HARLEY-DAVIDSON BARELY REMARKED ON THE DEATH OF ITS SAVIOR. BUT LEVATICH & CO. SHOULD TAKE INSPIRATION FROM VAUGHN BEALS.
The Harvard Business School lists Vaughn Beals as one of its "Great American Business Leaders of the 20th Century". Harley-Davidson's ex-CEO and Chairman died April 19, at the age of 90.
Vaughn L. Beals, Jr.'s passing went unremarked, as far as I can tell, on web sites from Cycle World, Motorcyclist, and Asphalt & Rubber, to HarleyDavidson.com. That’s in spite of the fact that Beals had an enormous impact on the company; he is nearly as important a figure in Harley's pantheon as any of The Motor Company's founders.
“During some of the most challenging times in the long legacy of Harley-Davidson, Vaughn Beals brought vision and powerful leadership to this great company. We’ve carried his leadership lift under our wings ever since and we always will.” – Matt Levatich
I’d argue that as the leader of the employee group that bought Harley-Davidson from AMF in 1981, that he was the most important American 'motorcycle guy' of the post-WWII era. He steered the brand from losses to profitability, took the company public, and dramatically increased its value.
For most of its history, Harley-Davidson was closely held, and controlled by the founders (and later, their heirs). It was acquired by AMF in 1969. While I think it’s an oversimplification to portray the AMF period a wholly unmitigated disaster, by 1981 the motorcycle business was losing money – and market share to Japanese companies that were still going from strength to strength. When AMF decided to sell Harley-Davidson in 1981, Vaughn Beals organized a group of senior managers; they borrowed $85 million from Citi and took the company private again.
The purchase price, about $250 million in today’s money, was relatively paltry. It’s interesting to imagine what another buyer might’ve done with the brand. I can easily picture an American car company picking it up; there would have been some economies of scale and advantages to a broader dealer network. A company like Kawasaki Heavy Industries probably could have adopted Harley and done well with it.
One way or another, there would’ve always been a Harley-Davidson company. But I think the most likely scenario was that Harley-Davidson would continue to be gradually run down – as it had been by AMF – and that it would have become a zombie brand like Indian. An editorial in British Dealer News called Vaughn Beals Jr. Harley’s “savior” and I don’t think that was an exaggeration.
Beals was not a motorcyclist. He’d been trained as an aerospace engineer and rose through the management ranks at Cummins before being hired to run Harley-Davidson. He immediately cut the workforce, and took steps to improve product quality. (Immediately before the buyout, more than half the Harleys that came off the assembly line needed remedial work before they could be shipped!) The revived Harley-Davidson company quickly set about making a new and much-improved ‘Evo’ motor.
For an MIT trained engineer, he either had natural marketing savvy or knew who to listen to; he green-lit the creation of Harley Owner’s Group clubs and Carmichael-Lynch’s dramatic repositioning of the brand. And he was savvy about finance, leading the company through its IPO and getting the stock onto the ‘big board’ at the New York Stock Exchange in 1987.
The company that Vaughn Beals bought from AMF for $85 million has a market cap of over $7 billion today – even at the currently depressed share price. That's some ROI, and should inspire the current management.
I guess I don’t blame Levatich and Harley’s PR department for soft-pedaling Beals’ death. Making a bigger announcement would have distracted from the 115th Anniversary celebration and the company’s recent and spectacular new product announcements. Since one of the things Beals is best remembered for was pressing the Reagan administration for trade tariff protection, it might’ve opened the company up for more criticism from Donald Trump, too.
Still, Levatich would not be remiss in pointing out that Harley-Davidson was on much weaker footing in 1980 than it is today. I've had people tell me that Harley’s recent announcements, of a Livewire, electric bicycles, an adventure-tourer, etc, are too little too late. But maybe they should ask, “What would Vaughn Beals do?”
Beals’ leadership was not faultless; he killed an expensive R&D project that would have yielded a much more modern four-cylinder bike; one that might’ve positioned H-D better against high-performance Japanese and European rivals. But during his tenure, early investors of Harley-Davidson shares saw about a 2500% ROI.
That alone should serve as an inspiration for Matt Levatich and the current management team.