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Erik Buell Interview with Motorcycles USA
9-12-2010 - Thursday, January 28, 2010
The demise of Buell Motorcycles shocked the motorcycle industry. Three months after the news hit, many questions remain. For answers MotoUSA asked the man that started it all 26 years ago, Erik Buell. Anyone who has spoken to Erik Buell knows his passion for motorcycles, and sportbikes in particular. Building the American sportbike has been his professional lifeâ€™s work, and in spite of the crushing news this past October, Buell will continue to support his namesake sportbikes at the helm of Erik Buell Racing.
We spoke with Buell only hours after Harley-Davidson released its 2009 year-end financial report, which showed the Motor Company 55 million in the red. Our discussion ranged from what happened to his company and the complex relationship with Harley-Davidson, to his personal reaction to the news and his plans going forward. Though he cannot broach certain topics for legal reasons, Buell answered what he could and gave us his perspective on one of the biggest motorcycle stories of 2009.
Our first question, the big question: What happed to Buell Motorcycles? What went wrong?
â€œWell, I think candidly what went wrong was we had a heck of a recession, which was particularly tough on all the sportbike companies and that was basically it,â€ said Buell. â€œHarley-Davidson needed to consolidate because they were having a tough time. It saw the sportbike industry doing a lot worse than their industry, which is already doing bad, and decided to get out.â€
The final Buell rolls off the East Troy assembly line (top). New Harley-Davidson CEO Keith Wandell (below).
Asking Buellâ€™s perspective as a business man on the move to discontinue Buell Motorcycles he said:
â€œI donâ€™t agree with the decision, but that is the decision that they made. They believed that they needed to focus on their core industry when the times are hard, and they believed it would be a long recovery for the motorcycle industry. And they couldnâ€™t be distracted, and like I said the sportbike industry was in worse shape than theirs and they felt they needed to focus. I donâ€™t agree with them, but thatâ€™s what they felt and thatâ€™s the leadership choice they made.â€
A key change in Harley-Davidson leadership took place on May 1, 2009, when Keith Wandell took over at CEO, replacing Jim Ziemer. Within six months Buell was axed. Asked if the change in CEO effected the decision to drop Buell, or whether it was the board of directors, Buell responded:
â€œObviously the board supported him and put him in place. And I believe that definitely was the decision that he had input into, had the lead as CEO.â€
The Harley-Davidson Brand
The current strategy for Harley-Davidson is to focus resources on the H-D brand. In a conference call explaining 2009 third quarter results, Wandell summed up the reason for dropping Buell: â€œWe firmly belive that $1 invested in going to market with the Harley-Davidson brand delivers much more impact than the same dollar invested elsewhere when it comes to reaching new rider demographics.â€ (Quote courtesy of Seeking Alpha transcript ) Asked to respond to Wandellâ€™s statement, Buell only reiterated that Harley believes the Harley-Davidson brand stands for cruisers and â€œthey believe the brandâ€™s strong and thatâ€™s where they should put their money.â€
However, Buell had a different vision of Harley-Davidson, a more inclusive one:
â€œMy belief was that Harley-Davidson could become Harley-Davidson Inc. That actually stood for leadership that could select, pick, customer bases and deliver the right product to them. But not necessarily under the brand name. And my idea behind that was when Harley-Davidson was bankrupt in 1982 or something, and Vaughn Beals [former President and CEO of Harley-Davidson] turned it around by focusing on their customers. So truly the fact that Harley was Harley, and that they always made the bikes the same, was not saving them. They were bankrupt. Theyâ€™d been around for 80 years or whatever, but they were just about to go under.
â€œWhat saved them was not building what they always built. What saved them was focus on the customer. And doing things like HOG and making high quality bikes and just doing all the things that the customer that wanted a bike like that wanted. And Vaughn did a great job of it, an unbelievable job obviously, one of the greatest success stories of all time. My mind was, if they could apply that kind of thinking to different customers theyâ€™d have a monstrously powerful corporation.
