Harley-Davidson to Close Kansas City Facility

Last summer, Harley-Davidson laid off 118 workers in its York Vehicle Operations plant in Springettsbury Township, Pa.

The reason? A realignment from the Milwaukee-based motorcycle manufacturer, which moved its Softail cruiser production to its factory in Kansas City, Miss.

But following a decline in 2017 sales, Harley-Davidson is once again realigning operations. The latest tactic in a multi-year “manufacturing optimization initiative” is to consolidate its Kansas City motorcycle assembly plant into the York plant, which currently assembles Touring, CVO and Trikes.

What does this mean for Kansas City? The loss of about 800 jobs, according to the Chicago Tribune. Due to the closing, Harley will add about 450 jobs in York, which will consist of full-time, part-time and contracted positions.

This news arrives after Harley announced that worldwide retail motorcycle sales were down 6.7 percent in 2017 compared to 2016. Harley reported that U.S. retail sales decreased 8.5 percent and international retail sales were down 3.9 percent.

During this “manufacturing optimization initiative,” Harley-Davidson expects to incur restructuring and other consolidation costs of $170 to $200 million, and capital investment of approximately $75 million over the next two years. Due to this restructuring, Harley also expects ongoing annual cash savings of $65 to $75 million after 2020.

“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 Matt Levatich, President and CEO of Harley-Davidson, Inc. “Our Kansas City assembly operations will leave a legacy of safety, quality, collaboration and manufacturing leadership.”

Harley-Davidson opened the Kansas City plant in 1997 after the city beat 30 other cities in a competition for ideal conditions. The plant produced Sportster, Street and Softail motorcycles.

Harley-Davidson also said the consolidation will begin immediately, and all Kansas City operations are expected to be gone by the end of summer 2019.

As for the York plant, when we reported about the layoff in April, Harley said about 800 employees would remain, which was drastically down from over 2,000 back in 2009. With the new restructuring, the current number should grow to about 1,250 employees in the York facilities.

When the 2017 fourth-quarter numbers were in, Harley-Davidson worldwide retail motorcycle sales declined 9.6 percent compared to the same quarter in 2016. U.S. retail motorcycle sales were down 11.1 percent in Q4, although Harley continued to own 50.8 percent of the US market share in the 601+cc segment.

Harley noted that overall motorcycle industry sales were down 6.5 percent in Q4 compared to the previous year.