Saturday, January 24, 2009

Harley History Offers Political Insight

Wisconsin is rightly rattled by the layoffs announced at Harley-Davidson.

The iconic business is deeply ingrained in Milwaukee's culture and its workers are among the highest paid.

It's worth remembering that in the 1980's, when Harley was also in financial trouble, the federal government - - specifically the 'free-trading' GOP administration of Ronald Reagen - - helped turn the company around by slapping stiff tariffs on large-engine imported Japanese motorcycles, making Harley's bikes more attractively priced.

The company spent heavily on product development, too, so there was a partnership, but the salient point is that there was government intervention.

I'm not suggesting that the government do the same thing now. Or that there is necessarily any direct aid that Harley should get.

But tax cuts, lending assistance and federal stimulus spending together are designed to stabilize markets and personal finances, too - - as a matter of national policy.

And that is good for all businesses producing consumer goods.

Certainly Harley is at the top end of discretionary consumer spending, but without a stimulus infusion into the local and state economies, Harley's recovery will be slower.

The company's bigger problem is demographic.

US baby boomers are going to soon age away from the requisite agility and vision to safely ride a motorcycle, and the generation coming up behind the boomers is smaller, and less well-to-do.

But Harley has been adaptable, meaning the company will survive, albeit smaller, and perhaps with newer products.

Maybe there's an all-electric three-wheeler in the company's plans for 65-year-old tree huggers?

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