This category includes establishments primarily engaged in manufacturing motorcycles, bicycles, and similar equipment, and parts. Establishments primarily engaged in manufacturing children's vehicles, except bicycles, are classified in SIC 3944: Games, Toys, and Children's Vehicles, Except Dolls and Bicycles. Establishments primarily engaged in manufacturing golf carts and other similar personnel carriers are classified in SIC 3799: Transportation Equipment, Not Elsewhere Classified.
336991 (Motorcycle, Bicycle, and Parts Manufacturing)
In one form or another, the two-wheeled personal vehicle has played an important role in U.S. transportation systems. Bicycling, as reported by the National Sporting Goods Association, fell from third to fourth place in sporting activity popularity in the late 1990s. This drop could be attributed to the rising popularity of in-line skating. Many U.S. manufacturers closed plants because of this decline. Despite the slip in popularity, bicycle sales did reach $3.4 billion in the late 1990s.
In spite of the slow growth of entry-level and off-road motorcycles in the previous years, the 1990s may be called the decade of the luxury or big bike for the motorcycle industry. The popularity of heavyweight motorcycles with engines larger than 800 cubic centimeters (cc) held an estimated 45 percent of the market. As baby boomers grew older and their incomes increased, they traded up for the larger, more customized motorcycles. By catering to baby boomers' nostalgia with safe, reliable replicas of older models, Harley-Davidson continued to dominate the U.S. market late into the 1990s. Known in the industry as "RUBs" (Rich Urban Bikers), these consumers of the larger motorcycles were predicted to be marketing targets well into the next century. Annual sales of heavyweight cycles reached $1.8 billion dollars in the late 1990s.
Total industry shipments were valued at $3.23 billion in 2000, higher than their 1999 level of $3.05 billion, but lower than shipments in both 1997 and 1998, which totaled $3.38 and $3.34 billion, respectively. The cost of materials in 2000 totaled $1.58 billion, and the number of industry employees that year reached 14,956.
Harley-Davidson Inc. of Milwaukee, Wisconsin, the only remaining major U.S. motorcycle manufacturer, knows it is selling more than "bikes." The image of the Harley as America's motorcycle has become integral to its marketing success. Its extensive national dealer network sells motorcycles, parts, and service, and it also promotes Harley-Davidson's own line of "Motorclothes" in "designer stores." The company sponsors a motorcycle enthusiast club, the Harley Owners Group (HOG), and organizes rallies and product demonstrations.
The Asian financial crisis affecting the mid-1990s allowed Japanese motorcycle manufacturers to lower prices because of the favorable exchange rates. The lower prices, in turn, increased production at two Japanese motorcycle makers—Honda and Kawasaki—who have facilities in Ohio and Nebraska respectively. Like other Japanese and European motorcycle manufacturers, these manufacturers maintain their own dealer networks and generally enjoy a price advantage over comparable Harley models. Even so, the effectiveness of the Harley-Davidson lifestyle marketing campaign has made the "Hog," as the Harley-Davidson is affectionately known, a desirable status symbol in the biking world. In the late-1990s, used Harleys routinely sold for more than their original price.
The bicycle segment of the industry also sells much of its product through specialized dealer networks. These dealer networks generally carry the sophisticated, higherpriced models for the cycling enthusiast. Bikes in this category, like Schwinn's Paramount line, can sell for more than $5,000. Cutthroat competition and rapid innovation in the bicycle segment of the industry forced many firms out of the market. Chicago, once the world's bike manufacturing capital with more than 90 manufacturers, only has Schwinn left, and that in name only. Schwinn, established in 1895, sold 25 percent of America's bikes during the 1960s, earning it the reputation as America's bicycle manufacturer, although it was never the largest. A 1981 labor dispute prompted Schwinn to phase out its U.S. manufacturing operations in favor of overseas facilities. That move created a new competitor, Giant Bicycles of Taiwan, which eventually drove Schwinn out of the market after supplying 70 percent of Schwinn's product in 1984. In 1991, Schwinn filed for bankruptcy. Scott USA of Ketchum, Idaho, bought its remaining assets, including the Schwinn trademark, for $41 million in 1993. Schwinn reported 1999 sales of approximately $200 million. Many of the U.S. bicycle manufacturers now outsource to China or Mexico.
