by James Dornbrook
Employees at the Harley-Davidson Inc. plant in Kansas City were advised Wednesday that they need to make concessions or the company will consolidate operations into its plant in York, Pa.
Milwaukee-based Harley-Davidson (NYSE: HOG) told employees Wednesday that it conducted internal studies that show significant cost, efficiency and production flexibility gaps in its Kansas City operations.
“We indicated that if we cannot find ways to address these gaps, the alternative would be for the company to consolidate the Kansas City operations into the vehicle final assembly operations at our York, Pa., facility,” the company said in a written statement. “We will continue to discuss ways to address the competitive gaps with the unions.”
The company said it expects to make a final decision regarding the Kansas City operations in the first quarter. Harley-Davidson’s Kansas City production plant employs 800, including 675 hourly workers.
This is not the first time Harley-Davidson threatened to close a plant unless it got concessions from unions. The company received concessions in a new seven-year deal with Milwaukee unions in September after threatening to move those production plant operations to Kansas City. In December, the company received concessions from employees in York, Pa., after threatening to move those plant operations to another city.
Now it’s applying that tactic in Kansas City.
In October, Harley announced that its revenue fell 2 percent to $1.09 billion. However, its third-quarter profits tripled, driven by the company’s recent restructuring and also by the strong performance of its financial services division. It posted third-quarter operating income of $50.9 million.
Get ready to ride a low-cost Harley-Davidson Bike
Sharmistha Mukherjee & Swaraj Baggonkar
After setting up shop, American cult bike maker Harley-Davidson is planning a low-cost model for India.
"We give inputs on the basis of market insights and consumer preferences to our global product development team to make our future product line-up relevant to our growing customer base here. Going ahead, we may look at developing a low-cost product for Indian consumers," said Anoop Prakash, managing director, Harley-Davidson India.
Harley-Davidson, which reported a two per cent drop in global revenues from motorcycles at $1.09 billion for the September quarter, is betting big on India and China. Chief Financial Officer John Olin has been reported saying, "We believe the long-term prospect (in China and India) is extra-ordinary."
The company expects to sell 200-250 bikes by the end of 2010, within six months of its launch in India. "Last year, as many as 1,000 superbikes were sold in India. The market is growing at over 20 per cent every year and strong double-digit growth rate is expected to sustain at least for the next 8-10 years," said Prakash. Grandpa: WOW! 1 + billion people and 1,000 superbikes sold. Awesome, this is worth at least a 15% move on HOG stock price!
To strengthen its foothold in India, the company has set up an assembly facility at Bawal in Haryana. The move would help Harley to save on import tariff and re-work pricing of its products for the Indian market. It is the company's second assembly unit outside its homebase, US, after Brazil.
Import duty and local taxes on completely built-up units amount to as much as 100 per cent of US prices of models offered by the company. Once the proposed assembly unit becomes operational in the first half of 2011, the impact of import tariff will be reduced to nearly 40 per cent. "We will announce the revised prices of our models in January. The intention is to make our bikes more accessible to people here. The potential is good and I expect India to become our largest market in Asia in the coming decade."
Worldwide retail sales fell by 7.7 per cent to 58,849 units during July-September, compared to 63,729 units in the year-ago period, on weak consumer spending in the US. The company expects 40 per cent of its revenues from motorcycle sales to come from international markets by 2014, compared to 27 per cent at present. Grandpa Note: HOG stock has launched 9.6% in the first 4 trading days in November and 13.5% since 10/4/10 on a 2014 HOG Dream...???
Harley-Davidson sells 12 models belonging to five families: Sporster, Dyna, Softail, V-Rod, Touring priced between Rs 6.95 lakh and Rs 34.95 lakh, in India. The bike maker has four authorised dealerships in Delhi, Mumbai, Hyderabad and Chennai. Welcome to India
Harley-Davidson WebsiteAll roads lead home. We have a reputation for seeking freedom and adventure. We are also known for taking care of our own-those communities where we live and work. So while Harley-Davidson can be found in all corners of the world, we are firmly rooted in the places we call home...and deeply connected to the people we call friends and neighbors.
Grandpa: taking care of our own...and deeply connected to the people we call friends and neighbors...Is that subject to receipt of concessions while informing "your own" that without concessions they are out of a job and this while you are making a splash in India???