Harley Closes One Of Its Main Factories; What Does It Mean?
Is This The Beginning Of The End?by Allyn Hinton, on
We’ve all seen the news. Harley-Davidson, the iconic American motorcycle manufacturer, has announced plans to close its Kansas City, Missouri, plant next summer and move operations to its York, Pennsylvania, plant. The Harley-haters are having tailgate parties and lots of folks are wringing their hands and quoting numbers and statistics over what could be spun into a story about a failing business. But is it really? What is really going on at MoCo headquarters?
Continue reading for my take on the plant closing and what it means.
Is The Sky Falling?
Is the closing really about hardship or is it forward-thinking financially sound corporate planning?
While it’s easy to spread gloom and doom when a plant closes, we have to look at the bigger picture. Is it really hardship or is it forward-thinking financially sound corporate planning? Let’s start with a look at the Kansas City plant.
Kansas City, MO
After removing recently discontinued lines, all that's left at the plant are the Sportsters.
The operation center in Kansas City was built by Harley-Davidson in 1998. It was the first brand-new facility built by Harley for manufacturing since 1914 when they built what is now their corporate headquarters in Milwaukee. This plant is the operation center for the Dynas and Sportsters, as well as the V-Rods, including making the V-Rod powertrains. Does that give any indication of what’s going on here? The Dynas and V-Rods have already been discontinued, so all that’s left at the plant are the Sportsters.
It makes good business sense to consolidate operations wherever you can to avoid a bloated payroll and the expense of duplicate tooling.
The York plant became a Harley facility in 1973 and was purchased from AMF in 1981. If you recall last Spring, Harley announced its plans to consolidate cruiser operations from the York plant to the Kansas City plant. It makes good business sense to consolidate operations wherever you can to avoid a bloated payroll and the expense of duplicate tooling. So what happened at the York plant after that operation move to Kansas City? Did that spell doom for Harley as so many people thought? No. The York plant handles the Softails, which saw a major overhaul last year, and it’s the operation center for the touring models. While the Sportsters and (I think) the Streets left for Kansas City last year, the plant didn’t close down; they just shifted gears. It looks like the shift facilitated the plant retooling to accommodate the brand new Softail line.
What Does This Mean?
The plant could be retooled for something we haven't seen yet.
Harley has promised “50 new models over the next five years” last year, so it is very likely that the Kansas City plant is being emptied to make way for retooling. Is it possible that the Sportser line will get a major overhaul after 2019 like the Softails were last year? Could be. The Sportsters have been a mainstay product for decades, so I doubt it will go away like the Dynas did. Harley has been announcing new models here lately so the plant could be retooled for something we haven’t seen yet.
The Unions Are Mad
Look at Detroit before deciding whether letting labor unions dictate major business decisions is a good idea.
“They didn’t even give us a call ahead of time,” said Joe Capra, directing business agent for Local 778 of the International Association of Machinists & Aerospace Workers. “It is real devastation for these people who work here and work hard in the Kansas City area.”
Well, the unions were mad when Harley sent the cruiser operation to Kansas City, but they don’t get a say. Last Fall, the United Steelworkers Union and the International Association of Machinists and Aerospace Workers ended a collaboration agreement with Harley-Davidson that had been in place for 22 years. Why? Because the unions were mad that Harley wasn’t consulting them on major corporate decisions the company was making to keep themselves viable. Seriously? Let’s look at Detroit before we decide whether letting labor unions dictate major business decisions is a good idea.
So Is The Sky Falling Or What?
All the manufacturers are scrambling for new riders right now and Harley more than others has big hurdles to get over.
It makes major sense to consolidate plants instead of trying to bleed manufacturing money because you’re spread too thin. As far as the labor unions go, Harley-Davidson has already demonstrated that they run their company to stay financially fit and doesn’t let the unions derail that goal. It’s corporate thinking like that that will keep the company healthy or at least as healthy as the declining industry allows. Remember, all manufacturers are scrambling for new riders right now and Harley more than others has big hurdles to get over as their old customer base is heading into retirement age and the new 18-to-34-year-old buyer group isn’t interested in the old Harley image. There’s nothing wrong with trimming the fat to make way for the future.
My Take On It All
Sending its operations to another plant has happened before and it happened just before the unveiling of a significant model line.
Closing a plant doesn’t mean the building goes away. I’d be concerned if Harley was selling the plant, but sending its operations to another plant has happened before and it happened just before the unveiling of a model line that had a major overhaul. While Harley-haters will continue with their tailgate parties, I think the rest of us can exhale and wait to see what the MoCo has in store for us next year and beyond.
Harley-Davidson Relocates 118 Jobs Amid Heavy Third-Quarter Losses
See our article on the cruiser operation move to KC.
Harley Says Buh-Bye To Labor Unions
See our article on the end of the collaboration agreement.
50 New Harley Davidson Models In Five Years?
See our article on Harley’s announcement of 50 new models.
Motorcycle Manufacturers Are Scrambling For New Riders
See our article on the shift in the market.
Harley-Davidson Announces 2018 Softail Lineup
See our article on the new Softail lineup.