Iconic motorcycle company Harley Davidson may be cruising in the right direction by adopting lean manufacturing practices to ward off the risks of a shaky global economy, The Wall Street Journal reports.
According to the news source, Harley has joined the hundreds of businesses and manufacturers around the country that have adopted flexible production measures, which help a company stay resilient in the face of economic uncertainty.
Before going lean, the company operated in a cluster of factories that could have been mistaken for an industrial park from the mid-20th century. The lack of automation and other new techniques kept it far behind in terms of operating productivity. But since adding lean to its operations, manufacturing that once comprised 41 buildings has been condensed into one well lit plant that employs more robots than laborers.
The media outlet noted that the company has shaved the number of hourly workers to about 1,000 from more than twice that only three years ago, with more than 100 of these employees on contracts that allow them to come and go as is needed by Harley.
Together, Harley's overhaul of its productivity will likely result in an operating profit margin of 16 percent, compared with 12.5 percent in 2009. Craig Kennison, an analyst at Robert W. Baird & Co. said the improvements are so impressive that the company will no longer need to operate at peak production levels to bring in hefty profits.
Harley's transformation is a strong case for lean, which has helped companies all over the country emerge from financially risky territory to more stable ground.
"There is a focus on performance and remaining profitable no matter what the business environment is," said Daniel Meckstroth, chief economist at the Manufacturers Alliance for Productivity and Innovation.
This drive for performance shows in the statistics. By trimming down excess expenditures and assets and tightening up processes, U.S. manufacturers' total profits rose to $363 billion in the first quarter of 2012, compared with $290 billion in the same period five years earlier, according to the U.S. Department of Commerce.
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