QT Interview: Ron Hutchinson of Harley-Davidson

Max Meyers Law Ad

Interview by Mike Dalgaard, Northwest Editor & Diana Olmstead, Northwest Associate Editor

During a recent “105th Ride Home” kick-off party we were given a rare opportunity to sit down and play 20+ questions with Ron “Hutch” Hutchinson who as noted above is the Senior VP of Product Development for Harley-Davidson. Ron has been with the motor company for 36 years. He would be leading the ride home to Milwaukee, riding the company’s newest entry into the trike market, the all new Tri-Glide. The questions we posed were all over the motorcycle map, as you will see below:

QT: On a personal level what is your all time favorite Harley model and why?

Oh, that’s easy; I’ve been with the motor company for 33 years. I have seen just about every great motorcycle and less than great motorcycle we’ve produced, but my all time favorite was the second generation FXR that we introduced in 1999 as a CVO model, custom vehicle operations model. For me it was the best balance… of balance, seat height, comfort and just nimble handling that was always very predictable. Now the newer models, certainly the ’09 FL is probably as good if not better, in terms of overall comfort, but just for an around the town kind of scooter I love that red FXR, it’s still sitting in my garage.

QT: Given the current economy, gas prices, inflation and the down market, what do you see ahead for Harley and the overall industry for the next 3 years?

Quite frankly I think we are on the verge of a resurgence in overall motorcycle demand. Right now we are seeing a tremendous number of Piaggio and many of the other little scooters. I think every one of those folks will eventually realize that 40 to 50 miles per gallon or 70 miles per gallon, without some of the speed and creature comforts you can get on a larger motorcycle, are customer prospects. So I suspect that once we get through this current economic malaise, and I’m no economist, but I’m hoping that gas prices become a little more rational, back to a little more normal, I don’t think they’ll ever get back to $2 a gallon, we might get used to $3 a gallon gasoline, but that will help the overall demand for motorcycles. We’ve seen a pick up in demand for Sportster’s this year; we attribute that to the very high fuel economy, so I think we’re poised on the edge of some great growth.

QT: What do you make of the almost precipitous drop of companies like American Iron Horse, Texas Iron, Swift Motorcycles, Custom Chrome and others? Is this the culling of the heard?

Hmm, I don’t know if I’d go as far as to say it’s a culling, as it is a fallout of the economic reality of 2007, 2008. When you look at what happened to the mortgage market and home equity a lot of the extra money that we used for toys is now going to fundamentals, to buy food, gasoline and our inflation is a real issue that we’ve had to deal with. Whether or not some of those guys will come back I don’t know. But I do think it’s been a tough time for businesses that are recreationally based, and for that matter even Harley, we saw a reduction in volume and had to take some very, very difficult action this year with production, volume cuts and our own employee workforce reductions. So it’s not been a good time to be in a recreational vehicle business. Guys like Swift, American Iron Horse and others have had a particularly tough time because they were very high end and relatively expensive compared to the rest of the industry.

QT: When you were in Sturgis did you have a chance to see the new Indians?

No, I didn’t. In fact, I have a confession, this year I didn’t go and it’s the first one I’ve missed since ‘91. But I ran the Parts and Accessories division for 12 years and every year we had a team building event where the entire senior leadership group from PNA would ride out and back and we did a lot of competitive shopping. It was a great educational trip for us. This year with the 105th and the fact that I’m doing this ride, I had to leave some time to work, so I had to pass on Sturgis.

QT: What model of 2009 H-D would you recommend for a new female rider?

Well, there are a number of new 2009’s that would work for a new female rider. Clearly the entry level Sportsters are great starter machines, but if that new rider has any degree of experience, then some of the Softail models that have a very low seat height and also very narrow seats that tend to make the motorcycle feel even lower are great motorcycles for women. Of course the new Tri-Glide is a fabulous product for someone who is new to the sport and may be just a little concerned about their own ability to keep a motorcycle upright, and 3 wheels do help for that. We saw a lot of women riders in Sturgis on bikes and trikes this year. I think that is the largest un-tapped market that we have yet to really serve. I’m personally convinced that the Tri-Glide will go long way to meet some of their needs.

QT: What percentage of motorcycle sales are to women?

For the overall industry I can’t tell you. Harley-Davidson is about 12%.

QT: Do you think that number is rising?

Yes. It absolutely is. When we first started measuring it, I remember a meeting where some young gentleman, new to marketing and new to the company, came into a product planning meeting and very proudly announced that he finally had the gender-based research that we needed and he announced that we had 96% of our sales to males and 2% of our sales to females and 2% to other, and he just could not figure out what the ‘other’ was!  (Laughing)

QT: Many Harley dealers are having Garage Parties for women only. Do you know how this concept originated?

