™ R NOW IN OU 26 EA t R h Y T H E L E A D I N G B U S I N E S S M A G A Z I N E F O R T H E I N T E R N AT I O N A L C U S T O M M O T O R C Y C L E A N D PA RT S I N D U S T RY “Manufacturing optimization” is response to -11.1% final quarter decline in domestic U.S. retail sales As has been well reported, Harley- Davidson’s response to its hugely disappointing 2017 4Q and full year results has been 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”. Having reduced its York, Pennsylvania footprint some years ago, Harley- Davidson described its plans to close its Kansas City, MO final assembly plant as a step to “improve” its manufacturing operations and cost structure by “commencing a multi-year manufacturing optimization initiative anchored by the consolidation of its motorcycle assembly plant in Kansas City into its plant in York, PA. The company 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 and expects ongoing annual cash savings of $65 to $75 million after 2020.” The closure of the Kansas City plant is expected to cost some 800 direct jobs in that area, with some 400 new hires slated for York. 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. At the time of the announcement Harley CEO Matt Levatich said that “the decision to consolidate our final assembly plants was made after very 4Q domestic US retail sales -11.1 percent careful consideration of our manufacturing footprint and the appropriate capacity given the current business environment. Our Kansas City assembly operations will leave a legacy of safety, quality, collaboration and manufacturing leadership.” In response to its disappointing 2018 fiscals, Levatich pointed to “progress in building riders”, expanded product development through increased investment in electric motorcycle technology and the fact that despite new model sales being soft, overall the number of Harley riders had grown due to an uptick in demand for used models. “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 Levatich. “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 is making much of its management of production numbers and inventory, but revealed that “fourth quarter revenue from motorcycles and related products was up versus the prior year behind higher motorcycle Continues on page 10 >>> MAR 2018 ISSUE #224 HELLO CURTISS, GOODBYE HYDROCARBONS! TIER 1 TUNERS +CCT CUSTOM DYNAMICS "LIGHT PIPE" TECHNOLOGY The 2017/2018 J&P Cycles Ultimate Builder Custom Bike Show competition series came to a crescendo at the penultimate Progressive International Motorcycle Show (IMS) on February 9 - 11 at the Donald E. Stephens Convention Center, Chicago, Illinois with Texas based Motorcycle Missions Veterans scooping the $20,000 top prize as the official 2018 ‘King of the Builders.’ Respect and kudos to founder Krystal Hess - full story next month.