Cycle News - Archive Issues - 1980's

WEST America's weekly motorcycle newspaper Sharon Clayton. Publisher Caroline Ge nd ry. Execu tive Secretary to th e Publisher Lisa Schorr. Advertising/ Ed itorial Assistant. Editorial Dal e Brown. Senior Ed itor. Lance Bryson , Editor. Karel Kra m er. Ed itor , David Edw ards Editor. Advertising Skip J ohnson . Nat io na l Sa les Ma nager. T erry P ratt, Sa les Man age r. Du an e J ohnson. Sa les Manager. Steve Wil son. Sa les Manager. Lin da Bro wn . Ad ver risi n ~Coord inalD r. Na ncy Danger. Advcr tism g Assist a nt . . Graphics and Production Kri sti n Cooper, Graphic Art ist. Ron a Kra mer. Assistant . Ma rion H a rash ita . Tvpograpbv. Dennis Greene. Labora to ry. Accounting /Data Processing Mike Klin ger . Controller. Donna Brya n. Accounts Rece iva b le C oordinat or. Geneva Repa ss. Assistant. T erryDailey. Credit Ma na!:"r. Circulation R h e ba Smith . Ma n ager. M ic h ell e H anna. Sarah Tavlor , Debbie Walker. Lvna Hood . Assistants. Want Ads Loah Corry. Want Ad Sa les. Dealer Sales and Service Nancy Emde Brogger , Deal er Sales Manager. Service and Support C hris Aitcheson, Receptionist. Gregory H a nso n . 5&5. West 2201 C herry Ave.. Long Beach . CA P .O. Bo x 498. Long Beach , CA 908010498 (2 13) 427· 7433; L. A. Line 636·8844- East 4 190 First Ave.• Tucker . GA . P.O . Box 805. T uc ker. GA 30084· 0805. (404) 934·7850 . Cycle News /West (USPS 141-340) is publish ed week ly excep t the fir st and last week of th e ca lenda r year for $20 per year by Cycle News. In c.. 220 I Ch er ry Avenue, Long Beach , CA 90806. Seco nd class posta ge paid a t Long Be ch . CA . a POSTMASTER : Send f orm 3579 t o Cycle News. P.O . Box 498, Long Beach . CA 90801-049B . S ubscr ip ric n ra tes: One year , second class ma il, 20; two years. seco nd cla ss mail , $35 ; three years, second class mai l. 53; 25 weeks . $11. Fo reign rat es a vai lab le o n req uest. Cycl e New s welcom es unsol icited editorial materi al including stories. cartoons, ph OIOS. etc. Su ch mat eri al. if publis hed . beco mes the excl usive pr operty o f Cyc le News . Su ch accepted mat eria l is subject to revisi on as is necessary in the so le discretio n of Cycle New s. Unso lic ited mat er ial wh ich is not used will be returned if accompan ied by a self addressed sta m ped en velo pe . All u nso lici ted mat eri al will be hand led wit h reasonabl e ca re, h owev er. Cvcle News assumes-no responsibility for 'lhe safcl Y, lo ss o r damage to su ch ma teri a l. Rep rin ting in wh ole o r part only by permission o f th e publish er. Advenism g Ta ll'S a nd circ u la tion in fo rma tion wi ll be sen t upon request . See S. R.D.S. COPYJ'ight® Cycle News. Inc . 1983. Trademark Cycle News reg istered U.S . Patent Office. All rights reo sented . 4 ON THE FRONT PAGE: Daytona 200 winner King Kenny Roberts f lies through the chicane en route to victory. Photo by Dale Brown . VOICES Harley speaks back In res po nse to so me o f th e recent lett ers co ncerni ng Harley-Davidson 's acti ons, let m e o ffer th is food (or thought . Some ha ve sta ted in yo ur lett er 's co lu m n that th e mo torcycl e glut is really th e result o f th e worldwid e recession. True. Bu t does a recession give th e japanese manufacturers th e ri ght to ma intain production as if the re were no recession? All responsi ble businesses (Ha rley incl u ded ) faced th e fact that sa les were Calling . a nd cut production accordingly. Not so with the j ap anese manufacturers, wh o actu ally increased producti on in th e face of a Calling market. Could it have so me th in g to do wi th lifetime employm ent polici es? The res u lt is lik ely to be a n all o ut price war, and a price wa r is a p rice war, regardless o f th e ca use. A price war