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Harley comes full cycle

Harley-Davidson and its hogs are king of the road again.

America's only major motorcycle manufacturer celebrates its 90th anniversary this weekend with a bikers' bash emceed by Harley enthusiast Jay Leno. And it's a good time to celebrate _ after years of production problems and losses, the demand for Harley-Davidson's bikes now outpaces production, and the company dominates the domestic market.

More than 250,000 people and their bikes, known affectionately as "hogs," headed to Milwaukee from around the world for the weekend.

"Harley-Davidson has sort of become a sensibility, a sense of Americana," said Hayley Sumner, spokeswoman for the Harley-Davidson Cafe, scheduled to open in New York by fall. "It used to connote a grittiness, but it's crossed every economic barrier."

The anniversary arrives as Harley-Davidson is on an upswing from the 1980s, when it sank as deep as its famous low-riders.

"During the past 10 years, the people of Harley-Davidson have transformed the company from a financially endangered, below-average-quality manufacturer to an industry leader," said Richard Teerlink, president and chief executive officer.

There was a lot to overcome to reach profitability. Harley-Davidson was hurt by competition from low-priced Japanese imports as well as its own quality problems. A leveraged buyout in 1981 tossed the company deep into debt.

"The possibility of bankruptcy stared them right to the eye. If there was a turning point, that was probably it," said Timothy P. Reiland, an industry analyst with Cleary Gull Reiland & McDevitt of Milwaukee.

The new management improved quality, lowered costs, made millions in capital improvements and cooperated with labor, Reiland said.

In a few years, Harley-Davidson became a "symbol of somebody who had turned it around and pulled themselves up by their bootstraps," Reiland said.

The company _ started in a Milwaukee shed in 1903 by three boyhood friends _ now has a 60 percent share of the domestic market, up from 20 percent in the early 1980s.

Harley-Davidson reported sales of $1.1-billion in 1992, an increase of 17.6 percent over 1991. Earnings increased about 45 percent over 1991 to $53.8-million.

Its Holiday Rambler Corp., although less successful, returned to profitability last year after being sidelined by the recession. Sales of recreational and commercial vehicles increased 18 percent to $282.4-million.

Analysts say Harley-Davidson needs to increase its supply to meet pent-up demand _ buyers are placing orders on bikes that won't be delivered for months _ while not saturating the market.

"It's a hard product to get. That enhances the mystique," Reiland said. "Enough bikes is too many."

Bill Stewart, of Charlotte, N.C., a Harley dealer for 14 years, led Harley owners on a five-day ride from Kitty Hawk to Milwaukee. He said his customers _ bankers, doctors and next-door neighbors _ are willing to wait for their bikes.

"It's the mystique. It's an ego deal. It's a fun sport," Stewart said. "Why else do people tattoo our (bikes') names all over their bodies?"