Harley-Davidson Will Reopen Some Factories This Week

Harley-Davidson will reopen its plants in Wisconsin and Pennsylvania and accelerate production in phases, a media report says.
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Motorcycle maker Harley-Davidson  (HOG) - Get Report said it would reopen its factories this week, though with lower production rates, according to a media report.

The Milwaukee company's plan was laid out in a memo, viewed by the Wall Street Journal, from its director of product sales, Beth Truett, to its dealers.

The company closed its U.S. assembly plants in March due to the coronavirus outbreak. But the company may not ship any additional new motorcycles this year to about 70% of its 698 dealers. 

Harley will reportedly reopen its plants in Wisconsin and Pennsylvania and speed production in phases. Output would be limited to the bestselling models and colors without customizable features for the remainder of the year.

Two weeks ago the company detailed its coronavirus recovery and response plan in its first-quarter earnings release. 

The plan includes preserving $250 million of cash in 2020 by cutting salaries and eliminating merit increases for employees this year.

Harley also said that it maintained $2.47 billion in liquidity, including $1.47 billion in cash, in the quarter, but it expected to access capital markets in the near future.  

Chief Executive Jochen Zeitz, who took the top post two weeks ago, told investors in April that the company was embarking on a five-year strategic plan to improve flagging sales. 

The company said it plans to outline that plan in the second-quarter earnings release. 

Earlier this month, analysts at Argus Research upgraded the stock to buy from hold. Analyst David Coleman said in a note to clients that the upgrade reflected his positive view of the company’s new strategic plan.

"We expect the plan, called 'The Rewire,' to result in a solid recovery for Harley as the economy restarts," Coleman said. 

"The company is also working to mitigate the impact of the pandemic through salary cuts, hiring freezes, and adjustments in its new product launch schedule. It has also suspended share buybacks and cut its dividend."

Harley shares at last check were up 4.4% at $22.79.