(Bloomberg) — Harley-Davidson Inc. has told investors privately it will be able to make up for lost production later this year after halting operations because of a problem with a supplier part, according to people familiar with the matter.
The motorcycle maker tumbled Thursday after saying it would halt almost all assembly and shipments for two weeks because of a “regulatory compliance matter” with a part from one of its suppliers.
The decision, made out of “an abundance of caution,” came after Harley received unspecified information from a supplier earlier this week, according to a statement. The interruption does not affect the company’s electric LiveWire bikes.
The Milwaukee-based company has told some investors that a global Tier 1 supplier initially flagged the issue, according to the people, and Harley has already sent personnel to try to resolve it. The company also said it should be able to make up for lost production later this year, said the people, who asked not to be identified because the information was shared privately.
A spokeswoman for Harley declined to comment beyond the earlier statement.
The work stoppage is a new stumble for Harley, which has already been grappling with chip shortages, high raw-material expenses and other supply-chain snags. Chief Executive Officer Jochen Zeitz, a former Puma SE executive who took the helm in 2020, has slashed costs, exited unprofitable markets and tightened inventory to raise motorcycle prices.
Harley shares fell 9.3% in New York, the biggest decline since February 2021.
The stoppage places a burden on Harley dealers, who have already struggled to get inventory amid the semiconductor crunch, said George Gatto, who owns two Harley stores in the Pittsburgh area.
“It’s peak season for this part of the country so this is the absolutely wrong time for this to happen,” he said in an interview. “We’re already not getting the vehicles we were promised, and now all of a sudden it’s worse.”
Gatto said he has been waiting on nearly complete bikes that are missing certain components to be shipped from the factory.
Higher supply-chain costs eroded Harley’s operating income in the first quarter, the company said last month. While it expects the chip shortage to ease in the second half, component costs and raw material inflation will continue for the rest of the year, it said in a recent regulatory filing.
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