MOTORCYCLE NEWS Harley Factory In India?

Harley-Davidson to set up first factory outside US

According to a recent article in a local newspaper in Indian, Harley has abandoned the concept of am assembly plant in Indian for it’s made in America motorcycle parts and is shifting gears to create entire factories there. Here is the article from the Indian newspaper The Financial Express.
 
In what could be construed as triumph of corporate interest over national interest, the iconic Harley-Davidson bike will now not just be merely assembled, but fully built in India — lock, stock and barrel. The company has asked suppliers in the US and Thailand to set up bases at Bawal in Haryana and offered them land as well. With over 60% localisation in components, the cheapest Harley Superflow that costs around Rs. 5.5 lakh in India now would become 40-45% cheaper.

US President Barack Obama, during his maiden visit to India last November, had played up Harley’s plans to set up a plant in India as a win-win for jobs for both countries. With the company now deciding to virtually ‘junk’ plans for a mere completely-knocked-down (CKD) units facility — an industry euphemism for mere assembly operations — Obama’s US jobs math is sure to take a hard knock.

The eponymous Milwaukee-based company is learnt to be upgrading its four months-old plan to set up an assembly plant in Haryana, to a ‘mother plant’. The plant will cater to the growing demand for its cult bike brand across booming Asian markets. Basing its bike factory in India — renowned for its globally cost-competitive auto manufacturing — will also make its products more affordable, with the sticker price down a third in India alone once the new facility comes upstream.

The development is significant since apart from the pricing edge, this would be the first manufacturing unit of any luxury automobile company in the country.

Industry sources told FE that the development was prompted by an overall turnaround in the domestic market and a gradual shift in focus to international markets such as India and China.

Harley-Davidson sold about 200-250 bikes in India during the second half of 2010. “The company has asked its global vendors in the US and Thailand to set up manufacturing units in Bawal. It has also given expressions of interest to Indian component makers for supply of vehicle parts to its Haryana unit, which would commence its operations in mid-2011,” a vendor with direct knowledge of the development told FE.

The source said Harley-Davidson has also offered land to some of its vendors at Bawal in Haryana. However, the company has not disclosed any details relating to the production capacity at the plant and the quantum of investments to be made by the company over the next few years.

When contacted, the company’s India spokesperson refused to confirm or deny the development. “Harley-Davidson is committed to global growth. The development of our India CKD assembly operations is proceeding on schedule as we look to build our brand presence around the world,” the spokesperson added.

An auto analyst with a global consultancy firm said that the luxury motorycle market in India is growing at 25% plus while the western markets are growing at 5%.

This has prompted global automobile companies to set up shop in India to expand their sales and benefit from the lower labour costs.

At present, import duties levied on completely built units (CBUs) and CKDs are at 110% and 60% respectively. The company will be able to make substantial savings with a mother plant in India. It would also reflect on the final cost of the bike.

Harley stormed into popular culture globally with Arnold Schwarzenegger riding the hunky automobile in Terminator-2. In India too, actors like Sanjay Dutt and cricketer MS Dhoni are known to be among the many die-hard Harley fanatics.

Harley-Davidson India commenced operations only in August 2009 and opened its first dealership in July 2010. In India, the company currently offers 12 models available through authorised dealerships in New Delhi, Mumbai, Chandigarh and Hyderabad. The bikes come in a range of Rs. 5.5-35 lakh.

Harley To Remain In Wisconsin

-press release-

Ratified New Labor Agreements Enable Production Flexibility

and Efficiency for Long-Term Competitiveness

MILWAUKEE, Sept. 14, 2010 — Harley-Davidson Inc. (NYSE: HOG) announced today it will keep production operations in Wisconsin, following yesterday’s contract votes by the Company’s Wisconsin unionized employees.

The decision follows Monday’s ratification of three respective new seven-year labor agreements by employees represented by United Steelworkers (USW) Local 2-209 and International Association of Machinists and Aerospace Workers (IAM) Lodge 78, both in Milwaukee, and USW Local 460 in Tomahawk, Wis. The agreements take effect in April 2012 when the current contracts expire.

Harley-Davidson produces motorcycle powertrains (engines and transmissions) at its plant in Menomonee Falls near Milwaukee and motorcycle components such as saddlebags in Tomahawk.

“Change is never easy, and we have asked our employees to make difficult decisions. However, we are pleased to be keeping production operations in our hometown of Milwaukee and in Tomahawk,” said Keith Wandell, President and Chief Executive Officer. “Together, we are making the necessary changes across our entire company to succeed in a competitive, global marketplace while continuing to meet and exceed the expectations of our customers.”

A key component of Harley-Davidson’s restructuring is a standardized continuous-improvement production system across company facilities. That system focuses on greater flexibility for seasonal and other volume-related production changes, an enhanced ability to vary product mix in line with customer preferences including the customization of motorcycles at the factory, and greater production efficiency overall. The production system includes the addition of a “casual” workforce component – unionized employees who work as required, depending on seasonal needs and to provide coverage for vacations and other absences.

The decision to remain in Wisconsin concludes a two-path assessment that began earlier this year to determine whether the Company could achieve the needed changes for the Wisconsin operations to be competitive and if not, relocate those operations.

All three of the new Wisconsin labor agreements contain essentially identical provisions except for variances in wage rates and incentives related to contract ratification. All provide a very competitive compensation package while enabling the flexibility and efficiency needed for the Company to be cost-competitive. The agreements also move full-time hourly employees to the same health benefits plan that salaried employees have and maintain a non-contributory defined benefit pension plan at current benefit levels funded entirely by the Company.

Based on the new ratified labor agreements, the Company expects to have about 700 full-time hourly unionized employees in its Milwaukee-area facilities when the contracts are implemented in 2012, about 250 fewer than would be required under the existing contract. In Tomahawk, the Company expects to have a full-time hourly unionized workforce of about 200 when the contract is implemented, about 75 fewer than would be required under the current contract. The Company also expects its Wisconsin production workforce to include 150 to 250 casual employees on an annualized basis to cover seasonal volume spikes, vacations and other absences as the new labor agreements are implemented.

The new contracts are expected to generate about $50 million in annual operating savings in 2013, the first full year of the agreements. The Company expects to incur approximately $85 million in additional restructuring charges related to the new contracts through 2012, of which about $55 million will be cash charges.

When fully implemented, the Company expects previously announced restructuring activities, together with the implementation of the new contracts at the Wisconsin operations, to result in one-time charges of $515 million to $545 million, and annual ongoing savings of $290 million to $310 million. In 2010 on a combined basis, Harley-Davidson expects to incur restructuring charges of $225 million to $245 million and to generate related savings of approximately $135 million to $155 million.

A brief summary of this financial information is available online in the Company/Investor Relations/Events and Presentations area on harley-davidson.com. Visit http://investor.harley-davidson.com/Events.cfm and click on the event titled “Harley-Davidson Production Operations to Remain in Wisconsin” dated Sept. 14, 2010.