Bicycles. The bicycle originated in France when Paris carriage maker Pierre Michaux fitted cranks to the front wheel of the German designed draisienne, or hobby horse. By 1867, a bicycle craze was sweeping Europe. According to David A. Hounshell, author of From the American System to Mass Production: 1800-1932, the Boston merchant Albert A. Pope deserves credit for introducing the device to America. Pope began importing the British High-Wheel, also known as the "Penny-Farthing," in 1876. By 1878, he was producing his own version at the Weed Sewing Machine plant in Hartford, Connecticut.
The new product tapped a growing demand in America for increased mobility and provided work for the idling American arms industry. Much of the industrial expertise developed for the weapons industry during the Civil War found useful employment in the production of bicycle components. In 1890, 27 bicycle manufacturers produced 40,000 "safety" bicycles, featuring two equal sized wheels.
By 1897 production increased to 1.2 million bicycles annually. Demand evaporated, though, as the horseless carriage began to make its impact felt. Auto manufacturer Hiram Percy Maxim noted that the bicycle revealed the advantage of quicker personal transportation but failed to answer the challenge. According to Maxim, the bicycle created the demand for the automobile and provided the technology needed to mass produce it.
Bicycles retained a steady but small popularity through the first half of the twentieth century; it was the baby boomer generation that fueled the resurgence of the bicycle starting in the 1950s. The single-speed child's bike gave way to multiple speed versions and, eventually, the popular light-weight 10-speed. Throughout the 1970s, the 10-speed dominated the market with a market share of 56 percent. However, an American innovation, the mountain bike, changed everything. Initially designed for climbing the scrubby hills north of San Francisco, mountain bikes and all-terrain bikes sported fat tires, sturdy frames, and multiple gears. By 1991 they boomed in popularity even in areas miles from any mountain and commandeered a 50 percent market share.
Many traditional companies like Schwinn and Murray failed to react quickly enough to the popularity of the mountain bike, leaving the door open for small innovators to carve out a niche and for large foreign firms like Taiwan's Giant and China's CBC to gain control of trademarks. The showroom models still sport familiar brand names, but many are foreign-made while others use components no longer made in America. Those firms that did react, like Trek and Cannondale, are enjoying great success in the export market, especially in Europe and Japan. In 1998 Cannondale was the leading manufacturer of aluminum bicycles with combined sales of more than $171 million for their bicycles, accessories, apparel, and components.
The phenomenon of the mountain bike may be dwindling in importance, as the sales of these bikes decreased in 1996 for the first time in ten years (from $1.6 billion in 1995 to $1.5 billion in 1996). Once again, the baby boomer market may be fertile, as shown by the introduction of expensive "nostalgia" bicycles by companies such as Schwinn. Some automobile manufacturers started producing bicycles under their own logos, hoping to appeal to customers who want to lead an active lifestyle (or at least to project that image); these companies include Mercedes-Benz, Volkswagen, BMW, and Jeep. Bicycles also are being used more frequently by non-recreational riders such as commuters, couriers, and police officers.
Motorcycles. The motorcycle represented a first step from the bicycle to the automobile. The simple expedient of attaching a gasoline-powered engine to a bicycle frame produced a device that was at once exotic and affordable. During the early 1900s, more than 100 companies began manufacturing motorcycles, including Harley-Davidson, Indian, Orient, Excelsior, Cyclone, Henderson, and Marsh. By 1915, they produced models that could exceed 100 mph. The 1915 Cyclone, designed specifically for racing, could reach speeds of 124 mph, but had no throttle and no brakes. Harley-Davidson began production of its first model, the Silent Grey Fellow, in 1903, the same year Henry Ford unveiled the Model A. When Ford introduced his mass-produced Model T in 1913 and sold it for $500, most motorcycle manufacturers could not compete. After World War I, only Harley-Davidson, Indian, and Excelsior remained. By 1953 Harley-Davidson was the lone American producer.
