- Harley-Davidson shuts down production for two weeks due to ongoing shortages
- The company's third-party supplier has encountered a regulatory compliance matter with a crucial component
- The semiconductor shortage is likely to continue throughout the year
Harley Davidson (NYSE: HOG) becomes the latest casualty on ongoing supply chain issues, testing company strength and growth durability across the board of industry. The famed motorcycle maker has just announced it will be halting production for two weeks, except for its electric models. Due to ongoing shortages from a lack of efficient supply, Harley Davidson is falling short on critical production pieces.
The two-wheeled icon is apparently having problems with a third-party supplier, stating they have a regulatory compliance matter with a crucial component. Harley is yet to announce any further details on the matter. Currently, production at two manufacturing plants in Wisconsin and Pennsylvania have been completely stopped.
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The shortage revolves around a critical cog of the automobile industry; semiconductors. The shortages have been wreaking havoc on the automobile industry the last few months, with Rivian CEO RJ Scaringe warning that the shortages are likely to continue throughout the rest of the year, forcing a variety of company’s to adopt lengthy delays, or in this case, complete production shutdowns.
Harley Davidson made the transition in 2018 to outsource the production of its motorcycles off the back of rising costs for domestic materials. Companies that have domestic supply chains might be having a slightly easier first quarter. Harley reported a first-quarter profit drop in April with margins being increasingly squeezed by higher costs and shortages. It isn’t just Harley-Davidson, we’re seeing automobile manufacturers across the board suffering with chip shortages and growing delays – a hurdle that doesn’t seem to be easing as quickly as investors initially thought.
The delay is only for two weeks, yet it doesn’t take much to dent the company's quarterly profit expectations. Investors should pay close attention to the wider industry, as more shortages and potential shutdowns are likely to follow.