Harley-Davidson Inc (HOG.N) announced on Thursday that it will suspend constructing and shipping motorcycles for two weeks, save for its electric versions, says an article published in Reuters.
Regulatory compliance
A third-party supplier, which the company did not name, has a regulatory compliance issue with a component, according to the legendary motorcycle manufacturer.
Harley-Davidson declined to speak further.
Production has been halted at two manufacturing factories in Wisconsin and Pennsylvania thus far.
Impacts on units
“There’s no indication of how this impacts the business or how it impacts the units that have already been made,” said Jaime Katz, senior equity analyst at Morningstar.
Semiconductor shortages
The company revealed in a recent 10-k filing that chip shortages were impacting manufacturing lines and that it was looking for alternatives.
It also stated that changes in legal or regulatory requirements could have a negative impact on its suppliers.
In response to retaliatory tariffs imposed by the EU on U.S. steel and aluminium exports, the business began outsourcing motorcycle manufacture for the EU in 2018.
Raw material costs
To offset growing local raw material costs, the company has increased its commercial contacts with foreign suppliers during the last two years.
In afternoon trade, the stock dropped 9.3% to $32.44.
First-quarter profit
Harley-Davidson, located in Milwaukee, announced a decline in first-quarter profit in April, owing to increasing expenses and chip shortages.
According to the corporation, supply chain snarls have hurt motorbike sales in North America, as production issues have resulted in decreased dealer stocks.
Did you subscribe to our newsletter?
It’s free! Click here to subscribe!
Source: Reuters