With the OPEC oil embargo of the early 1970s, motorcycles became popular for commuting—but not the Harley. Consumers wanted cheap, reliable, bikes, and those came from Japan. In 1973, sales of motorcycles reached an all-time high of 1.5 million. In 1983, Harley-Davidson sought and received tariff protection from the Reagan administration to help it battle Japanese competition. Even with the 45 percent tariff protection, the company was almost bankrupt by 1985 due to poor quality and inefficient production. By applying Japanese management techniques, Harley-Davidson finally reversed its situation and asked for the tariff to be removed one year before it was due to expire. Meanwhile, Honda miscalculated the heavyweight motorcycle market, concentrating instead on small bikes and high-priced, hightech super-bikes. Honda's market share dropped from 44 percent in 1985 to 32 percent in 1989.
There was a new surprise for the industry in 1994 when Polaris introduced their heavyweight Victory V92C cycle, the largest V-twin engine on a cruiser-style cycle. Polaris is the first new U.S. motorcycle manufacturer since 1960. The Victory V92C was chosen Best Cruiser of the Year by Cycle World .
The motorcycle sector of the industry will be competing with the bicycle sector as it targets much of the same audience, playing on that group's high level of physical activity. Increased pressure to use bicycles for environmentally friendly commuting in congested cities may also continue to push the domestic market.
As a whole, industry shipments declined from $3.38 billion in 1997 to $3.23 billion in 2000. The cost of materials over this time period fell from $1.8 billion in 1997 to $1.58 billion in 2000. Employment in the industry declined throughout the late 1990s, dropping from 17,151 in 1997 to 14,817 in 1999, before recovering slightly to 14,956 in 2000.
Bicycles. In the late 1990s a reported 45 million bicyclists were active in the United States. High demand for American mountain bikes overseas accounted for an estimated 17 percent increase in exports in the late 1990s. Improved quality without significant price increases have occurred because of the competition's ability to mass produce their product.
Electric bicycle technology was at the forefront of the industry in 1999. As a result, Schwinn and Currie Technologies created a partnership in an effort to be the worldwide frontrunners in the electric bike market in the early 2000s.
Motorcycyles. The average motorcycle rider at the turn of the century looks little like the stereotypical biker depicted in popular movies like Easy Rider. A biker is more likely to be an aging baby boomer who bought an expensive, heavy-duty "cruising bike," most commonly a Harley-Davidson. While the median age of a Harley rider was 34 in the mid- 1980s, the age rose to the 55 to 64 group as the fastest growing and ages 45 to 54 the second fastest. Those age groups were expected to increase 4 percent and 3 percent annually from 1998 through the year 2003. Many Harley buyers are professionals who spend weekends and vacations on their bikes. In the late 1990s smaller, faster sport bikes were being marketed to the ever popular baby boomers with their greater disposable income.
The 1990s have seen domestic production relying much more on exports—although Harley-Davidson continued to have difficulty meeting those demands. However, improvement in the Asian financial situation near the end of 1999 was expected to help economic growth for the major motorcycle manufacturers. According to the Consumer Expenditure Survey, baby boomers will continue to play a major factor in the growth of the motorcycle industry since they will be at their highest level of discretionary income.
In 1999 Cannondale remained the bicycle industry's leader in aluminum bicycles. The company offered 55 models and had total sales in excess of $171 million for fiscal year 1998 for their bicycles, apparel, accessories, and components. In 1998 Cannondale began plans to manufacture and market its first off-road (motor cross) motorcycles and unveiled the MX400 at the International Powersports Expo in Indianapolis, Indiana, in 1999. The company plans to be as innovative with their line of motorcycles as they have been with their bicycles in the past.
In 1998 Schwinn signed an agreement with Currie Technologies, giving Schwinn Cycling and Fitness exclusive license to the electric bicycle technology Currie Technologies has developed. This new electric bicycle was available in 1998. It is lightweight and frictionless, can be operated in inclement weather and be serviced at traditional bike shops, and delivers state-of-the-art performance. Maximized production efficiency by Curry Technologies has made this electric bike affordable to the public. Schwinn also launched a full line helmet program for the safety of adults and children in June 1998.
Huffy Corporation, the world's largest bicycle seller, announced net sales of $112.8 million, down 6.1 percent from the same period 1998. At the end of 1999, the company's planned transformation from a single-brand to a multi-brand bicycle design manufacturer was complete. These changes were projected to increase the company's earnings significantly in the year 2000 and continue through the first decade of the new century.
