Harley-Davidson shutting down Kansas City plant amid sales drop

By Sara Shayanian  |  Updated Jan. 30, 2018 at 11:06 AM
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Jan. 30 (UPI) -- Harley-Davidson said it will close its Kansas City plant while disclosing sales late last year were down both in the United States and abroad.

The motorcycle company said its fourth quarter 2017 net income fell 82 percent to $8.3 million -- considerably lower than its net income of $47.2 million in the fourth quarter of 2016.

Harley-Davidson partly blamed the Republican-led tax reform bill passed into law late last year and a voluntary product recall for the lagging sales. It said the tax reform measure helped make its 2017 tax rate more than 7 percentage points higher than it was a year earlier.

Worldwide retail motorcycle sales were down 6.7 percent in 2017 from 2016, while U.S. retail sales slipped down 8.5 percent and international retail sales were down 3.9 percent.

"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," Matt Levatich, president and chief executive officer, Harley-Davidson, said.

"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-Davidson announced they would be closing its plant in Kansas City, Mo., and consolidating it into a plant in York, Pa.

The Milwaukee-based company said it expects restructuring and other consolidation costs of $170 million to $200 million over the next two years, with ongoing cash savings of between $65 to $75 million to follow 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," Levatich said.

For 2018, Harley-Davidson says it expects full-year motorcycle shipments of approximately 231,000 to 236,000 motorcycles. In the first quarter of 2018, Harley-Davidson expects to ship approximately 60,000 to 65,000 motorcycles.

The company also hopes to launch an electric motorcycle by mid-2019.

"The [electric] motorcycle market is in its infancy today, but we believe premium Harley-Davidson electric motorcycles will help drive excitement and participation in the sport globally," Levatich said. "As we expand our [electric] capabilities and commitment, we get even more excited about the role electric motorcycles will play in growing our business."

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