Harley-Davidson’s response to its hugely disappointing 2017 4Q and full year results is to constrain future manufacturing capacity by closing two factories for a total net job loss of around 500 jobs in what it describes as “Manufacturing Optimization” and point to “progress in building riders” and expanded product development through increased investment in electric motorcycle technology.
|Harley-Davidson President and CEO Matt Levatich: “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”|
The company’s worldwide retail motorcycle sales were down -6.7 percent in 2017 compared to 2016, with domestic U.S. retail sales down -8.5 percent while international retail sales fared better at down -3.9 percent.
Closure of the Kansas City final assembly plant is expected to cost some 800 direct jobs in that area, with some 400 new hires slated for York, PA, where all final assembly operations will be consolidated. The other facility to close is Harley’s New Cast Alloy wheel factory at Adelaide in southern Australia at a cost of a further 100 direct jobs.
“Our actions to address the current environment through disciplined supply and cost management position us well as we drive to achieve our long-term objectives to build the next generation of Harley-Davidson riders globally,” said Matt Levatich, president and chief executive officer, Harley-Davidson, Inc.
“We finished 2017 with over 32,000 more Harley-Davidson riders in the U.S. than one year ago, and we delivered another year of strong cash generation and cash returns to our shareholders.”
Harley reiterated its focus on training “the next generation of Harley-Davidson riders globally”, and confirmed that it had opened 57 new international dealer points in 2017. Harley (and Indian Motorcycle for that matter) are on record as expecting 50 percent of sales to be outside of the domestic U.S. market within ten years.
Harley has also announced that it is step up its research in to EV technology and plans to have its first E-bike model on sale within 18 months.
CEO Matt Levatich said that “the EV motorcycle market is in its infancy today, but we believe premium Harley-Davidson electric motorcycles will help drive excitement and participation in the sport globally. As we expand our EV capabilities and commitment, we get even more excited about the role electric motorcycles will play in growing our business.”
Following the release of its 4Q and FY 2017 fiscals, Polaris CEO Scott Wine responded to suggestions that Polaris was perhaps falling behind the curve in E-bike terms, after having been well ahead of Harley, said that, for them, it wasn’t so much a technology issue but one of ROI – suggesting that it was difficult, at this stage, to see a pathway to profits in the sector in the short term.
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In the fourth quarter, Harley-Davidson worldwide retail motorcycle sales declined -9.6 percent compared to the prior year. Harley-Davidson domestic U.S. retail motorcycle sales were down -11.1 percent in a market that was down by around half that at -6.5 percent compared to the year-ago quarter. Fourth quarter market share was down on 3Q 2017 and 4Q 2016 share at -50.8 percent in the 601+cc segment.