Harley-Davidson, Sankyo and the Shinagawa Factory
During the earlier import period, Alfred Child had already seen how important Japan could become for Harley-Davidson. The Great Depression changed the terms almost overnight. Financial markets were disrupted around the world, and Japan felt its effects as the value of the yen continued to drop throughout 1929. At one point, the yen dropped to a value of 20 cents, down 30 cents from 1925 averages.
This caused the price of imported goods from America to more than double within one year. Harley-Davidson motorcycles soon went from being transportation vehicles to luxury items. Child was faced with either closing down Harley-Davidson Sales of Japan or doing something unheard of in the history of the Motor Company.
The Depression Pushes Harley Toward a Japanese License
Child’s choice was to travel back to Milwaukee and convince the four founding members of Harley-Davidson to allow Sankyo Company to purchase exclusive rights to manufacture both motorcycles and spare parts in Japan. Just one year earlier, this idea would have been quickly dismissed by the Motor Company, but with the Great Depression taking its toll on Harley-Davidson, the four founders agreed to Child’s terms.
Period accounts place Sankyo’s import and distribution rights in the early 1930s, followed by a manufacturing license around 1932–33. The agreement was not an open-ended export license. Sankyo was to build for the Japanese market, avoid exporting the motorcycles it produced, and continue purchasing Milwaukee-built machines until Japanese production was ready.
Sankyo, Fred Barr and the Shinagawa Factory
Child also hired Assistant Factory Superintendent Fred Barr to help oversee construction of the new factory in Japan. The Shinagawa factory took approximately five years to complete and was producing 100 percent Japanese-made motorcycles using parts manufactured in Japan by 1935.
Remarkably, no Japanese workers were ever sent to the United States for training. Everything about the production of the motorcycles and parts was learned from Fred Barr and the blueprints provided by Harley-Davidson. Harley also provided some of the machine tooling, but many machines were purchased directly by the Japanese from outside suppliers.
The larger historical picture reinforces the same point: Sankyo acquired tooling and blueprints, built VL and R-series flathead motorcycles locally, and relied on the Shinagawa plant as the center of Japanese production. These early machines were not simply rough copies made from a distance; they grew out of a licensed production arrangement before the relationship collapsed.
The Knucklehead Problem
As the new Japanese-built motorcycles began to roll off the line at Shinagawa, something new was coming out of Milwaukee. For the past several years, Harley-Davidson had been developing an overhead-valve engine to replace the aging side-valve. It was called the Knucklehead.
Now that the worst of the Depression had passed, Harley realized that having a factory in Japan provided competition that it did not want. In order to help lessen the blow of reduced motorcycle sales in Japan, Harley insisted that Sankyo pay a licensing fee for the new Knucklehead engines.
Sankyo had no interest in the new overhead-valve engines because its main clients were the military and commercial entities. The low-compression, high-torque flathead engine was much better suited for that work than the higher-revving Knucklehead engine that was replacing it in Milwaukee.
Rikuo and the Break with Milwaukee
Sankyo not only refused to produce the Knucklehead, but went as far as telling Harley-Davidson that it would continue producing the flathead under the name “Rikuo.” The name is often translated as “King of the Road,” but a more literal translation is “Continent King,” which more accurately conveys the purpose of this new motorcycle.
That purpose was to transport the Japanese Imperial Army across the Asian continent. Harley-Davidson was left with no choice but to completely break ties with Harley-Davidson Sales Company of Japan, Sankyo Company and the Shinagawa factory. Sankyo continued motorcycle production at Shinagawa, building the rebadged Rikuo model.
From there, Sakurai’s sidecar-drive design would turn the Harley-based flathead into Japan’s Type 97 military motorcycle.