Harley to Cease Australia Wheel Operations

Harley-Davidson Operations News

As part of Harley-Davidson’s overall restructuring plan that went into effect in 2009, The Motor Company reports that it will cease operations at the New Castalloy facility in Australia, which produces cast motorcycle wheels and wheel hubs.

Harley says the New Castalloy facility will close by mid 2013, and the wheels and hubs will be sourced through other existing suppliers.

Matt Levatich (President and Chief Operating Officer) says: "The Company’s decision on wheel production follows a review of the long-term fit and competitiveness of the New Castalloy business with our strategy and was not made lightly.

"New Castalloy has been a valued part of the Harley-Davidson team. We appreciate the many significant contributions of New Castalloy’s employees over the years."

The Australian plant currently employees 212 people – 183 are employees the other 29 contract workers – and manufactures the majority of cast wheels found on Harley-Davidson motorcycles. Harley acquired the wheel producer back in 2006, when the supplier was on the verge of bankruptcy.

Harley says under the new restructuring strategy, the company is "focusing its production operations on metal fabrication for motorcycle fuel tanks, fenders and frames, paint, final assembly and powertrain production, and has been transitioning to suppliers work that is outside these areas or cannot be performed competitively in house."

Harley-Davidson says: "The sourcing of the New Castalloy production to other existing suppliers is expected to generate about $9 million in annual ongoing savings beginning in 2014. Harley-Davidson expects to incur about $30 million in restructuring charges related to the transition, including approximately $10 million in 2011 and $20 million in 2012. Approximately 35 percent of the $30 million will be non-cash charges.

"Including the closing of the New Castalloy operations, Harley-Davidson now expects all restructuring activities initiated since early 2009 to generate annual ongoing savings upon completion of approximately $315 million to $335 million, and to result in one-time overall costs of $505 million to $525 million, including costs of $75 million to $85 million in 2011 and $45 million to $55 million in 2012."