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Bad idea of the week: Excelsior-Henderson revival

Feb 15, 2017

Considering that the first month of 2017 saw the demise of not one, but two U.S. motorcycle manufacturers, I did not expect this news, even if it is just a trial balloon: A Denver investment banking firm is pitching the idea of an Excelsior-Henderson revival.

That’s right. Someone is making the argument in 2017 that what the U.S. motorcycle market needs is another company building heavyweight cruisers.

Aaron, Bell International, the Denver firm, issued a statement yesterday saying the firm has been retained “to seek a strategic relationship for the reintroduction of the brand to the marketplace.”

For those of you with better things to do than study defunct motorcycle companies, the short version of the history is that Ignaz Schwinn of bicycle fame bought Excelsior in the early 20th century and built it into one of the big three U.S. manufacturers, alongside Harley-Davidson and Indian. He later bought Henderson, combining the two companies. Excelsior-Henderson stopped building motorcycles in the Great Depression but was revived in the early 1990s by Dan Hanlon. The new Excelsior-Henderson spent millions of dollars building a huge plant in Minnesota (and got millions in government incentives) but produced fewer than 2,000 motorcycles before going out of business.

Yesterday’s announcement quotes Aaron, Bell President Ralph Bellizzi as saying that “the resurgence of manufacturing pride and interest in motorsports” makes this a good time for investors to revive the brand.

While I agree that there’s no shortage of talk about rebuilding manufacturing in the United States, there’s also a lot of uncertainty about current business conditions, from taxes to trade policy. Plus, even if there is a revived “interest in motorsports,” which I’d question, the last time Excelsior-Henderson was involved in motorsports was a century ago.

The statement adds: “The convergence of several market factors has created a unique opportunity to reignite the heritage-rich Excelsior-Henderson brand. Recent motorsports industry reconfiguration, with Polaris Industries ending production of Victory Motorcycles to focus on its historic Indian Motorcycles, and Arctic Cat’s sale to Textron, combined with the strength of American motorcycle manufacturing and sales worldwide, make the market ripe for the reemergence of the venerable ‘E-H’ marque.”

That’s a gutsy argument: That since Polaris couldn’t make a go of the Victory brand, someone else should try with the Excelsior-Henderson brand.

Less defensible is the statement about “the strength of American motorcycle manufacturing and sales worldwide.” Harley-Davidson predicts flat to lower sales in 2017, Polaris lost more than $100 million on Victory and could not foresee profitability, and Erik Buell Racing ran out of money and couldn’t attract dealers or investors.

The 1990s Excelsior-Henderson Super X was not a terrible motorcycle, and the advantage of buying the company would be to get the engineering, as well as the brand. Or, as Bellizzi puts it, “An entrepreneur or investor can essentially pick up where the previous company left off, bypass the most difficult barriers to entry, and build upon the established success of this heritage-rich brand in a highly lucrative industry. It’s literally a once-in-a-lifetime opportunity.”

The problem with that is it’s hard to argue the U.S. motorcycle market today needs another 800-pound $20,000 cruiser. The cruiser-buying Baby Boomers are getting older every day, Millennials were never interested in cruisers and have moved on from café racers to scramblers and dual-sports, and absolutely nobody in the market for a new motorcycle still recalls the days before the Great Depression when Excelsiors were a force to be reckoned with on the race tracks of the United States. The Excelsior-Henderson brand may be “heritage-rich,” but that heritage is so old nobody remembers it except historians and the 1990s revival does not have uniformly positive connotations attached to it. Some cite the government subsidies to Excelsior-Henderson as a great argument for why Congress should outlaw them. And as for building motorcycles being “a highly lucrative industry,” I guess that’s a matter of how you define "highly lucrative."

I would say “good luck” to Aaron, Bell in shopping the Excelsior-Henderson brand. But although I think they’ll need that luck, and more, it’s hard for me to wish it. If there is investment money looking for a place to land in the U.S. motorcycle industry, I don't think building big, nostalgic cruisers is the best use of it. Better to let E-H R.I.P.