â€œIn short, you could say â€˜letâ€™s do sportbikes.â€™ Theyâ€™re kind of similar, but actually a lot different in the customer mindset. So what we need to do is approach them as specifically and as focused a way as you did with the cruiser customer. But they didnâ€™t because it was hard, because we were small. And it was also hard to get people to believe that.â€
Erik Buell at the desk and at the workshop. Though his American Sportbike company has dwindled from 190 employees at Buell Motorcycles to six people at Erik Buell Racing, his American sportbike dream isn't dead: 'I still feel like I have tons of energy for this stuff.'
We asked: Was there ever any talk or idea that the Buell brand goes away but Harley-Davidson takes over and delivers more of a street bike, more of a performance-oriented design?
â€œObviously, they had made that thought before, thought it possible and revisited it every so often. And whenever they did any research, the answer was: one of Harley-Davidsonâ€™s greatest strengths is that it has a very unique identity and that it shouldnâ€™t go into the marketplace where other brands are. It would devalue the brand, they need to stay independent. Their identity is extremely, extremely strong, which is a great value, the last thing you want to do is to lose that. So thatâ€™s basically what it came down to is you might sell more, but you might not sell more. But you definitely would confuse the brand. And so that really was why we kept going to do the Buell thing. Like I said, it was difficult, because itâ€™s a big company and a small company trying to do something different. And it always was that the big company had much more important needs from a financial basis than Buell did.â€
Later Buell would say on the decision to focus on the H-D brand rather than stick with Buell:
â€œThey decided to go back to investing their money in doing more with the Harley brand. They both do require investments in that situation, that they had to make, and they made the one they chose to make. I donâ€™t agree with it, but on the other hand that doesnâ€™t mean I denigrate it and that doesnâ€™t mean I think theyâ€™re stupid, or anything like that. I just disagree. Thatâ€™s okay for people to disagree.â€
Buell did feel, however, that progress was being made.
â€œI think we were getting there. We were getting there, but it takes a lot longer than I thought,â€ said Buell on his namesake companies progression, continuing. â€œBut the recession really was a huge hit. And you know what itâ€™s done to the other brands â€“ the Suzukis and Kawasakis and everybody â€“ they have big companies that help bolster them up, their car companies and other things. But without those, theyâ€™d be in trouble. And Harleyâ€™s a lot smaller company than any of them, so thatâ€™s the choice they made was to get out.â€
The history between Buell and Harley is complex. We asked: Considering the fact that H-D ultimately opted to kill Buell Motorcycles, does Buell himself regret making the partnership?
â€œObviously Buell became significantly larger with their investment. It was complex. Itâ€™s always complex when you have a large company and much smaller company in any industry. It was exacerbated because the two brands had such, shouldnâ€™t say the two brands, the two customer bases had such significant differences.
â€œAnd so itâ€™s very hard to get the proper focus on a little division of the big company and identify the smaller company properly for a different customer base. That was very difficult.â€
The relative size disparity of the two companies was a clear challenge, but the difference in the customer base may be even larger. It was a divergence that extended to the dealer level. Asking Buell about the question of dealer support, he answered:
â€œI think we had spectacular dealers. I think the best dealers that we had were probably the best dealers in the sportbike industry of any brand. The ones we had that were really good, were just fabulous. There were others that didnâ€™t get it and there were many, most Harley dealers were not even Buell dealers. So there were many, who because, once again the scope and the fact that having to accept completely different customer and different image, and also have it all be on such a smaller scale was a difficult thing.â€
Buell continued: â€œAnd thereâ€™s no blame here. We had come to think of this as something that was pretty hard to do. I had a vision which was shared by some of the others, but it was a difficult one and it didnâ€™t make it.â€
One argument for hanging on to Buell is demographics. Could Buell be a source of young riders for the aging H-D ridership? We asked Buell: Did the numbers really bear that out? Was Buell selling bikes to younger people, or were they selling bikes to the same age group as the Harley people?
