htmlHarley to ship motorcycle kits to India for assembly, sale

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http://www.jsonline.com/business/106491613.htmlHarley to ship motorcycle kits to India for assembly, sale
Journal Sentinel files Zahan Merchant poses for a picture atop a Harley-Davidson in downtown Mumbai in 2009. Next year, Harley plans to begin sending motorcycle kits to India, where they will be assembled and then sold in the world’s second-largest motorcycle market. Maneuver avoids high tariffs, taxes on imported bikes By Tom Daykin of the Journal Sentinel
Harley-Davidson Inc. will begin shipping motorcycle kits next year to India, where the parts will be assembled in order to sell bikes in the world's second-largest motorcycle market, the company plans to announce Tuesday.
The kits will be supplied by Harley's U.S. plants, including those in Wisconsin, a company statement said. Harley expects the assembly plant in the Indian state of Haryana to be operating in the first half of 2011.
Harley has been importing completely assembled motorcycles to India from the company's U.S plants.
By assembling the motorcycles in India, Harley will avoid steep tariffs on bikes imported from the United States. Tariffs and taxes double the price of a U.S.-made Harley, putting the bikes out of reach for most Indian buyers.
The new assembly plant will allow Harley to improve its market responsiveness and production flexibility while reducing the tariff burden, allowing Harley to grow its sales by making its motorcycles less expensive for Indian buyers, said Matthew S. Levatich, Harley-Davidson Motor Co. president and chief operating officer.
"Given the strong response we have received in the initial months of retail operations, we believe this is the right investment for this important market," Levatich said, in a statement.
In July, Harley opened its first three dealerships in India, a country of 1.2 billion people and the world's second-largest two-wheeler market after China.
"India's rapidly growing economy, rising middle class and significant investment in construction of new roads and highways are paving the way for leisure motorcycle riding," Levatich said.
It marks the second time that Harley has opened an overseas plant where motorcycle frames, engines, and other components from the United States are assembled into complete bikes for a foreign market. The company opened an assembly plant in Brazil in 1999.
About 32% of Harley's motorcycle sales are outside of the United States - mainly in Japan, Canada and Europe. The company's goal is to increase foreign sales to 40% by 2014.
Harley is facing overall weak demand, including among U.S. buyers. In its third quarter earnings report, the company said its 2010 motorcycle shipments will decline 5% to 7% from 2009.
In September, the company won steep concessions from its Wisconsin labor unions and agreed to keep its factories in Milwaukee and Tomahawk, saving about 1,350 jobs. But Harley anticipates eliminating about 200 blue-collar jobs in the Milwaukee area by the end of 2012. In Tomahawk, about 75 of 275 jobs are anticipated to be eliminated at the plants that make parts and accessories.
Chief Executive Officer Keith Wandell has pushed for more nimble factories that can operate efficiently when sales are slow, and can respond quickly to seasonal demand for bikes.