Looming Job Cuts and Outsourcing Thicken Dark Clouds Over Harley-Davidson
With second quarter sales slipping 53.5%, these are tough times across the board for the motorcycle industry. But it's an especially difficult period for Harley-Davidson, whose ongoing troubles have dominated anxiety over the domestic bike business-- despite rival Victory's recently announced 56% drop in 3rd quarter sales.
Not only has the Motor Company faced continued losses and announced the discontinuation of the Buell brand and the planned divestiture of MV Agusta, their latest arrows of misfortune center around outsourcing and further anticipated job cutting at their York, Pennsylvania plant.
The embattled York plant is facing outsourcing of noncore jobs to suppliers, namely chrome plating and parts stamping. Though spokesman Pat Sweeney says that vehicle assembly, metal fabricating, and painting will stay at the plant, union president Tom Santone estimates the move will eliminate 400 jobs. Even more threatening are recent news items suggesting that Harley-Davidson is not ruling out building motorcycles overseas, a realistic expectation considering their strong European sales and their expansion into growing markets like India.
Is any U.S. industry sacred, and is this the end of an era in American manufacturing? Considering that Budweiser is owned by a European conglomerate and even Levi's jeans are manufactured abroad, I'd say Harley has served as one of the last bastions of truly great American brands.
Are these outsourcing trends troubling, or simply to be expected given the globalized state of commerce? Share your thoughts with a comment.
Sources: York Daily Record, LA Times
Related:
- Will This Year's Harley-Davidson York Open House be its Last?
- Industry Shock: Harley-Davidson to Discontinue Buell, Divest MV Agusta
- Moto Poll: Should Harley-Davidson Receive a Government Bailout?
- Harley's Next Stop: India
- Harley-Davidson Profit Drops 91%; 1,000 More Layoffs Announced
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A Harley built in India is just over the top for me. I love my Harley, but with all the “AMF” type thinking coming out of Milwaukee lately…I think my next ride is going to be a Triumph or something Italian.
I want to buy American wherever possible. If Harley were to move production overseas then I would feel no great compulsion to pay the premium price Harley commands when a Honda or Suzuki would meet my needs just as well.
Any economist will tell you that as an economy matures, the low-tech jobs in that economy will move offshore.
There may be a lot of very high-tech components and engineering in a motorcycle, but the mechanical process of assembling a machine like a motorcycle is pretty low-tech. It is inevitable that assembly line-type jobs currently done in the USA will move to countries where it can be done just as well, but cheaper. That’s just the way the free market works.
Now is a good time to remind your kids of something: If they want to be a member of the middle class in the coming years, they have to get at least a bachelor’s degree from a good college. The days of an unskilled worker being able to own a house and live the middle-class lifestyle are fading fast.
Harley are proud, blind to market demands and proving that history repeats itself: They are making the same mistakes the American car industry made in the 70’s. They continue to produce overly large, fuel consuming, low-tech, expensive to buy and to keep motorcycles, thus allowing japanese (and korean) manufactures to beat them at their homeland!
To add stupidity on narrow mindedness they closed Buell that actually could’ve been their kick into new markets and state of the art technology. I was very sad to realize I would never own one…
Royal Enfield are made in India
The Motor Company should have kept the demand for Harleys’ high by not trying to overproduce during the last 10 years. That way the bikes would likely still be in demand at a higher price and could justify maintaining good paying American jobs & craftsmanship.
Building your product in a poor country like India – and not manufacturing anything you can actually sell there – is hypocrisy on a level bordering on obscene. That’s even worse than moving your call center over there!
I’m sure the man struggling to feed his family is going to put his entire heart and soul in to building a huge bike that will be sold back in the States for a hundred times what he makes in a year. They best not do too much flag waving…..
WOW, Victory down 56%! Guess that shows it’s not about the bikes it’s about the economy being in the toilet. I hope HD doesn’t move production (building there bikes) out of the US. I don’t think would be a good move by them.
I see it as a failure to plan. The Harley of today is excessively overpriced and even more so once you add up all the accessories it is inevitably packaged with. The reliability is spotty, the performance is poor and the resale value is terrible. Look at the loaded touring bikes as an example: The Ultra Classic Electra Glide STARTS at THIRTY SIX THOUSAND DOLLARS! Compare that to a Honda Goldwing, fully loaded with a freaking airbag at $27K. Do you really REALLy think you get more for your extra $9,000 (or more) dollars? 100,000 miles down the road, which one will hold more resale value and have cost less to own? Have you watched the prices ‘Wings go for on E-Bay? Calculate up the retention value versus the Harley and wince for the guys who bought the HD.
How about the entry level? Harley HAD an entry level bike with the Buell Blast…now their cheapest bike is the Sportster Low at $6999 and it is an 883CC bike which weighs in at a whopping 583 lbs…NOT exactly what you want for a first bike. Compare that to a Kawasaki Ninja 250 for $4499 or a Honda Rebel at $3999, both weighing in at 350 lbs or less…wet. Where is the entry level Harley now that the Blast is no more? Anybody looking for a first ride is now going to be introduced to a Japanese bike.
Where is the sports bike? No more Buell, so what does somebody who wants a twin sports bike do now? Buy an XR-1200 for $11,000? Really? Or would you buy a Ducati or a Triumph Speed Triple (okay, yes, the Triumph isn’t a twin…but is is’t an I4 either and it is cool!).
So lets see…they are cutting out the one area Harley could really differentiate themself in…being American built. They no longer offer a serious sport bike. There is no longer an entry level bike. The touring bike is WAAAY more expensive. Service is more costly and the resale value is terrible. So why would I consider one?
Your article is misleading. There are three US sites being considered in the York matter, in Indiana, Kentucky, and Tennessee.
Hey Basem, I would love to see more info about Victory and their sales being down. Are they cutting production of some of their models?? Any news on their strategy??
BABS,
My earlier post about the York plant mentions that production could move from Pennsylvania to Kentucky, Tennessee, or Indiana.
Joe,
According to various reports, Victory is scaling down production and increasing promotional efforts to reduce inventory. Laying off employees and lowering prices are also cited as ways Victory is dealing with the downturn.
Basem
Thanks Basem!!
harley, Wake up. go ahead and follow the u.s. auto industry and outsource and i will do the same to my allegiance.
I tried to buy a sportster a couple years ago and the sales guy said it was a girls bike. I can’t be the only one out there so fed up with the “i’m so cool because i ride a harley” attitude. I would hate to see them fail, but a dose of humility would be great.