Economy & Business
11:47 am
Thu July 11, 2013

In Time for Anniversary, 'Outsider' CEO Helps Harley-Davidson Recover

Lake Effect's Mitch Teich interviews reporter Rich Rovito about Harley-Davidson.

Tens of thousands of motorcyclists are expected in Milwaukee late next month to mark the 110th anniversary of Harley-Davidson.

Motorcycles line up outside of Milwaukee's Harley-Davidson Museum.
Credit Dave Reid/Flickr

As Harley-Davidson approaches its 110th anniversary, both Harley owners and company management have many reasons to celebrate. Sales are up, consumers are happy, and production is efficient. 

No one would guess that just five years ago, the company was struggling to stay afloat in turbulent economic waters.

“When the 105th anniversary rolled around in 2008, behind the scenes as this big party was going on, there was some consternation among Harley execs . . . about where the economy was headed and what impact that was going to have on consumer spending,” says reporter Rich Rovito.

Rovito wrote about Harley-Davidson’s financial crisis and astounding recovery in the latest issue of Milwaukee MagazineHe sat down with Lake Effect to expound on his findings.

Rovito says that after the recession hit, most consumers didn't have enough money to continue to buy luxury items like Harley Davidson.

As a result of plummeting sales, falling profits, and labor issues hindering production, Rovito says the company "shifted into a mode where they hadn’t been in a long time."

So Harley-Davidson was forced to make some difficult decisions. The company needed a new leader.

“Harley had had this history – especially since the management buyout in the early 1980s – of just promoting from within,” Rovito says. “Things had gone so well for Harley in the years following the management buyout that nobody really seemed to raise an eyebrow about that.”

But this time, instead of promoting a current employee, Harley-Davidson sought out an outsider to fill the role of CEO. Enter Keith Wandell, then second-in-command at Johnson Controls.

When Wandell assumed his current position, Rovito says he was “a complete outsider being asked to make some very very dramatic and difficult and necessary changes at Harley-Davidson.”

Four years after Wandell came on board, that decision has proved to be the right course of action. He revamped company operations by eliminating several hundred positions and then creating a new production process to tighten manufacturing. Just five years after a financial panic, Harley-Davidson is securely back on its feet.

Harley-Davidson’s next big challenge, Rovito says, is to expand its consumer base behind the traditional customer, whom Rovito identifies as "a middle-aged . . . white, male baby-boomer."

Wandell has already started catering to other demographics with new marketing strategies geared towards women, minorities, and younger riders. Although Rovito says this could potentially alienate the core consumer base, thus far “they don’t seem to care all that much about it.”

Rovito says, “they want the company to survive and thrive, and if that’s what they have to do,” loyal consumers will be unfazed.

With the anniversary celebration approaching, Rovito says people at the company are “cautiously optimistic" about the future. As for the celebration itself, organizers are confident that the event will be even bigger and louder than the last one.