â€œOur demographics were about, weâ€™re not super young, because of the price point and because of the fact that most of our product were the air-cooled and the water-cooled had just started and the water-cooled was on the higher-priced end of the scale, our demographics were more like you would see with literbikes. But they were about 10 years, ballpark 10 years younger than Harleyâ€™s. And going down.â€
Why Not Sell?
Addressing one of the biggest questions since news of the companyâ€™s demise, we asked Buell for his insight or speculation: Why not sell off the Buell brand the way Harley plans to sell off MV Agusta?
â€œThey [Harley] believed it was just too much of a part, too integrated into their business. They had dealers who were involved and they wanted to keep their dealers kind of focused. They wanted to control that. They had 137,000 Buell owners out there to sell parts to, and I think the parts business over the next 5-7 10 years will be a profitable business. And it was a great deal of complexity they felt in disconnecting Buell from Harley-Davidson.â€
Related to the decision not to sell, rumors abounded about other OEMs, specifically Can-Am, as possible suitors to Buell. Asked specifically about the Can-Am rumors, and other OEMs, Buell said:
â€œWith financials or plans for the future, or whatever deals or things might have been considered or anything, thatâ€™s not something I can talk about.â€
The same holds for the confirmation or denial of Buell being bound by a non-compete clause. Again the answer was succinct:
I really canâ€™t talk about anything like that, legal or financial.
The Wait for Water
The switch to a water-cooled engine sooner was a big factor in the companyâ€™s fate â€“ at least in Buellâ€™s eyes. He needed the water-cooled platform to be competitive on the race track, and success on the track would legitimize Buell innovation and translate into success in the sportbike market. We asked: It seemed like the 1125 platform was just breaking through. Do you regret not making the switch to a liquid-cooled motor sooner?
â€œAbsolutely. And we tried, and couldnâ€™t pull it off. I built the prototype of the 1125 in 1988, so it took me 20 years to get it to market. And then we had another run at it, we were actually supposed to have a water-cooled bike out by 1998, but that became the motor, Harley Davidson decided to take the motor and changed it into a cruiser motor and that became the V-Rod. But it actually started out as our engine. We were trying to get a water-cooled bike. It was actually scheduled to launch, it was ready to launch in Europe in â€™98.
â€œWeâ€™d just been in business doing the air-cooled for a couple years, and I felt we needed to go water-cooled as soon as possible, and so did the person who was the head of marketing at the time. But we got going, but once we were given the scale. Harley Davidson looked at it and said: â€˜well, when you do launch it, it will only be at these numbers and weâ€™re doing hundreds of thousands of motorcycles. If we did a water-cooled weâ€™d sell a lot more of those, so we need to share the motor. In fact, we kind of need to drive the motor. And then when weâ€™re done with it, you can use it.â€™ And it became a great cruiser motor, but it was just too big and too heavy, it only had a five-speed transmission â€“ a lot of things were not appropriate to bring it out in the marketplace as a true sportbike engine.
â€œThat truly was what I was trying to do with Buell from the beginning, is truly make it a sportbike company. We did great things with the air-cooled engines. But it was very much a niche, and like I said, I knew it.â€
After losing the motor to the V-Rod, Buell went back to the drawing board and persevered with the air-cooled powerplant, but the desire for a water-cooled engine remained.
â€œWe did the XBs because we could at least do our own [engine], see what kind of elegant take we could do on the air-cooled motor, which turned out to be pretty great success in some circles. But still that was always our goal: a range of water-cooled bikes. We believed with using just the air-cooled engine we were holding Buell to about probably 5% of what if could have been, maybe 10%.â€
A high-water mark in the Buell racing history, thus far, came with Danny Eslick's Daytona SportBike title.
Integral to Buellâ€™s future plans was racing. Having gathered its first title championship (albeit in the controversial AMA Daytona SportBike series), Buell was looking forward to racing on an international level with a more refined version of the 1125R superbike.
â€œLike I said, I still wish it couldâ€™ve worked. I think if weâ€™d have lasted another five years, we wouldâ€™ve turned the thing around. We had just won our first championship, we wouldâ€™ve run American Superbike this year, and World Superbike in 2011.