Good question. Yes I do as a matter of fact. Garage Parties came out of the very creative mind of a young lady who retired this spring, her name was Kathleen Lawler, and Kal had been with the company 36 years when she retired, she started as an admin and used our tuition reimbursement program to help her grow professionally and educationally. She retired as VP of Communications for the Motor Company. She thought that we were not doing enough outreach work for female riders and thought and thought about this, and had spent time as our Managing Director of our UK Operations Manager in the early 90’s and had some success with doing similar types of events in the UK. Thus came to the concept of the Garage Party. We piloted that concept. It has worked very, very well to reduce the intimidation that some women feel when walking in to a Harley dealership and standing next to big, burly Bob at the Parts Counter.

QT: One of the things we know, based on of the amount of phone calls and e-mails we receive, is that Service, which is a concern with both Corporate as well as its dealers, is an issue. It seems that many dealers over the last two years have laid off senior techs in an effort to lower overhead. It strikes me that this is counter productive to running a good operation. Your thoughts?

I certainly agree that the economy has taken its toll on a lot of dealer operations. That just goes without saying. Any good business guy is going to look at the cost of operation and try to do the best job they can in optimizing their business model for the current conditions. It would be wrong for me to sit in Milwaukee and try to judge any individual operator and I won’t because they know their market, they know their people. They are doing what they believe is best for their business. I applaud their efforts to right-size their business. We clearly have provided more Service support in terms of training, a lot more electronically based materials for our dealer techs to try to make servicing bikes more efficient. Now on the other side we have literally spent millions improving the overall reliability of our motorcycles to reduce the need for service. You add that along with the economy, I would not want to be in some of the dealer’s shoes who have had to make some of these tough decisions. Again, I applaud their decisions to right-size their business but regret that some of them may have chosen to see some of their most experienced techs walk out the door. I also know a lot of those guys will come back in a heart beat.

QT: Has the Harley median age demographic stopped rising? What is the current median age of a male Harley buyer?

It has dropped, it’s now back down to 46-47. That reversed the tide and in fact, while our overall business is not quite as vibrant as it was a year ago, we’re down a bit, I think the published numbers were about 6% or so, the fastest growing segment in our business is the under 35 segment. So the dark custom, the marketing effort that we have done for outreach to females and younger riders is beginning to pay off. Quite frankly we’re excited about the fact that the age is no longer 49 and rising.

QT: I often see and hear that the average age of most HOG members active in their chapters is in their 50’s. How can H-D encourage younger riders to join their local HOG chapters?

Well, a number of things. From the Corporate level we are redefining a number of HOG events and trying to do events that are much more relevant to a younger crowd. With the announcement of the 1200 Nightster we took a totally different marketing approach and did kind of the Harley equivalent of rave parties to attract a much younger group and that worked very, very effectively. Word of that has gotten around and when we followed that with our dark custom series, we’re reaching a much younger crowd. Now as we moved from product announcement to some of our other services and also did some events in Sturgis at the Buffalo Chip – we had a much larger presence, in fact a corporate presence at the Buffalo Chip this year. The fact that we are there, trying to understand more about a younger demographic of riders, I’m really hopeful that we can re-tool some of the HOG events and things like Garage Party’s and other events to appeal to a younger demographic.

QT: Given the fact that the demographic is dropping, which is a good thing for Harley, it also means that a lot of newbie’s are riding. What we’ve seen across the country, especially with the fatality spikes in 2006, is that a lot of states are moving towards mandatory safety training. How do you feel about that?

Well, personally, as a rider, as a father and grandfather with 12 grandkids, having safety training is, I think, critical to long term success on a motorcycle. Having a state tell me that I must engage in that training prior to getting a motorcycle license runs a bit against the rather strong conservative feelings that I have, given my age and my demographic. So while I support an individuals decision to take appropriate training and have taken multiple advanced riding courses myself, I don’t like the idea of a state telling me I have to do that, I feel that’s a personal opinion and choice.

QT: The Trike is finally here. What prompted its development?

Officially the motor company recognized a burgeoning opportunity. I touched on that in our prior discussions about females and those of us that are in our 60’s, that are boomers, aging boomers, (laughter). I think the market for Trikes goes well beyond the aging boomer. We’ll be the first wave and we’ll take the first view, but in the end, females and those new to the sport, folks that might be just a bit apprehensive, I think, will be the greatest market potential for the 3-wheeled motorcycle. We recognized it and have scanned the industry. We paid a lot of attention to the physics and fundamental design characteristics of Trikes and chose the solid axle. Not because Lehman was there and they were the leader, but because there are some fundamental physics about a solid axle that provide for a measure of stability in a curve. When the inside wheel comes up, the power goes to the inside wheel and you don’t go over, whereas with other forms of suspension you may not have as much advanced warning. There are some fundamental reasons for the design that we chose and it did take awhile to create a product that we‘re proud of.

