Harley-Davidson has announced that more than 20% of the workforce at its Kansas City production plant are to be laid-off for a five-month period starting in early May, as the company seeks to cut dealer inventory of slow-selling models.
The lay-offs will affect 169 employees out of a 750-strong headcount at the Missouri facility. According to analyst Tim Conder of US investment bank Wells Fargo Securities, these temporary staff cuts are driven by poor demand for Sportster, Dyna, Softail and V-Rod models manufactured in Kansas City.
The factory also assembles entry-level 750cc Street machines destined for the Amercian domestic market, from knocked-down component kits sourced in India. These are still reportedly selling well, adds Conder.
Reducing production in Missouri is the easiest option for Harley, because it’s a “right to work” State where businesses aren’t obliged to negotiate with or recognise trades union representation.
Some of the dust-gatherers made there, particularly the Sportster range, are due to be refreshed with updates for 2016 announced in August. Laid-off staff are likely to return to work in October to begin a production surge for the following season.
Conder also notes that Harley-Davidson’s share price, which has been substantially under-performing New York Stock Exchange index movements in recent weeks, will probably remain weak until investor negativity is ameliorated (or otherwise) by firm second-quarter retail sales data released in July.