â€œMy belief was thatâ€™s what we needed to do, desperately. Thatâ€™s why my very first water-cooled bike that I built in â€˜98 was a superbike. It was 1000cc, water-cooled, with radiators and fuel in the frame, and all that stuff, and at that time it was going to run against 750 four-cylinder Japanese bikes. And I think it wouldâ€™ve been a dominant bike. â€¦Again I believed thatâ€™s what we needed, was a high-end racing identity. The proof that our innovation was proven on the track.â€
At the center of future racing was the 1190RR, which would feature a larger spec motor using the 1125 platform. Erik Buell Racing, which will support Buell racers with parts and racebikes through at least 2010 has already sold two of the 1190RRs, though details are still scant.
â€œOn Erik Buell Racing we have an 1190 race version that will be coming out soon. Not yet, itâ€™s not up. We talk about it some on the website, but thereâ€™s no pictures because weâ€™re not done with it. Weâ€™ve been testing it, but weâ€™re not ready to release them yet.â€
The 1190RRs were sold to the German-based Pegasusraceteam.com. EBR is mum on the details, however, in part because operations at the new racing company are just getting underway, still transitioning.
â€œWeâ€™re awfully small here,â€ said Buell of his new company. â€œItâ€™s only six people here, and weâ€™re kind of overwhelmed just with the emails and the contacts and those kinds of things. So we really donâ€™t want to make a big deal out of it until we can deliver them. But in this case this was a team thatâ€™s raced Buells for a number of years with good success in Europe, and they had a great rider. We know them well technically, so they came over and they looked at the information and understood what weâ€™re doing.â€
The return to building racebikes brings Buell full-circle, his initial sportbike design the RW750 purpose-built for the AMA Formula One series. So, what is his expectation for Erik Buell Racing? What are your plans this season and beyond?
â€œWell the goal right now basically is to advance the 1125 and the new 1190, and advance more successes on the racetrack with the water-cooled bike. And a chance to just kind of prove that the work we did was good, which is make people feel good about the Buells that they own. Whether Harley has shut the brand down or not, it will make it seem really alive and, you know, not defunct.â€
Taylor Knapp campaigning the 1125R in American Superbike. Buell's racing plans included a shot at World Superbike in 2011.
But how much longer could Buell campaign the 1125 with homologation rules?
â€œThereâ€™s really nothing that would stop. They always have grandfather-type rules in class for quite a while. With a bike that was a production bike, it was made as a production bike, and there were thousands and thousands of them made. Thereâ€™s still a dealer network, and you still need parts for them. And thereâ€™s still new ones that havenâ€™t been sold yet in the dealer network. So itâ€™s still very much a valid product. I canâ€™t imagine that they wouldnâ€™t let them race for years. Thereâ€™s really no reason why they wouldnâ€™t.â€
What Riders Are Missing
Buell touched on the upcoming 1190RR, but one thing Buell fans are dying to know is what theyâ€™re missing with Buell gone from the marketplace. So we asked, what was in the Buell pipeline?
â€œWe had a lot of things in the pipeline but, (long pause) itâ€™s not in the pipeline now. There were different things â€“ the 1190RR and other stuff. We had a dirt bike that was well along. It was announced it was going to be launched and then that was put on the side. We had future variations. Obviously, if we were going World Superbike racing in a couple years there had to be changes. And there were other products we were working on too.â€
What happened to the Buell dirt bike project?
â€œIt was canceled. It was put on hold, frankly, I donâ€™t whatâ€™d started it up again. But we were pretty deep into it, and itâ€™s a pretty neat bike. But thatâ€™s the way it is, and Iâ€™m sure itâ€™s the same with any other company thatâ€™s working hard for their future. My real excitement was that I was finally starting to turn products quicker than 20 years (laughing).â€
Asked if the new 1190RR was the sportbike seen in spy shots testing near the East Troy plant, Buell said:
â€œNo, you havenâ€™t seen pictures of the 1190R. One of these days weâ€™ll get them up.â€
Some decisions, like losing the 98 motor, were out of his control, but looking back we asked Buell does he have any any regrets:
â€œThereâ€™s a lot of things you think you might do differently, but thereâ€™s nothing I look back in my head and go â€˜oh my god that was a horrible mistake.â€™ And whoâ€™s to say what those decisions would have done anyhow. I donâ€™t look back a lot. I look forward and I always have. Thatâ€™s why we persevered so long to build the company what it was. We never were looking back trying to redo anything in the past, or celebrating the past and getting all nostalgic about it. The work was ongoing.
