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Dan Hanlon. Resurrecting then losing Excelsior-Henderson Motorcycles taught him a lot about the importance of heritage, and the false security that comes from listening to financiers.

Central to the relaunch of Excelsior-Henderson was a platform frame that could support a variety of bike models and styles, a motor that could provide the performance buyers wanted, and genuine American style.

American Heritage

It's the one thing the domestic automakers have that their competitors don't. If properly used, it can spark the imagination of buyers, and erect an impenetrable barrier against foreign competitors.

“Look at GM, Ford, and Chrysler. A lot of their brand names, particularly the company names, mean something. They go back nearly a century and have depth, but the companies don’t market them as aggressively as they could–or should.” The person speaking these words is Dan Hanlon, the man who almost single-handedly resurrected Excelsior-Henderson motorcycles in the late 1990s, only to watch as the company came crashing down as financing dried up.  Hanlon, whose lifelong goal has been to start his own car company, discovered the importance of authenticity while launching his endeavor, and believes it is critical to American automakers’ chances for success.

Hanlon compares Detroit’s current position to that of Harley-Davidson in the early 1980s. Knowing it had to radically improve the quality and reliability of its motorcycles, H-D embarked upon a renewal process designed to overcome its shortcomings. But matching or even exceeding the quality of the Japanese bikes would never be enough to put the company back in the black. “Harley had mistakenly marketed its bikes similar to the way the Japanese marketed theirs,” he says, “and found that no one cared.” Like many companies–the Big Three included–it was easier to copy what the successful companies were doing than to go back, determine what had gone wrong and fix it. It took new management and a new marketing company, Carmichael Lynch (Minneapolis, MN), for Harley to realize it had one thing the Japanese never could have: American heritage.

Hanlon wonders whether the domestic automakers are so top heavy and process driven they’ve lost sight of their strengths, how to use them to their advantage, and how to give their customers a genuinely American car. “The product has become so homogenized it’s like a bushel of corn: every kernel looks the same,” he says. “And the domestics seem to play a politically correct game of follow-the-leader and wonder why they continue to lose market share.” Hanlon worries the same virus has infected the design process, placing too much reliance on speed and software, and not enough on thought. “My chief stylist at Excelsior-Henderson wasn’t into computer-aided design,” he recounts, “but he worried he’d have to learn it in order to compete with and understand the engineers and stylists we hired later.” Hanlon would have none of it, and suggested that his chief stylist forget about the computer training. He told this person his talent came from thinking a problem through by creating the solution in his mind. “The result was often much more correct and creative than anything the other guys could do,” he laughs, “because they were letting the computer do the thinking for them.”

However, it’s Hanlon’s thoughts about the complete automotive industry development system that really catch your eye. Early on in the resurrection of Excelsior-Henderson, Hanlon corresponded with “The Bobs,” Eaton and Lutz at Chrysler, suggesting they consider buying his company as an incubator. With an internal combustion engine, transmission, wheels, paint shop, manufacturing facility, dealer network, etc., a motorcycle maker isn’t all that different than an automaker–just smaller. And for minimal outlay, Chrysler could have used E-H to develop ideas for improving product development, streamlining operations, investigating basic technologies, and more before rolling them into Chrysler as a proven concept. “It would have been fascinating,” he says, “but while Lutz said he thought it would be a good fit for Chrysler, others within the organization viewed it as too much of a departure from their core business–and not profitable enough.” An odd thing, Hanlon adds, “since Harley builds 300,000 bikes and makes between $4.0 and $5.0 billion dollars each year.”

He argues that domestic automakers must follow Harley’s example and sell their authentic American heritage if they are to be successful. “Harley doesn’t water down its brand, and does very well domestically and overseas,” he says. It’s something the Japanese are beginning to learn. With Lexus, Infiniti, Scion and others increasingly leaning on their Japanese heritage, they are creating a unique alternative to brands with a strong heritage, like Mercedes and BMW. American automakers can and should do the same, he insists. “The American automakers have to change the vehicles and the branding messages so that they are in harmony with the automakers’ American heritage, but I worry they’ve become so large and bloated that they can’t find their way out of the problem.”

 

Surviving Road Rash

 

Over the years, much has been written about Dan Hanlon’s attempt to resurrect the Excelsior-Henderson motorcycle brand in the late 1990s, but none of it from the founder’s point of view. That changed with the release of  Riding The American Dream: The Official Story of Excelsior-Henderson Motorcycles (Union Hill Press, 401 pp., $32.95). If you’re looking for a kiss-and-tell, forget it. Hanlon doesn’t descend into finger pointing, preferring to tell the story in a chronological sequence–warts and all–with little extraneous commentary. By the end of the book, it’s apparent who the bad guys are, and Hanlon leaves it to the reader to decide just how much vilification they deserve, if any.

Where this book shines is in telling the story of how to build a business–any business–as well as showing how manufacturing has declined in importance in the U.S. Through grit and determination, Hanlon oversaw Excelsior-Henderson’s successful efforts to raise $95 million in funding over the firm’s seven-year run, and guided it through the maze from startup to manufacturer. Only at the end, as the company struggled to transform itself from a cash flow negative venture into a profitable manufacturer of premium American cruiser motorcycles, did the bottom fall out–despite E-H posting $30 million in sales over its first 10 months. Financiers couldn’t understand a brick-and-mortar business in a “clicks-and-mortar” Internet world, or see that the tech bubble was upon them. To them, manufacturing lacked the sexiness, charisma, and high-profit potential of the web-based companies drowning in seed money. In the end, the only thing Excelsior-Henderson had in common with companies like pets.com was that both were out of business, despite the fact that Minnesota’s only motorcycle maker had a viable product and a growing, loyal customer base in a booming market segment.


Readers of this magazine will recognize the games played by competitors as they attempt to keep Excelsior-Henderson from succeeding. Whether suggesting to suppliers that they’d be better off not working for the interloper, or retaining an “industry analyst” to convince dealers Excelsior-Henderson was a bad financial play, the monolith in Milwaukee couldn’t see the advantage of a second builder of American cruiser motorcycles. But Honda could, and it kept tabs on Hanlon’s progress, knowing that his entry into the cruiser market would reduce the customer base for its interpretation of an American-style cruiser. And that the Excelsior-Henderson frame/engine platform concept efficiently and cost effectively could support a multitude of bikes, making the company a potentially serious long-term threat.

Despite some mild repetition and a folksy lack of polish, Riding The American Dream is a compelling story of one man’s dream to break into the mature motorcycle market and compete in terms of quality, style, and image. So compelling, in fact, that I found myself searching Internet sites for left-over Excelsior-Henderson bikes once I’d finished the book–and I don’t even ride. For more information, go to: www.ridingtheamericandream.com.