Harley-Davidson is closing its cast wheel and hub producing subsidiary New Castalloy, deciding to outsource production to third-party suppliers.
Based in Adelaide, Australia, New Castalloy produces about 1,450 wheels and 500 wheel hubs per day for Harley-Davidson. That work will be transferred to outside suppliers by the middle of 2013.
Harley-Davidson expects to save about $9 million annually by 2014. Closing New Castalloy will however require a cost of about $30 million, including $10 million in 2011 and $20 million in 2012. New Castalloy employs 212 workers, including 29 contract workers.
According to Harley-Davidson, the decision to close New Castalloy is part of a continuing strategy to focus in-house production on metal fabrication for fuel tanks, fenders and frames, powertrain production, final assembly and painting. Everything else can be outsourced 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,” said Matt Levatich, President and Chief Operating Officer, Harley-Davidson Motor Company. “New Castalloy has been a valued part of the Harley-Davidson team. We appreciate the many significant contributions of New Castalloy’s employees over the years.”
Harley-Davidson acquired New Castalloy in 2006, saving the company from bankruptcy. The Australian company had been supplying wheels and hubs to Harley-Davidson since the ’80s, but the company has been around since the ’40s as Castalloy, producing wheels for customers including Chrysler.