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Harley-Davidson, Back in the Black, to Host President

May 05, 1987|Associated Press

YORK, Pa. — Harley-Davidson Inc., which President Reagan will visit to talk about American competitiveness, took advantage of protective tariffs to regain its position in the world motorcycle market, the company's chairman said Monday.

"We think we're a bona fide American success story--and they're a little scarce these days--and the President seems to agree," said Vaughn L. Beals, Harley's chairman and chief executive.

Beals' comments came as the company, which was $160,000 in the red as the first quarter or 1986 ended, posted earnings of $5.2 million for the 1987 period.

At Harley-Davidson's invitation, Reagan will tour the York assembly plant and meet with workers on Wednesday.

Harley, producer of big, distinctive motorcycles featured in such movies as "Easy Rider" and favored by many law enforcement agencies, is the only U.S.-based motorcycle manufacturer.

Beals said he believes that congressional proposals calling for retaliation against nations with big U.S. trade surpluses could spell trouble.

The Reagan Administration in 1983 imposed five years of stiff tariffs against imported motorcycles that had been beating Harley's own product.

Earlier this year, Harley officials said they no longer need the protection.

"We believe Harley is an excellent example of an American company that really pursued the steps toward improving its competitiveness in world markets," said Beals. "It took a lot of blood, sweat and tears to do that, and it also took a fair amount of good old-fashioned American ingenuity."

Regained Market Lead

The company increased worker participation in management, redesigned and modernized its product line, revamped its inventory and quality control methods, and diversified. For example, it won a Defense Department contract for bomb casings that helped it through the lean years, Beals said.

He said Harley regained first place in its market last summer for the first time since 1980. The firm's market share dipped to 23% in 1983 but had rebounded to 33% at the end of last year, he said.

"We were the only company in the motorcycle business last year to increase production in the world," Beals said. "All the Japanese and BMW had to cut their production."

In its separate earnings announcement, Harley-Davidson said the $5.2-million profit included a one-time gain of $1.6 million in tax benefits from loss carryforwards. Revenue for the three months ended March 29 rose to $162.4 million from $70.4 million.

Beals said he supports current trade laws, adding that changes, such as mandatory retaliatory measures proposed in Congress, could mean trouble. The House last week passed a sweeping trade bill that included provisions to require retaliation against nations that fail to reduce large trade surpluses with the United States.

Needs Flexibility

"I think the law that's on the books . . . is a good law, if it's used. It was used in our case," Beals said. "I think the Administration really needs flexibility. I think it would be very, very dangerous for Congress to tie up this President or any President."

But, he said "it takes two for the success. One, it takes the opportunity that President Reagan accorded us and, two, it takes the recipients of that to get their act together. That worked in this case."

Beals said the tariffs helped whittle down the bulging Japanese motorcycle inventories in the United States while giving Harley a chance to change its manufacturing techniques.

"The government gave us some help, (but) they didn't write us a check. They didn't do anything but say, 'Time-out, guys,' " Beals said.

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