Harley-Davidson has been steering away from its “Made in America” strategy — and it’s just skidded off the road.
Shares of the iconic motorcycle maker fell more than 5 percent after the company admitted that problems with bike parts shipped from overseas have been hampering production and hurting sales.
Milwaukee-based Harley said its profit jumped 30 percent in the second quarter on higher margins and increased orders. Sales, however, remained stagnant with 90,128 bikes sold, little changed from a year earlier.
That’s partly because quality-control issues with overseas parts have stymied production of Harley’s new, lower-priced “Street” model, execs said. US versions of the cheaper bike are being assembled at the company’s manufacturing plant in Kansas City, Mo.
The new Street bikes, which retail between $6,800 and $7,500, are targeted for a younger, more urban customer. Harley’s top-of-the-line models have retail prices nearing the $40,000 mark.
“This is the first time we’re manufacturing product internationally, and with that, a majority of the supply chain is international,” Chief Financial Officer John Olin told investors during a conference call.
“Not only is it a much longer supply chain, but it’s with a lot of new suppliers,” Olin said. “We’re going through a learning curve.”
Harley posted profit of $354.2 million, or 1.62 per share, up from $271.7 million, or $1.21 a share, a year earlier. Revenue grew 12 percent to $2 billion.