is lik ely to ca use devastation a m ong the j apa nese bra nd dea lers in th is co untry, wh o arc al ready operat! ing on paper- thin margins. T he co ns u mer shou ld rea lize, too , th at h e's o n ly a custo mer u nti l he ha s bought the motorcycle. At that point, he becomes an in vesto r who loses money every time a new mot orcycle sells Cor less th an w hat h e paid C r it. o Resal e values are u n dermi ned an d the real cos t of o wne rs hip skyrockets. Another th em e of th e lett ers deal s with Harle y-Da vidso n 's prod uct ofIerin gs. So me suggest that H arley is in the Dark Ages in this area. Le t m e suggest that so me of th e lett er writers are in th e Dark Ages wh en it co mes to kn owledge of H arley p roducts. Most of the co m ponent syste ms on o ur pr oducts - frames, brak es, electrics, ig n ition , transmissions - have been co m p letely redesigned in th e last five years. T he V-twin en gi ne has been steadi ly im p roved and will soo n show even more dramatic cha nges. Perhaps the letter wr iters shou ld read th e ro ad tests from th e p ast co u p le of years, including th e FLT test in Cycle N ew s th at "o n ly" gave the motorcycle a score o f 99 0ut of 100 - just o ne point shy of perfect, I would suggest it 's time to tak e orr th e blinders and look a t Harl ey-Davidson products as th ey exist today, instead o f sim p ly dusting orr all the old myth s. Pricing 's a nother topic. Harley has ...... -# a lways offered premium-priced vehicles an d quite frankly, we always will. However , th e price differen ce bet ween Harley and th e j apanese has been growing in recent yea rs, and it's because th e japanese ap pear to have been su p pressin g thei r prices. T heir motorcycle prices have increased only 40 percen t since 1977, compared with 80 pe rcent Cor j ap an ese autos. That . certain ly sugges ts price su p p ression , since production cost increa ses Cor the two' ind ustr ies should be about the same . j apa nese m otorcycle price increases com pare with a 52 percent increase in th e japanese overall prod ucer price in dex during the- same period. Meanwhile, Harley's prices have gone up about 60 percent since 1977 - alm os t exactly th e sa me as th e co ns u mer price index in this cou ntry. We seek a return to a more rea list ic, non-suppressed pricing struc tu re by th e j apanese. So H ar ley-David son took action C a co uple o f rea sons. T he first, wa s or to call attention a nd get so me th ing done about the l 8-m onth inventory overhang in th is country. And perhaps more im portan tly, we took action to p ro tect th e vast investments Harley-Da vidson h as made in manuCacturi ng, quality a nd new p roduction develop ment. We are currently in th e middle o f a co mp lete revam pin g o f ou r manufacturing systems tha t, wh en C lly in p la ce, wi ll pu t us u on eq ual footing with any thi ng found in j apan C eCficiency . We have or al ready spe nt mill ions o n new products for th e market , wh ich are, in essence, ready to go but for th e revenues n eeded to produce th em . We have made u n p recedented co m mitm ents to product qua lit y that have brought abou t dr amatic improvements in this area as well. In short, we have done every th in g tha t an in div idual co m pany, opera ting u nder V .S. law s and wi th th e reso u rces avai la ble to a p ri vat e co m p a ny, co u ld do to become more com petitive. Co mp letion of o u r co rnpeti tive ness program an d revital ization is n ear. Yet, the m assive inventory buildup, with th e fire sales that were su re to result, thr ea tened to destroy every thi ng. T h e International Trade Co m mission ap parently agrees wi th the threat we see. In making an a ffirm a tive rul- ing on an " Esca pe Cla use" case (Section 