US motorcycle producer Harley-Davidson is to cease operations at New Castalloy, its Australian unit that produces cast motorcycle wheels and wheel hubs, and source those components through other existing suppliers.

Harley-Davidson told Reuters the move was part of its overall strategy to outsource work that cannot be performed competitively in-house.

Harley-Davidson said it expects the transition of supply from the Adelaide-based New Castalloy to be complete by mid-2013.

The company expects to incur about US$30m in restructuring charges related to the transition, of which about 35% will be non-cash charges.

Sourcing of New Castalloy production to other suppliers would generate about $9m in annual ongoing savings from 2014.

"The company's decision on wheel production follows a review of the long-term fit and competitiveness of the New Castalloy business with our strategy and was not made lightly," said Matt Levatich, chief operating officer of Harley-Davidson.