â€œAnd now the new company, I think we have the same philosophy. Weâ€™re developing new products to make sure a lot of the people out there can get race parts, because the race part business was the same step down in size and scale to Buell as Buell was to Harley-Davidson. So for Harley-Davidson to handle the race end of the business and supply race parts to the racers out there was just a ridiculous disproportion. So it didnâ€™t make sense for them, they didnâ€™t want to do it at all. And we really felt there were a lot of people still out racing Buells and it would be a good marketing thing for Harley-Davidson. And thatâ€™s why they decided to let us have a license to build new Buell race bikes till the end of 2010. Weâ€™re still building new motorcycles, so itâ€™s kind of fun.â€
We also asked: It's been 26 years since you started. When you look back thereâ€™s a lot to be proud of but what stands out for you as the founder?
â€œIâ€™m really proud of the team we had here. A lot of people didnâ€™t understand that Buell really was Buell. People would say, oh that stuff is Harley engineering and then they just stick a Buell badge on it,â€™ and thatâ€™s not true. At our peak we had 190 people here, maybe 30 people on the assembly line. The engineering team, the whole thing everything from receiving, shipping and inventory, human resources, computer and IT services, accounting, all that kind of stuff. The technical team, engineering team, we have here was really, really great. And we were doing some amazing stuff.
â€œIâ€™m really proud of the team of guys we developed and how the whole thing worked together. It was an amazing, amazing little company. We were shipping products out with very low budgets, compared to real significant sized motorcycle companies. And they were the real deal, fully tested and fully certified. Tons and tons and tons of development work to make sure they were a real motorcycle, not a kid bike.â€
The videos of Buell announcing Harleyâ€™s decision were agonizing to watch. Buell himself had only received word of the decision a few days before the public announcement. We asked, on a personal level what does the end of Buell Motorcycles mean. Is this the end of a personal dream?
â€œOh no. That was a pretty stunning thing at the time. It was new to me. All I was thinking about was all the impact that it was going to â€“ the people who are going to lose jobs, how can we support the customers, how are we going to get over this huge slump. Because we knew we were going to get shut down, and shut down fast. Itâ€™s just an overwhelming bunch of things to take in over a few days and figure out what to do with it. And the thing that probably weighted me the most, was just caring about the people, you know the employees â€“ a lot of them going to be out of jobs soon. Worrying about employees in dealerships who might not longer be there. People that bought bikes and how were they going to get parts and service, and how is that all going to be set up. Thatâ€™s all that was just on my mind, all just this huge weight of â€˜oh my god, what do I do to help all these people.â€™
â€œSo I think we got most of that taken care of. The employees we donâ€™t, but people are getting jobs. We all kind of communicate with each other, and celebrate the success stories when they do. Quite a few of them are getting promotions with their new companies they go to because when they go in to interview and people find out what their skill sets were they go â€˜holy smokes.â€™ Because it really was a strong team. When you bring in a portfolio of what you did at Buell, itâ€™s always â€œoh my god, I thought you were a designer but you did tons of stuffâ€¦â€™ â€¦.Obviously not all of them have jobs back, but Iâ€™m feeling like weâ€™re making progress towards that. Weâ€™ve made progress to getting all the drawings transferred over to Harley so that they can take care of the customers.â€
Buell still continues his dream about the American sportbike. He looks back at the end of the 2009 AMA racing season with fondness, aa vindication that Buell was on the right track.
Buell points to the feedback from competitors regarding Corey West's top-10 running at New Jersey as a highlight.
