Commentary: He Really Got Harley Roaring

CEO Jeffrey Bleustein is dismounting his hog after an exhilarating run

Jeffrey L. Bleustein knows how to make an entrance. To deliver a 2002 commencement talk for engineering grads at Columbia University, the Harley-Davidson Inc. (HDI ) CEO roared out to the podium on a gleaming silver V-Rod, his company's newest rolling work of art. The Ivy Leaguers whooped, just as wowed as the black-jacketed, tattooed folk who have long been bike fans. And they warmed even more to the Harley mantras Bleustein brought them: Charge headlong into life, he urged, with a sense of freedom and individual expression. "This is your chance to soar with the eagles," he said.

Now, Bleustein, 65, is heading for the open road. The brainy New Yorker, who earned a PhD in engineering at Columbia and later taught at Yale University before going into business, will leave Harley's corner office on Apr. 30. He will be remembered for having co-authored one of the great American comeback stories: vaulting the 102-year-old Milwaukee bikemaker from the financial junkyard -- a near-bankruptcy experience -- to roaring success.

When Bleustein arrived as engineering vice-president in 1975, Harley was notorious for shoddy workmanship. He and his colleagues restored quality and introduced new models, making biking appealing to weekenders while keeping an outlaw image. Today, Harley-labeled gear is a hit for grannies and babies as well as grizzled bikers. The machines sell to Wall Streeters as well as to Southern California gangs. With the newest Fat Boy starting at $18,500, many Harleys go to the well-heeled, but you can still pick up something for $6,500. For that reason, Bleustein resists the luxury label: "We've worked hard to keep it a brand for the people."

Plenty of execs have been lionized, only to prove all too mortal when their game plans fell apart. And much can still happen to dim the glow surrounding Bleustein, who became CEO seven years ago. (He will stay on for a time as chairman but turns the job of running Harley over to CFO James L. Ziemer, 54.) It's not clear, for instance, whether his efforts to broaden the bikes' appeal to women and younger riders will pay off. Harley can't count on boomers forever. Typical customers are in their late 40s or older -- not far from the group that buys Buicks.

But there's no doubt Bleustein & Co. have had an extraordinary run. For 19 years, Harley racked up unbroken gains in earnings and sales, hiking 2004 profits by 17%, to $900 million, and sales by 8.5%, to $5.02 billion. That explains why it has made the BusinessWeek 50 ranking of top-performing big companies for the past three years. Along the way, the shares -- worth the equivalent of 39 cents back in late 1987, figuring in dividends and splits -- have been lofted to more than $60 today.

Just as important, Harley is a case study for marketers of how to freshen up a timeworn product. Sports-car makers and collectibles producers should take note of the Harley Owners Group, clubs that let folks feed one another's rebel self-images while taking road trips and trading biking tips. Brewers could learn from Harley's moody print ads about how to turn products into personal statements. "It's a cult brand," says Northwestern University's Kellogg School of Management marketing Prof. Philip Kotler. "Every brand would love to be a cult brand."

Timing helped. In the post-feminism era, Harleys became vehicles for men to be men. Accountants could dress like James Dean on weekends. Harley softened the edges by backing charity runs and making riders look friendlier -- but not too friendly. "You always needed to keep a little bit of the bad in the brand," says the CEO.

Any brand built on memories of Easy Rider has vulnerabilities. But Harley has shown a knack for adapting. Marketers should take some of Bleustein's ideas out for a spin -- they've had a winning ride in Milwaukee.

By Joseph Weber

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