“It’s disgraceful, but how about the heartless timing for Christ’s sake.” — Australian Workers Union State Secretary Wayne Hanson said to reporters.
It’s not well known, but the majority of cast wheels and hubs for Harley-Davidson motorcycles are produced in Australia and shipped to Milwaukee. Harley acquired Adelaide-based New Castalloy in 2006 when continuity of wheel supply was an issue. The Australian subsidiary is New Castalloy and was a long-time supplier that was on the verge of bankruptcy of its then parent company, Ion.
Now Harley-Davidson plans to shift the manufacturing to China (according to South Australian Trade Minister Tom Koutsantonis) where it will save the motor company about $9 million a year. The decision to cease operations at New Castalloy will effect 183 employees and 29 contract workers. Harley expects to complete the transition to “outsourcers” by mid 2013. The company estimated the related restructuring costs at $30 million, of which $10 million will be recorded in 2011 and $20 million in 2012.
South Australian Trade Minister Tom Koutsantonis said to reporters, “To tell a group of workers before Christmas they may not have a job is insensitive and I think quite silly.” Mr Koutsantonis also stated that the motor company had given no indication to the government of the closure and as a result were unable to provide any assistance. The South Australian Employment Minister Tom Kenyon stated that workers would get between $3K – $5K each in job training, but he was rather candid in that there was no place for them once we’ve got them through the right training.
The Australian manufacturing sector is bearing the brunt of global uncertainty (read layoffs) and high Australian dollar. Ever the politically correct, President and Chief Operating Officer Matt Levatich said, “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.”
As we know and have read many times, Harley has been recreating itself as a premium brand and smaller manufacturer while trying to grow its market share outside the U.S.
Made cheaper in China might be the new corporate mantra and correct decision based on pure Wall Street math, but there can’t be much pride in that choice.
UPDATE: July 10, 2013 — Harley-Davidson reverses decision to shutter the Adelaid plant (HERE)
Photo courtesy of H-D and New CastAlloy