The undisputed leader in the U.S. motorcycle industry is Harley-Davidson of Milwaukee, Wisconsin, which maintained a 67 percent share of the domestic motorcycle market in 1997. The company's net sales rose to $2,063,956 in 1998, and the company increased its production target in 1999 to 175,000 units. Harley-Davidson increased its production target for 2000 to 193,000 units because of the positive reaction from motorcycle press, dealers, and customers, as well as the continued strength of the heavyweight motorcycle worldwide. Seven new models were introduced by Harley-Davidson in the third quarter of 1999, all having the new Twin Cam 88B counterbalanced engine. Also, third quarter sales for Harley-Davidson apparel rose 22.2 percent—totaling $40.9 million. Buell Motorcycle, a division of Harley-Davidson making smaller, sportier motorcycles, had sales totaling $16.7 million—an increase of $7.5 million from 1998.
Polaris Industries, Inc. reported a 9 percent increase in net income for the first six months of 1999 and a 16 percent increase in sales totaling a little more than $562 million. This growth was attributed to a 26 percent increase in all-terrain vehicle (ATV) sales, which continue to grow at more than 20 percent industry wide.
Harley-Davidson reported a workforce of 6,200 employees for 1998—a 3 percent increase over 1995. In 2000 the United States motorcycle, bicycle, and parts manufacturing industry reported 14,956 employees, of whom 10,250 were production workers.
The expansion of exports in both bicycles and motorcycles throughout the late 1980s and the late 1990s has been steadily growing. U.S. exports of motorcycles has grown steadily from 1987 to 1997 at an annual rate of 18 percent. The apparent consumption totaled $2.4 billion in 1998, a 10 percent increase. Harley-Davidson now exports 30 percent of its motorcycles, which could be higher if they could meet production demands. By contrast, imports of motorcycles and parts decreased 3 percent to an estimated $1.3 billion in 1998. Harley-Davidson maintains 55 percent of the total U.S. market, far more than all Japanese manufacturers combined.
American companies are seizing new market opportunities in countries such as China, which traditionally have been controlled by domestic manufacturers. In early 1997 ZAP Power Systems of Sebastopol, California, received a grant from the U.S. Environmental Protection Agency (EPA) to promote sales of its electric-powered bicycles in China. This grant came on the heels of Shanghai's ban on the licensing of new gas mopeds and bicycles and its plans to replace 80 percent of the 470,000 gas vehicles in the city with cleaner vehicles.
The mountain bike continued the technological revolution started with the 10-speed bicycle by reducing cost and increasing comfort levels. Innovators in bicycle design use new materials and electronic gadgets to bring the century-old "safety" bicycle into the computer age. The molded carbon fiber metals that made stronger, lighter frames possible, for example, came from missile technology, while Special Bicycle Components' three-spoke wheel (which combines carbon fiber, epoxy resin, Kevlar, and aluminum) was designed on the Cray Supercomputer. In addition, hydraulic brakes are replacing the familiar cable systems, and electronic shifters make changing gears a snap. Some manufacturers are investigating a new enclosed automatic transmission system, which could banish "gear fear" forever. The most visible innovation in bicycling may be a completely new design. The new recumbent bicycle places the rider in a sitting position with the pedals in front, thus providing a low center of gravity, which improves cornering and pedaling efficiency.
Foreign manufacturers are changing the way they do things, as well. National Bicycle Industrial Co., a subsidiary of Matsushita, builds its bikes one at a time. Using robots and computer tracking, its 20 employees custom manufacture the product from the individual customer's order. From a base of 18 models of racing, road, and mountain bikes, they can build 11,231,862 variations in 199 color patterns.
The manufacturing expertise of Harley-Davidson has grown steadily since its first 1903 model, which used a tomato can for a carburetor. Faced with sophisticated competition from Japanese manufactures in the 1980s, the company adopted modern Just-In-Time inventory management and computerized information systems. It retrained its production workers to use statistical monitoring methods, and re-educated managers to work as team leaders instead of bosses. New production line techniques included a state-of-the-art robot assembly system and a $23-million paint center at York, Pennsylvania. The result was the vastly improved quality and productivity needed to overcome Harley-Davidson's reputation as unreliable and expensive.
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