Saturday, 24 February, 2018

Harley-Davidson consolidating Kansas City assembly plant into its York facility

Harley Davidson to close Kansas City plant Harley-Davison to consolidate Kansas City assembly plant to York County facility
Nellie Chapman | 31 January, 2018, 04:20

Harley-Davidson said it will close its Kansas City plant while disclosing sales late past year were down both in the United States and overseas.

The Milwaukee-based company said they plan to consolidate the Kansas City plant into its plant in York, "further improve its manufacturing operations and cost structure by commencing a multi-year manufacturing optimization initiative".

"We finished 2017 with over 32,000 more Harley-Davidson riders in the USA than one year ago, and we delivered another year of strong cash generation and cash returns to our shareholders".

Harley-Davidson shares have increased nearly 9 percent since the beginning of the year, while the Standard & Poor's 500 index has risen roughly 7 percent. The Medina, Minnesota-based company's stock plunged as much as 17 percent, the biggest drop since November 2008. It forecast 231,000 to 236,000 motorcycle shipments in 2018. That is at the low end of its previous forecast of 241,000 to 246,000 units. Shares of the company have declined about 12 percent in the past year.

Sales in the crucial USA market fell 11 percent in the fourth quarter and 8.5 percent for the year.

In the meantime, the company will close a factory in Kansas City, Missouri, eliminating 800 jobs but will create 450 positions by moving some production to an existing facility in York, Pennsylvania.

The restructuring will cost $170 million to $200 million before 2019, the company said.

It also announced the closure of its wheel operations in Adelaide, Australia, which will affect 100 employees.

"The decision to consolidate our final assembly plants was made after very careful consideration of our manufacturing footprint and the appropriate capacity given the current business environment", said Chief Executive Officer Matt Levatich.

Levatich, however, said his company views the Chinese and Indian markets as growth opportunities.

"Our assumptions include US retail dealer retail sales to be down, partially offset by growth in worldwide retail sales", Harley's Chief Financial Officer John Olin told analysts on an earnings conference call.

The company has chalked out a turnaround strategy, hoping to attract two million new riders in the next decade by introducing new models.

On Tuesday, Harley said it would invest $25 million to $50 million a year over the next several years to develop electric motorcycle technology and was on target to launch its first electric bike within 18 months.