Harley-Davidson Inc. plans to discontinue operations at New Castalloy, a metalcasting business at North Plympton, South Australia, that produces most of the cast wheels and wheel hubs for Harley-Davidson motorcycles. It said the shutdown will be complete by mid-2013, and it will source its wheels and hubs from other suppliers. The move will save the company about $9 million annually, beginning in 2014, it estimated, and it will cost Harley-Davidson about $30 million in restructuring charges.
The closing is part of a Harley-Davidson restructuring strategy “to develop world-class manufacturing capability” by consolidating operations to emphasize competitiveness, efficiency, and flexibility. As a consequence, its production operations will be comprised of metal fabrication for motorcycle fuel tanks, fenders and frames; painting; powertrain production; and final assembly. For all other parts and systems, Harley is shifting its sourcing to suppliers.
"The company's decision on wheel production follows a review of the long-term fit and competitiveness of the New Castalloy business with our strategy and was not made lightly," assured Matt Levatich, president and chief operating officer.
New Castalloy has 183 employees and 29 contract workers. The business was in voluntary bankruptcy when Harley-Davidson acquired it in 2006, a move explained at that time as a sourcing strategy. "Castalloy has been a valued supplier to Harley-Davidson for more than two decades," Levatich said then. "We carefully assessed our sourcing options for this critical motorcycle component going forward, and Castalloy demonstrated unique capabilities."