davidson Motorcycle Company signed a letter of intent to buy the company from AMF. It was all official by mid June. Changes started to happen almost at once.

Production quality started to improve. The company worked to improve profitability. In 1982, they began a system called, “Materials as Needed” (MAN), a just-in-time inventory system, designed to reduce inventories dramatically.

The company put in place an innovative system called “Circles of Management.” They worked hard to bring both workers and dealers into the fold by gaining their participation in key decisions. Things began to look up.

In 1983 Harley introduced the Harley Owners Group (HOG). There are now over six hundred thousand members of six hundred HOG chapters at Harley dealerships around the world. It costs members forty bucks a year, and gives them a readymade community to go with their Harley and their logo merchandise.

In 1986 the company went public. In 1987, it made it to the New York Stock Exchange. Today, a hundred years after its founding and just about twenty years after it re-established its independence from AMF the Harley-Davidson Motorcycle Company has attained cult status in many areas.

Harley has achieved cult status with customers. Their customers simply think it is not only the greatest motorcycle in the World but the greatest vehicle. They not only ride Harleys, they wear Harley clothes and use Harley gear of all kinds. Probably the only other physical product that inspires that kind of devotion is the Macintosh computer. Both are fine products, to be sure, but they are also lifestyle choices.

Harley has achieved cult status among investors. That’s based on more than that 37 percent annual increase in earnings since going public. It’s also based on recent performance where Harley has been up when the entire market has been down.

From the books and magazine articles and analyst’s reports you might get the impression that Harley-Davidson can do no wrong. You could get the idea that the next Harley story will be more success heaped on the success of the last twenty years.

When a company has been successful for a long time everybody starts to think the success will never end. That’s the most dangerous time of all.

Harley has done a lot right. They’ve revitalized product quality, management and profits. They’ve built a powerful cult following based on an outlaw aura. They’ve offered high-priced accountants and stockbrokers the opportunity to feel just a bit like an outlaw when they don their leathers and settle in for a cross-country ride on their Harley. But there are danger signs for the company as it begin its second century.

Harley buyers are getting older and older. The average age, according to Harley, is forty-six years old. That’s increased from thirty-seven back in 1990.

A lot of the customers are Baby Boomers. They like the outlaw status and the independent image that Harley offers. They’ve got the money to buy the toys they want and a big motorcycle is a wonderful toy. The result is that Harley has a 45 percent market share in big cruiser bikes. Second place Honda has just 23 percent. But that cult status cuts both ways.

What is cult for The Boomers is definitely not for their children. If it’s their parent’s cult they want no part of it and besides they tend to buy motorcycles that are smaller and less expensive. In the last three years sales of those light sport bikes have increased by 90 percent. Harley has got only 2 percent of that market.

The company has made some moves to capture the younger buyers. The new V-Rod is aimed at younger folks. Harley has started up a subsidiary, the Buell Motorcycle Company, with products aimed specifically at this segment. But they still have only 2 percent.

The problem for Harley-Davidson is to attract the younger customer without alienating the customers that buy the big motorcycles and ride them to HOG events. That won’t be easy.

There are other bad signs, too. Production backlogs are getting shorter and shorter. The premiums that Harley dealers have been able to get over the manufacturer’s list price are getting smaller and smaller or in some cases going away all together.

There is certainly some hazardous road ahead. Will Harley’s cooperative management style and the relationships with workers and dealers last if there’s an economic downturn? They might, but they haven’t been tested yet.

We’ve had three chapters of the Harley story so far and there’s more yet to be written, but there’s significant danger that this story could turn into a different kind of classic, the tragedy. It could go like this. Company overcomes adversity and achieves success. Company fails to deal with new challenges. Company fails. That is also a classic American story.