Harley-Davidson to close Kansas City plant

Harley-Davidson Inc., the fifth-largest employer in Platte County, announced it will close its plant 11401 N. Congress Ave. in Kansas City, Mo., next year.

The Milwaukee-based company announced it will consolidate the Kansas City plant with one in York, Pa., as part of a restructuring effort after a drop in profits in the fourth-quarter earnings reports.

 BRYCE MERENESS/Citizen Photo  The Harley-Davidson plant in Kansas City will close next year after the company announced Tuesday it will consolidate that location with another plant in York, Pa. in 2019.

BRYCE MERENESS/Citizen Photo

The Harley-Davidson plant in Kansas City will close next year after the company announced Tuesday it will consolidate that location with another plant in York, Pa. in 2019.

There are some conflicting reports on the actual numbers of employees that will be impacted by the move. A press release from Harley-Davidson reported it would result in a loss of 800 jobs, but would save the company an annual cash savings of $75 million by 2020 as a result of the move.

In November, a press release announcing the plant would be producing a new line of motorcycles, had the number at 748 employees.

According to numbers from the Platte County Economic Development Council, presented during the Platte City Chamber of Commerce Luncheon on Jan. 18, Harley had 600 workers in the county.

"Our actions to address the current environment, through disciplined supply and cost management, position us well as we drive to achieve our long-term objectives to build the next generation of Harley-Davidson riders globally," Matt Levatich, president and CEO said in a statement. "The decision to consolidate our final assembly plants was made after very careful consideration of our manufacturing footprint and the appropriate capacity given the current business environment. Our Kansas City assembly operations will leave a legacy of safety, quality, collaboration and manufacturing leadership.”

Troy Schulte, Kansas City’s city manager, tweeted he learned of the closure the same time as everyone else did and the city had no advance notice of the news.

Harley-Davidson issued a press release later Tuesday morning to address the Kansas City closure.

"This decision was made after very careful consideration of our manufacturing footprint and the appropriate capacity given the current business environment. We are constantly evaluating capacity and our current U.S. capacity exceeds U.S. demand. Approximately 800 full-time, causal and contract positions will be impacted at the Kansas City plant. Layoffs are expected to begin mid-year and the facility will close in the third quarter of 2019. We anticipate an increase of approximately 450 full-time, casual and contractor positions will be added at our York facility, which will be expanded to support additional production.

"This was a decision we did not take lightly. The Kansas City plant has been assembling Harley-Davidson motorcycles since 1997, and our employees will leave a great legacy of quality, pride and manufacturing leadership. We are grateful to them and the Kansas City community for their many years of support and their service to our dealers and our riders."

The company said it expects to incur restructuring and other consolidation costs of $170 million to $200 million, and capital investment of approximately $75 million, over the next two years.

Layoffs locally will begin the middle of this year and the plant will close in the third quarter of 2019 according a statement released by Harley-Davidson.

“The Platte County EDC and its partners are saddened to hear about the closure of our local Harley-Davidson plant,” Platte County EDC executive director Alicia Stephens said in a press release. “For 20 years Harley-Davidson has been a great partner by bringing this state-of-the-art plant and its well-paying jobs to Platte County and the region. We are working to confirm the timing as we have not had direct contact with local or headquarters management. At this time, we are not aware of any official requests for assistance to retain the company in Kansas City, Platte County, Missouri.

“The Platte County EDC will continue to work with the Company and our partners —the State of Missouri, the EDC of Kansas City, the City of Kansas City, Missouri, the Full Employment Council, area employers and others to help place these skilled workers in local jobs.  Platte County is an employment hub for the transportation sector including aviation, the auto industry and logistics.  We have great compassion for the employees and their families and the impact this will have on their lives.  We are committed to keeping them in our community.”

According to published reports, the company laid off nearly 100 workers in July from the Kansas City plant. In 2015, the Kansas City plant had 169 workers laid off.

According to information provided, the York, Pa., plant will have an additional 450 jobs added due to the consolidation with the Kansas City plant. According to The Patriot-News in Harrisburg, Pa., some salaried employees will be offered transfers to Pennsylvania.

Harley-Davidson opened the 350,000 square-foot plan near Kansas City International Airport in 1997 producing soft-tail, sportsters and street motorcycles. In November, the company announced the newest motorcycle — the Sport Glide — would also be made in Kansas City.

Harley-Davidson said its net income fell by an eye-popping 82.4 percent, from $47.18 million to $8.3 million, compared to last year’s fourth-quarter earnings.

Revenue was $1.23 billion, up from $1.11 billion in 2016, but sales in the United States fell 8.5 percent and international sales were down 3.9 percent in 2017.

Compared to 2016, worldwide sales are down 9.6 percent.

Stock in Harley-Davidson has fallen more than 6 percent over the past 12 months.

Harley-Davidson was also hurt by a voluntary product recall that cost the company $29.4 million, while Milwaukee Journal Sentinel said that the 2017 Tax Cuts and Jobs Act also hurt the company.

Despite that, Leavitch seemed confident in the future of Harley and its 2017 performance.

"We finished 2017 with over 32,000 more Harley-Davidson riders in the U.S. than one year ago, and we delivered another year of strong cash generation and cash returns to our shareholders," the CEO said in the press release announcing the Kansas City closing.