A Reconstituted GM Might Want to Look to Harley-Davidson as a Model

This Week: A Reconstituted GM Might Want to Look to Harley-Davidson as a Model

My manager Rick Canny and I should take a stab at getting our U.S. economy back on track. I swear that by our third cup of coffee on a usual morning, we have pretty much trouble shot every newsworthy business quandary of that particular day. We are well-read dudes in the business world—why not us? Let me invite you all inside one of our conversations.

First off: I am all for government spending. But I am for the kind of spending that creates long-term jobs. It’s tough to say how much of the spending back in the 1930s led to jobs with longevity. Seems as if a lot of WPA projects back then were pet projects of various politicians. Politicians are not a group with a great reputation for seeing things through for the long haul. Obama talks a good game, but only time will tell whether his projects are designed for longevity.

Okay, now on to solving America’s business dilemmas. This past week GM became the biggest bankruptcy in the manufacturing sector in the history of our country. Where do I start? So, as I understand things right now, we taxpayers will end up with a 60 percent stake in GM when it reemerges from Chapter 11. On top of that, via a union controlled trust fund, the United Auto Workers have another 17.5 percent, basically by default because the UAW pension fund is that big at this point.

Obama wants GM to make fuel efficient cars and I think that is great. But folks, we are in a fight to save a gigantic car company—the world’s largest—and one that fuels a large part of our US economy. Let’s face it, as far as I’m concerned, GM makes a lot of crap. I was being driven in a Cadillac the other day and the insides were basically falling apart. It was a new car!

With this in mind, I was thinking that Harley-Davidson might be a good company to look at and find some lessons. In 1969, after diversifying into scooters and boats and all sorts of bikes, Harley merged with AMF, a company with no experience building motorcycles. The Harley brand got pimped to the hilt, and the quality of the bikes became something of a joke. The company sputtered. And the story could have ended there.

But instead, in 1981 a group of 13 heartsick Harley executives bought their company back from AMF. They realized that the only way for their company to recover from the laughing-stock status it had reached would be to return to quality. They instituted a ground-breaking just-in-time production regime. They designed innovative new power trains. They did research to find out what buyers actually wanted and started make those sorts of bikes—customs, heritage re-issues, raked-out choppers, lots of chrome, an emphasis on reliability, etc. They created and nurtured an owners club, called H.O.G., that had almost a 100,000 members within six years and half a million by 2000.

And what do you know, the company made a robust recovery. By 1986 Harley was able to go public on the American Stock Exchange, switching to the New York Stock Exchange the following year. I can personally attest to the attraction of their bikes to consumers—I own two myself, a 2006 Road King and a 2007 Street Bob. I’ve ridden that Road King all over the country. As for an American car? It’s been about 20 years since I bought one of those, I’m afraid. And that’s telling.

At some point in the 1980s, GM seems to have decided that their new business model was to become the world’s largest automaker. They began to buy up other brands such as Opel and Saab; their own brands proliferated with Saturn. The focus seems to have diminished as far as getting a customer a car they wanted at a fair price, and to have increasingly been set on getting the bottom line to soar like a high-performance engine. It is obvious now that neither of those two things happened.

This is my public plea for GM chief Fritz Henderson to return to quality and innovation. Follow an example like Harley-Davidson and make kick-ass cars that we consumers want. It is possible to have high-performance and energy-efficiency. That is probably the defining engineering challenge for the industry, and it would seem manufacturers like Nissan and BMW have a leg up in an arena—car engineering—where US companies took pride in leading the world for many decades. Not surprisingly, those were decades of profitability—and decades when people around the world lusted after American cars. The UAW and the US government must get active through their ownership stakes; their input can help make this all happen. Let’s put our people back to work and have an American car company that we can once again be proud of.

Previously: How Important is Consumer Confidence?