Harley To Close Five Plants For A Week

Harley-Davidson Inc. will close five assembly plants for the week after Thanksgiving as part of its previously announced plan to reduce production.

Harley will close final assembly plants in York, Pa., and Kansas City; the Wisconsin powertrain operations in Wauwatosa and Menomonee Falls, and its Tomahawk Operations in Tomahawk for the week of Nov. 26, according to published reports.

Employees will not be paid for the wseek, but in a statement, Harley said health care coverage for the workers will not be disrupted.

"The company regrets the temporary impact the shipment reduction will have on so many of its employees as well as its dealers, suppliers and customers," Harley said in a statement. "The company believes this solution is the best option for balancing the needs of our stakeholders while doing what's right for the long-term prosperity of the company."

Harley said "some sites will take additional steps to achieve their production reductions," but the company did not state what the actions would be.

Harley sales have been sluggish amid a broader industry slowdown. In early September Harley lowered its financial guidance for the rest of the year, and since then analysts and investors have pummeled the stock (HOG).

Some analysts have downgraded the company's stock, citing the impact of the housing and credit crunch on high-end luxury goods and the lackluster 2008 lineup.

"Based on our dealer checks, we believe it is a difficult retail environment and model year 2008 bikes were not being well received," Citi analyst Gregory R. Badishkanian wrote in a Sept. 10 note to investors. He cut his target price to $51 from $64 and lowered his earnings estimates for the next three fiscal years.

That followed Bank of America Securities analyst Michael Savner's August analysis.

"Based on our proprietary inventory survey, we believe inventory levels remain well above optimal levels," he wrote. "Currently, we are tracking 39,496 bikes in the channel, which is up roughly 12 percent from last year but decreased from up 22 percent at the end of the second quarter of 2007." He lowered his price target from $64 to $62.

In July the stock was trading around $60 a share; Sept. 19 it closed at $48.59.