â€œItâ€™s what we always needed to do, because a lot of people in sport, racing is kind of the heartbeat of it. If Sturgis and the coleslaw wrestling, or whatever, is kind of the heartbeat of Harley - the fun and good times party, and the bike gets you there. For sportbike guys, the heroes there are not Peter Fonda and Jesse James, theyâ€™re guys like Danny [Eslick], Ben Bostrom and Valentino Rossi and on down the list. So those people count a lot and a lot of the journalists who follow it count that, and they believe that this stuff is used on the racetrack. Itâ€™s the best stuff in the world, and because we were doing unique solutions, the fact that we werenâ€™t competing at the highest level and showing that that stuff worked, some of our solutions got denigrated.
â€œAnd thatâ€™s why it was so cool for me, to finally see that. Because that chassis may be the best in the world. I'm telling you anyone who was in New Jersey, any riders that were on the track, would tell you the same thing. The bike was down on power, but against the 1098 Ducati, and the R1s and the GSX-Rs, which are all great motorcycles, it was better handling. And thatâ€™s good, that doesnâ€™t mean it did everything else better or anything else, but we were really there, with the fuel in the frame and the ZTL front brake and the things that we did are the real deal.â€
Racing success not only leads to vindication of Buell products, but vindication of American-built products. Speaking with Erik Buell itâ€™s clear that the American part of American sportbike drives him.
â€œItâ€™s important for me. For some reason in this country we have gotten the belief, particularly in the vehicle business, that we are not as good. That American stuff is not as good, that the import stuff is better.â€
Asked why he thinks that is:
â€œI donâ€™t know. I donâ€™t believe it, but I hear it said. My belief was that we have to go racing to get people to believe it. I think they do a great PR job, the import cars and motorcycles do a good job, but we tend to pick on ourselves. Weâ€™re a country that likes to feel bad about ourselves right now. We feel that weâ€™re doing bad things and that weâ€™re not good, and I donâ€™t agree with that. And are people taking advantage of that to make money? Sure. Is Toyota going to promote as hard as they can that theyâ€™re better than a Ford or something, are they going to take advantage of that? Of course.
â€œI donâ€™t know what I think we can blame it on. If youâ€™ve ever been in a Cadallac CTS-V â€“ I donâ€™t own one â€“ but thatâ€™s an unbelievable car and itâ€™s cheaper than a BMW or Mercedes. Itâ€™s gotten pretty good recognition, but they literally have to make something that was stunningly good to be better, to get any recognition. And then itâ€™s still kind of â€˜well, itâ€™s really a pretty good car, although the texture of the dashboard isnâ€™t quite what that BMW is.â€™ I think, guys, what are you doing. In some respects thereâ€™s an impact there from journalists, saying things, and they do it because itâ€™s popular and theyâ€™re in the business of selling things, they go along with the popular flow. So I donâ€™t blame them per se, but itâ€™s just the reality check of that.
â€œAnd you know itâ€™s true, and I donâ€™t know what weâ€™re going to do about it, because itâ€™s hurting us as a country. Because people here in America are as good as the engineers in Japan, and as good as the engineers in Germany. There is no doubt about it. The average working guy that puts some bikes together is a hard working guy. Iâ€™ve been in factories in Austria and Germany and Japan, and theyâ€™re hard working too, but we have this image that Americans are lazy and sloppy. And itâ€™s not true. So I need to prove that, that was my deal. Thatâ€™s what I feel was a piece I had got and I donâ€™t have done yet, that hopefully someday I get a chance to do again. But my belief is that I have to lead through racing.â€
Buell doesnâ€™t seem finished yet, thatâ€™s for certain. We ended our conversation with plans for the future: Can American riders look forward to Erik Buell built motorcycle five, ten years down the road?
â€œIâ€™m certainly not done and, like I said, I still want to do that. I donâ€™t want to have to be not competing in the same market. I still feel like I have tons of energy for this stuff and so weâ€™re leading with racing and if nothing else weâ€™re going to hopefully build a belief that American designs and concepts and American-made stuff is cool. What I do beyond that, time is going to tell.â€