One of the most enduring images of America is the open road, and the open road is surely incomplete without a deep-throated Harley tooling down it.
No doubt, Harley-Davidson (NYSE:HOG) is one of the most iconic consumer brands in America, pretty good for a manufacturer of niche products like motorcycles. Harley is on track to sell around 240,000 bikes worldwide in 2012, and haul in more than $5 billion in annual revenue.
The desirability of Harley’s products is reflected in its healthy profit margin: It rose to 35.9% in the first quarter of 2012, compared to 33.1% in first quarter 2011.
Founded in Milwaukee by William S. Harley and Arthur Davidson just after the turn of the 20th century, their namesake company has had a long, often bumpy history. It was one of only two major American motorcycle shops to survive the Depression, then fought its way to dominance, thanks to military contracts for motorcycles in both World Wars. The company fell on hard times again because of “biker gang” image problems in the 1970s and Japanese competition in the 1980s. But it has again found redemption as wealthy baby boomers took to the open road.
Now, even as the U.S. — and much of the world — is struggling for growth, Harley is setting a strong pace in unit sales, income and margins.
Still, as much as Wisconsin is identified with Harley, the relationship has been a bit dicey lately. Though Harley decided to stay in Milwaukee and nearby Tomahawk, the decision came with concessions from unionized employees and the loss of a few hundred local jobs.
Where might the motorcycle giant turn next? Model proliferation could backfire if Harley starts making bikes that don’t have the Hog aura that buyers of all stripes long to cover themselves with. But you can count on it leaning ever more on Harley-Davidson-branded apparel and other products that even strictly wannabe bikers can display.
Harley’s troubles in the downturn, as well as its latest revival, show why the stock is a good indicator of overall U.S. business trends and consumer spending. For Wisconsin, Harley could be an indicator of how the state’s manufacturing sector — and its employees — are faring in the current economic climate.
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Mike Mercurio is Managing Editor of InvestorPlace. As of this writing, he did not hold a position in any of the aforementioned securities.