US Auto deja-vu? A lesson from the British motorcycle industry

Across the street from my office in Vancouver lies the oldest motorcycle dealership in Canada, Trev Deeley motorcycles. Unable to fight another impulse not to look at the beckoning showroom, I stopped by one day last week. There is an attached museum at the shop, which for the past six months has brought over 250 classic bikes together for an exhibition on the history of the Bristish motorcycle industry (including T.E Lawrence's - of Arabia - 1928 Brough Superior). To make a long story short, after walking through the exhibit I came back with a notebook and pen to summarize the main takeaways, which seemed remarkably portentous for the future of the US auto industry...failure to introduce new models, increased loss of market share and abandonement of market opportunities in pursuit of short-term profits. Make of it what you will, but here is some food for thought: In 1920’s, post war boom increased motorbike demand and 200 British manufacturers emerged. By 1930, 130 manufacturers had left the business. Those that left were in the high-profit racing segment In the 1940’s Britain exported to America to repay its wartime debts. BSA concentrated on large-capacity models, but Bantam Lightweight was in fact the most popular model. In 1950’s, the PR image of big, fast bikes was turned sour by Hollywood image of bikers as rebels and troublemakers. In 1960’s, BSA and AMC conglomerates dominated the market, with about 12 brands between them. In 1957 Honda, entered the market, known for reliability and quality. After travelling to Japan in 1960, Edward Turner, CEO of BSA/Triumph brands foretold that “unless the British motorcycle industry abandoned its ‘head in the sand’ attitude, there would be no one making motorcycles in Britain in 25 years”. In 1964 Japan entered the large capacity market. British dismissed as “interesting bag of tricks”, while focusing on increasing dividends rather than developing competitive products. In 1966 AMC went bankrupt. Norton-Villers emerged with a light and fast bike, but it was based on a 20-year-old design. In 1967 BSA/Triumph manufacturing was integrated at the suggestion of management consultants. Bureaucracy increased and quality declined. In 1971 BSA delayed launch of a new model, and Japanese presence in large-capacity market caused US dealers to drop British brands. By 1972 BSA appealed to the Government for financial assistance. To receive funding, BSA/Triumph had to merge with Norton-Villers. In 1973 NVT (Norton-Villers-Triumph) moved production to another factory, eliminating 1,750 jobs. Militant workers staged “sit-in” in plant. The Government created a workers’ co-operative, and gave a new loan to enable workers to build new models. By 1975 NVT was unable to meet loan payments. The Government withdrew export credit and recalled its loan. In 1975, NVT entered receivership and ceased production. The remaining co-operative made a small number of motorcycles until sold to a property developer, John Bloor, in 1983. Bloor licensed original parts suppliers to keep the brand name alive, and in 1990 released a new design that earned a worldwide - but niche - market. Today Triumph is the only surviving British motorcycle manufacturer.