Harley-Davidson shuts down production; Supply Issues

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May 19 (Reuters) - Harley-Davidson Inc (HOG.N) said on Thursday it will stop assembling and shipping motorcycles for two weeks except for its electric models due to a problem with parts from a supplier.

The iconic motorbike maker said a third-party supplier that it did not identify has a regulatory compliance matter with a component. Harley-Davidson had no additional comment.

So far, production at two manufacturing plants in Wisconsin and Pennsylvania have been halted.

"There's no indication of how this impacts the business or how it impacts the units that have already been made," said Jaime Katz, senior equity analyst at Morningstar.

In a recent 10-k filing, the company disclosed that semiconductor shortages were affecting production lines and that it was seeking alternatives. It also noted that its suppliers could potentially be adversely impacted by changes in legal or regulatory requirements.

The company began outsourcing production of motorcycles for the EU in 2018 in response to retaliatory tariffs imposed by the EU on U.S. steel and aluminum products. Over the past two years, the company expanded business dealings with foreign suppliers to mitigate rising domestic raw material costs.

Shares sank 9.3% to $32.44 in afternoon trading.

Milwaukee-based Harley reported a drop in first-quarter profit in April, as margins were squeezed by higher costs and chip shortages.

Supply chain snarls have dented motorcycle sales in North America as production challenges resulted in lower dealer inventories, the company has previously said.

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