SAN JOSE, Calif., Dec 12, 2008
For Mike James, watching the failure of his Santa Cruz Harley-Davidson dealership was a little like watching a slow-motion car crash.
He knew months ago that the economy was in trouble. Motorcycle sales began to slide, and he could see a day when he wouldn't be able to cover his costs and make payments on the debt he took on to start and expand his business. In March, he closed a small branch location.
He even sought out buyers, eventually finding one who was willing to take over the Santa Cruz, Calif., dealership provided the buyer and James could extract concessions from James' lenders.
Those concessions never materialized, and last month James closed his doors for good.
"I don't think you can fully anticipate how ugly it is unless you've witnessed it firsthand," says James, 47, who opened the dealership nearly 13 years ago. "I don't wish it on anybody."
James doesn't mean ugly just for him. In fact, his story holds a larger truth: Often in cases like this, a community loses not only a business but a piece of itself.
"It's like a death in the family," says Keri Baughman, a regular customer and member of the Santa Cruz Harley Ownership Group. "We're pretty sad. We've shed some tears."
No question Harley customers are passionate. But the same sadness is likely to play out again and again as the nation spirals deeper into recession and other Mike Jameses find they can't make it. Bookstores, cafes, mom-and-pop shops will close, leaving voids in storefronts and hearts.
"I think Christmas for retailers is going to be devastating," James says.
James knows devastation. His sales dropped from 50 motorcycles a little over a year ago to 15 in October.
"It's consumer confidence," James says. "People are scared to death."
He is not making excuses. James says he was in charge. And he feels terrible when he thinks about the way the closing of his shop will ripple through Santa Cruz and beyond.
It starts with the 24 employees who were laid off when the store closed.
"What I had been suffering most from," James says, "was that I had these employees who right before the holidays were being put out of work."
And there are customers like Baughman and others who came from throughout California and beyond for camaraderie and to visit the small museum of Harley artifacts that James set up. Bikers would gather at the store, sipping free coffee, swapping stories and planning road trips.
James kept them in touch with a blog and an e-mail newsletter that had 28,000 subscribers at the end. When he posted news of the closing, he received more than 700 e-mails. The Saturday after the store closed, bikers came to the parking lot to pay their final respects.
James says he counted about 350 bikers pull up over the course of the day. "It was almost like a herd of elephants coming back to mourn the dead," he says.
The ripples don't stop with laid-off employees and customers. James says he thinks about the crepe restaurant next door. His customers won't wander over anymore and order. He thinks about his landlords - two elderly women - who won't receive his rent check anymore. And he thinks about the city and his dealership's spot as one of the top 20 sales-tax generators in town.
James has turned over the dealership's assets to Harley-Davidson, which is his lead lender. He suspects the company and a secondary lender will come after him for the balance of his loans. Harley spokesman Bob Klein said the company does not comment on issues involving individual dealerships.
No, James is not sure how he'll pay his lenders. And his plans are hardly specific.
"I'm going to be out there with my employees," he says, "looking for a job."
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