Harley-Davidson plant consolidation to bring hundreds of jobs to York County

After Harley-Davidson’s sales fell sharply in 2017, the company will move ahead with a plan to consolidate manufacturing operations, including shifting production from Kansas City, Mo. into its Springettsbury Township plant.

The shift is expected to bring about 450 full-time, casual and contractor positions to York County over the next year and a half, according to Harley spokeswoman Bernadette Lauer.

About 800 jobs in Kansas City will be cut as Harley closes its Kansas City plant in the third quarter of 2019.

Plans are underway for expansion of the York plant, which will produce all Harley models, including the Softail, Sportster and Street motorcycles currently made in Kansas City, Lauer said. Construction will begin this year.

Harley expects restructuring and other consolidation costs of $170 million to $200 million over the next two years.

It expects ongoing annual cash savings of $65 million 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. Our Kansas City assembly operations will leave a legacy of safety, quality, collaboration and manufacturing leadership,” said Matt Levatich, president and CEO.

Levatich did not make any mention of the company’s Wisconsin operations, including its large manufacturing plant in Menomonee Falls and a smaller plant in Tomahawk.

Harley and other makers of cruiser and touring motorcycles have seen their sales tumble as the economy has weakened in some areas and interest in motorcycling, overall, hasn’t been as strong.

Harley-Davidson worldwide retail motorcycle sales fell 6.7% in 2017 compared to 2016. The company’s U.S. sales fell 8.5% and international sales were down 3.9%.

“For years, the North American heavyweight motorcycle industry grew at double-digit rates due to low interest rates, a strong economy, a rising stock market and … the baby boomers. However in recent years, and going forward, we expect a much slower growth pattern for the U.S. motorcycle industry,” said analyst Robin Diedrich with Edward Jones Co.

“As safety becomes a concern for aging baby boomers, domestic sales for the heavyweight motorcycle industry should slow. We expect certain international markets, particularly in Asia and South America, to have higher growth rates in heavyweight motorcycles than the U.S.,” Diedrich said.

Harley’s foreign competitors have benefited from a strong U.S. dollar, as their overseas operations have made it more profitable to sell bikes in the U.S. at lower prices.
In some cases, Diedrich said, prices of Japanese motorcycles have come down 25% and discounts ranged up to $3,000 per bike.
“Harley is seeing significant pricing pressure, hurting profitability and sales,” she said.
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