Harleys with joysticks end century of bike-design inertia

Harley-Davidson Inc's newest models feature a voice-activated and touch-screen GPS system, the first on a production motorcycle. When the bike is getting low on fuel, the system finds the nearest filling station and maps out directions on a 6.5-inch (16.5 centimetre) screen the rider can control by voice, touch or joystick.

What's also new is how the company decided what to include: It asked its customers. For the first time, 110-year-old Harley is using customer focus groups and dealer clinics as it develops models and features. Last week, the first wave of new bikes from those changes began arriving in dealerships.

"Harley was an 'if you build it, they will come' kind of company," Sharon Zackfia, an analyst at William Blair & Co in Chicago, said in an interview. "The recession was really what brought them into the 21st century. A lot of other companies had those moments long before."

Chief Executive Officer Keith Wandell, 63, also speeded up the process by avoiding late changes that add cost and can reduce quality.

Harley shares, which bottomed at $8.20 in 2009, have more than tripled since Wandell was named CEO of the Milwaukee-based company in April 2009, while the Standard & Poor's 500 Index almost doubled. Harley, which trades under the ticker HOG, rose 0.6 per cent yesterday in New York to $59.20. Last week, the shares closed at the highest level in more than six years.

'More sustainable'
"Since day one, we've been trying to transform the company in a way that is going to make us stronger and more sustainable in the future," Wandell said in a telephone interview this week. "That's what we said we wanted to do four years ago and, voila, here it is."

While revenue rose 17 per cent from 2009 to $5.58 billion last year, net income soared to $623.9 million from a $55 million loss in 2009.

For most of its history, Harley sold as many motorcycles as it could make to customers it knew well: older, affluent, white American men. The global recession changed that. Revenue dropped by almost a quarter from 2006 to 2009, prompting Wandell, newly installed from auto-parts maker Johnson Controls Inc (JCI), to cut costs, speed development and seek more advice on how to put new customers on bikes.

Customer outreach
"This is truly a monumental mentality shift," Matt Levatich, 48, Harley's president and chief operating officer, said in an interview. "There was 107 years of inertia."

In Minneapolis, about three dozen people gathered in a hotel conference room for a few days. They handed over their smartphones at the door and got early peeks at prototypes and were asked to weigh in on the strengths and weaknesses of the competition's bikes. Harley staged focus groups as far away as Europe and Tokyo.

The company also opened the doors of its product-development centre in nearby Wauwatosa last year to dealers and sales managers. About 800 engineers and designers there are developing future Harley motorcycles. Only a third of Harley's 5,800 employees have access to the building and it wasn't until last year that a group of its dealers was allowed in for a briefing on new product planning.

Profitable bikes
The new Touring line of motorcycles, some of Harley's priciest and most profitable, start at $18,249 for the Road King and $25,899 for the Ultra Limited, and can cost more than $40,000. The line appeals to Harley's traditional customers, as well as its new buyers: women, younger drivers, African-Americans and customers outside the US

The Street Glide, starting at $20,399, is Harley's top-seller. It's the kind of bike state troopers ride, with saddlebags, fenders and a fairing, which keeps the wind out of the driver's face and holds the infotainment screen.

Bill Davidson, great grandson of the co-founder, rode an amber whiskey Street Glide Special straight from the York, Pennsylvania, assembly line to Milwaukee for the company's 110th anniversary celebration on Labor Day weekend.