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Bloomberg
A deepening slump in US motorcycle demand is spurring more job cuts and a plant closure at Harley-Davidson Inc., a company President Donald Trump has cast as a model American manufacturer.
The Milwaukee-based motorcycle maker will close its factory in Kansas City, Missouri, and consolidate production in York, Pennsylvania, according to a statement. The restructuring will eliminate about 260 US jobs, CEO Matt Levatich said.
Trump praised the company in 2017 as a “great example†of a business creating jobs and building factories in the country.
Harley is consolidating its US manufacturing presence as its bike sales fall on every continent. And the pain won’t end this year: The company projected global sales will drop as much as 4.9 percent more in 2018 after a 6.7 percent decline in 2017.
US motorcycle ridership has stalled in spite of Levatich’s efforts to introduce models for first-time buyers and teach more Americans how to safely get around on bikes. Harley shares fell as much as 9.4 percent in New York, the biggest intraday drop since July.
The issue for investors isn’t the fourth-quarter miss, which was complicated by a number of one-time items, David Beckel, an analyst with Sanford C. Bernstein
& Co., said.
“The story is, or continues to be, that Harley is in the throes of a significant secular decline,†he wrote. Sales in the crucial US market fell 11 percent in the fourth quarter and 8.5 percent for the year.
Harley executives said they’re drawing more consumers to their brand, but couldn’t say during the call with analysts how many are buying used instead of new bikes.
As bike demand weakens, one of Harley’s rival brands is calling it quits. Polaris Industries Inc., which started winding down its Victory motorcycle operations early 2017, projected adjusted profit of as much as $6.20 a share for 2018, well below analysts’ $6.99 a share average estimate.
The Kansas City plant closing will cost Harley as much as $200 million through 2019, then result in annual cash savings of $65 million to $75 million after 2020.