Harley-Davidson Warns of Plant Closures

Harley-Davidson News:

After releasing some devastating first quarter numbers in April, Harley-Davidson is making economic headlines again with talks of possibly closing two manufacturing facilities in Wisconsin due to efficiency issues.

The Motor Company recently gave their Milwaukee employees and Union officials a warning – either cut millions in cost or operations will be relocated to another state. This threat was also directed at the Tomahawk facility; there are about 1,700 employees combined in both plants.

According to Harley Spokesman Bob Klein, these warnings came after H-D announced it found huge "cost-gaps" totaling $54 million in the Milwaukee Operations, the most significant ones involving labor costs and scheduling flexibility. "We’ll be talking with the unions about how to close those competitive gaps," Klein told the Associated Press.

Milwaukee’s Mayor Tom Barrett has meet with Harley executives, and reported that the company wants to work on the issues internally. Barrett told reporters he won’t rule out tax incentives or other assistance in the future.

This news arrives while H-D is already in the process of consolidating production operations at the Menomonee Falls factory in Wisconsin; this move will lead to the closure of the company’s Wauwatosa factory.

In Harley’s York, Pa., assembly plant, the union agreed in December to a seven-year contract that will shut down one of two factories there, and lay off half the unionized employees, or about 1,000 of the 1,950 workers. Several operations in the York facility will be closed as Harley outsources non-essential operations.

Many of this restructuring comes under Harley’s new CEO, Keith Wandell. Since obtaining Wandell in May, 2009, the iconic American motorcycle company has been cutting, hoping to grow the brand. Part of Wandell’s plan includes the closing of two factories and a distribution center, and plans to cut about 25-percent of the workforce (roughly 2,700-hourly workers and 840 administrative positions).

Also during his first six months, Wandell eliminated the Buell Motorcycle Co., an East Troy bike manufacturer that won the 2009 AMA Daytona SportBike title, and is continuing in his attempts to sell Harley’s premium brand, the Italian motorcycle company MV Agusta.

It was reported last week that Harley’s first-quarter profits plunged 72 percent from the same period last year. Harley-Davidson Investor Relations website