QT: Do you anticipate people will hold onto their Trikes longer than they would their bikes before trading in?

I’m hoping we can create enough product differentiation over time that there will be a wonderful trade-in cycle on Trikes just like there is on two wheelers.

QT: We keep hearing rumors about the so-called “ladies Softail”; Is there such a thing?

We make motorcycles for motorcycle riders. We don’t differentiate on gender, race or any other basis. We believe that there are certain physical limitations that exist in short riders and tall riders. We create ergonomic packages for shorter riders and since I’m 5’6” you might know where some of those may have generated from, (laughter) but the things that are required to make a motorcycle work very well for a 5’6” man happen to work very well for a 5’6” woman. So we design motorcycles for all sorts of body sizes and it’s got nothing to do with gender. One of the reasons we have been so successful in PNA is that we offer a wide variety of ergonomic packages that allow a consumer to tailor a motorcycle to whatever size and body shape they’ve got.

QT: Will Harley be able to meet the next set of EPA standards, I think in 2012 if I’m not mistaken, with air-cooled motors?

Absolutely. In the foreseeable future we see a very good future for air-cooled V-Twin motorcycles. There may come a time that we may have to provide some sort of precision cooling of certain areas of the engine, but we don’t know and it all depends on what happens in November with the Co2 regulation, etc.

QT: I have a question that was inserted by my wife and it will be the first thing I’m asked when I get home. She wants to know ‘Why when the average-size woman is now a size 14/16, is it that most H-D dealers carry women’s sizes that even an anorexic Hooters girl would have trouble getting into?’ (Lots of laughter) That’s a direct quote from my wife. (Laughter) Where are all the plus sizes and styles?

Two years ago we changed up leadership in our general merchandise group. Patrick Smith is the new general manager of that unit. His experience prior to Harley-Davidson included Lane Bryant, Limited and a number of other companies that served the clothing needs of a wide variety of female sizes. He has re-tooled the product line and those plus sizes that actually fit, are now available in the catalog and I would suggest that your wife, whose name I did not catch, go to her favorite dealer and quite frankly, raise hell to get the right sizes of clothing in there because we now produce it. Patrick has done a lot to re-tool the entire product line. In fact at our annual meeting a rather rotund lady got up to the mic and asked nearly the same question and Patrick stood up, ran back to this gal, provided her a business card and a catalog of products, so now she is his favorite model for the plus size clothing!

QT: Is Harley doing any initial research on alternative fuels and energy sources?

I can’t really talk about future product. But I can tell you that we are looking at, and have run, and currently have motorcycles that run on a much higher level of ethanol because we sell a lot of product in Brazil. Fuels there are a sugar-based ethanol that have a slightly higher energy content than the stuff we get here. But regardless we already have the capability of providing products that do just that – that run on a higher percentage of ethanol and we are also looking at a variety of different alternatives.

QT: If a rider has an idea or concept for a part or accessories design can they forward their idea to H-D’s manufacturing and design department? If so, how?

There is an idea submission process that we ask someone to go through that provides protection for the individual and protection for the motor company. Because what we wouldn’t want to do is already be working on something and then have someone come in and suggest something very similar. So we have this idea submission form and an individual can call our standard switchboard number 414-342-4680 and ask for the folks in the legal department and ask for an idea submission form.

QT: With the recent acquisition of MV Augusta will we start seeing some of those bikes in this country? What are Harley’s plans to do with MV Augusta at this point?

Our initial objective with MV Augusta is to create a high end leverage, in terms of what they have already created, a high end motorcycle in Europe, and to re-energize that focusing primarily first on the European market. Beyond that where we take it is anybody’s guess at this point. But we are focusing on Europe first.

QT: If a customer/rider has a comment regarding a local dealership that they want to express “above” the dealership owner, who do they contact and how?

Harley-Davidson customer service and that number can also be reached through the main switchboard number, or the number is listed in the owner manual.

** Ron “Hutch’ Hutchinson speaking on stage: “During the time period surrounding the H-D anniversaries, H-D and it’s loyal riders raise much needed money for MDA. We are proud to say we have raised over 60 million bucks over the last 20+ years!”

EDITORS NOTE: We just received a very nice note from Ron saying that the ride home on the Tri-Glide with his lovely wife, Maureen was the best 2 weeks on a scooter yet! They loved the bike and Ron, who rumor has it owns quite a few very nice rides, is thinking of adding the trike to his garage. Look for an upcoming road test of the H-D Tri-Glide very soon.