201 o f T h e 1974 Trade Act, u nd er wh ich H arley filed its petition , is kn own as the Esca pe Clause) the ITC by statute m us t determi ne th at th ree co nditions are m et: I ) th a t im ports are increasing, either absolutely or rela tive to th e market; 2) that the domes tic industry is faced with the threat of serious injury; and 3) th at the imports are the prime cause of the jury threat. I should note that the U.S. " Esca pe Clause" law was ado p ted to bring our tra de law s into co mplia nce wi th th e trade statutes o f the G en era l Agreem ents on T rade and Tariffs (GALT). It m igh t surprise some to learn th at an " Esca pe Clau se" mech anis m is a n interna tionally recogn ized tool for the fostering programs to m ak e a n at ional eco nomy more co m pe ti ti ve. In fact, th e V .S. law is m uch tough er th an the GALT "Esca pe C lause," m eaning it's much more difficult to o btai n reli ef in th is country th a n it wou ld be in countries that strictly foll ow the GATT guideli ne . T he fact that th e ITC fo u nd those co nd itions to exi st and then reco mmen ded su bsta ntia l temporary tariffs as n ecessary rem edy, o nl y h ighlights the serio usness of th e inventory th reat and th e abso lu te ludicrousness of the japa nese manufacturers' inven to ry policies. . Speaking o f those tariffs , th ey have caused much unnecessary alarm in th e industry whe n th ere is reall y littl e need for much co ncern - except of co urse by th e j apanese m an u factu rers. Here's wh y. With th e cu rre nt inventory of imp orted h eavyweigh ts in this country, the j a panese wouldn 't have to import an o th er motorcycle Cor the next 18 m onth s and the y'd still h ave p lenty to sell. That' s why the ITC reco mmended st iff ta riffs th e first two years, with rap idl y decreasing a mou n ts . thereafter. T he Co m mis sion sta ted that th e 45 a nd 35 percent tariff increases the firs t two years wo uld discourage im ports during tha t period an d wou ld encourage importers to sell from exi sti ng inven tor y. Im p ort dea lers thus wo uld be relieved o f the p ressu re o f oversupply a nd wou ld n o longer n eed to sell a t rock-bottom d isco u nt p rices sim p ly to reduce th at in ventory. Iro ni call y, H arley-Davidso n 's actio ns cou ld mean that import bra nds dea lers co ul d sell p roducts Cor so me th ing resem bling a respectable return o n investment. The rates for the last three years (20, 15 a nd 10 percent ) were recommended to a llow remaini ng in ven tori es to decline to his to rica l levels a nd assure th at H arley-Davidson wo ul d be a ble to co m p lete its im port adj ust ment programs, wh ich ar e cr it ical to the co m p a ny 's long- term health. Thus, as in ventories get back to h istoric levels, tariffs on new im ports fall drama tically. It's bea u tiful in its sim p lici ty. Co mm iss ion Chairman Alfred Eckes ca lcu la tes tha t th e first- year 45 percen t tari ff rate increase wou ld resu lt in a retai l price increase o f only 10 perce nt. That would p robabl y start to refl ect real-world pricin g, in stead of th e suppressed pricing we hav e been seei ng in recent years. As a result, motorcycle dea lers hav e more than en o ugh moto rcycles avai la ble at non-tariff prices. Because of th e laws of su p p ly and de ma n d , th ey do n ot ha ve to sell them off a t thin or .n onexistent margins to ge t the m out of inventory. Harley-Davidson avoids the devastating blows o f an a ll -out fire sale which it can not afford to co m ba t. T h e consumer feels on ly m in imal price impact. There is long term stability in a market th a t has more competition, not less. And at (Continued to. .... . 65) .. . . __.. . page ~ - _-

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