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Harley restructuring credited for savings

By Rick Barrett of the Journal Sentinel

Harley-Davidson Inc. has realized several hundred million dollars in cost savings since it implemented a massive restructuring less than four years ago, executives said Saturday at the annual shareholders meeting.

This year the company expects savings of about $305 million, from changes it initiated since 2009, and rising to annual ongoing savings of about $320 million beginning in 2014. The changes, including a new manufacturing system at Harley’s factory in York, Pa., are boosting the company’s profits and making it more agile as it builds motorcycles closer to market demand. They’ve also come at a price to the workforce, including hundreds of York employees who lost their jobs when Harley outsourced work such as metal plating and stampings.

“I would like nothing more than to have every single employee who lost their job come back to work. None of us get up in the morning with the intention of ruining anybody’s life,” said Chief Executive Officer Keith Wandell. But the point of the restructuring has been to strengthen the company and make it more efficient. Also, Wandell said, the outsourced work has created jobs at other American companies.

This year, Harley is focused on changes at its operations in Menomonee Falls, Tomahawk, and Kansas City, Mo. In 2014, it expects to have “surge capability” at the Wisconsin and Kansas City factories, meaning they will use seasonal workers to ramp up motorcycle production closer to seasonal demand. “As we gain more business, bringing people back to work would be awesome,” Wandell said. Soon, all of the manufacturing plants will have a similar operating system. In a practical sense, it means that everything’s tied together: from the customer order for a motorcycle, to that bike going out the factory door, said Matt Levatich, president of Harley-Davidson Motor Co.

Harley says it’s confident that efforts to attract younger, nontraditional riders, and to increase its share of the international motorcycle market, will continue to boost sales. The company was the No. 1 seller of new street motorcycles to U.S. adults ages 18 to 34, women, African-Americans and Hispanics, according to 2012 data released Monday from the market research firm R.L. Polk & Co. Harley also was the top-selling street bike to white males ages 35 and older. But sales to young adults, women, African-Americans and Hispanics grew at more than twice the rate of sales to white males 35 years and up.

In 2012, the company opened 31 dealerships in 18 foreign countries, including Malaysia, Russia, Turkey and Bolivia. It has opened six dealerships in foreign countries so far this year, including South Africa and the Philippines.

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