Harley-Davidson Sales Fall, Shutting Plant in Kansas City

Sales at Harley-Davidson fell sharply during 2017 and the motorcycle maker will move forward with its plan to consolidate its manufacturing operations, which includes closing its plant in Kansas City, Missouri.

The biggest maker in the world of heavyweight motorcycles has been struggling to reverse a sales slide trend in its fourth year, with overseas growth helping somewhat to offset a drop in the bike market across the U.S.

The company, based in Milwaukee posted a drop in net income of 82% for the fiscal fourth quarter to just over $8.3 million, in comparison to one year ago. Per share earnings ended the three-month period at 5 cents, compared to one year ago when they were 27 cents. Revenue ended the quarter at $1.23 billion which was up from last year’s revenue for the same period of $1.11 billion.

The drop in earnings came in part due to a charge associated with the tax overhaul by President Donald Trump and a Republican controlled Congress as well as a charge of $29.4 million for a product recall that had been voluntary.

Harley-Davidson retail sales worldwide for motorcycles were down 6.7% during 2017 in comparison to the previous year. U.S sales for the company fell by 8.5% and sales outside the U.S. were down by 3.9%.

Harley has taken the steps it needs to counter what has been a prolonged downward trend including tightening its inventory of motorcycles.

In a prepared statement, CEO and President Matt Levatich said the action to address today’s current environment through disciplined cost and supply management, position the company well, as it drives to achieve its objectives over the long-term of building the next generation of global riders of Harley-Davidson.

The manufacturing consolidation of the company includes plans of shifting production from its plant in Kansas City to its York, Pennsylvania plant, which means as many as 800 jobs will be lost in Kansas City.

Harley is expecting its restructuring and other costs of consolidation to be between $170 million and $200 million during the upcoming two years.

It is expecting ongoing annual cash savings of between $65 million and $75 million starting in 2021.

The CEO did not mention the operations of the company in Wisconsin, including its large Menomonee Falls manufacturing plant and a smaller on located in Tomahawk.

Harley and other touring and cruiser motorcycle makers have seen sales plunge as the economy weakened in certain areas and motorcycling interest overall has been weak.