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H-D announces further job cuts

Relocation of York, Pa. facilities considered

By Motorcycle.Com Staff, Jul. 16, 2009
Harley-Davidson announced further job cuts and reductions in production as second quarter 2009 sales dropped 30.1% from 2008.

Harley-Davidson reported a 35.1% decrease in new motorcycle sales domestically, and an 18.2% drop in international markets compared to second quarter 2008. The numbers appear dim, but things could have been worse as industry-wide retail sales of heavyweight motorcycles in the U.S. were down 48.1% this quarter.

“While the underlying fundamentals of the Harley-Davidson brand remain strong and our dealers’ retail motorcycle sales declined less than our competitors, it is obviously a very tough environment for us right now, given the continued weak consumer spending in the overall economy for discretionary purchases,” says Keith Wandell, Harley-Davidson president and chief executive officer.

Second quarter net income totaled $19.8 million compared to $222.8 million in 2008, but much of the decrease was attributed to $101.1 million non-cash charges related to Harley-Davidson Financial Services.

In response to the second quarter results, Harley-Davidson lowered its 2009 shipment targets to between 212,000 and 228,000, compared to the previous shipment projection of 264,000 to 273,000. Harley-Davidson says it expects to ship from 52,000 to 57,000 motorcycles in the next quarter.

Due to the lower shipment volume, Harley-Davidson announced a reduction of 700 production positions and 300 non-production, primarily salaried jobs including positions with HDFS. These reductions are on top of the previously announced 1,800 job cuts to be made in 2009 and 2010. Harley-Davidson plans to offer a voluntary separation incentive package for salaried employees.

Harley-Davidson is examining the future of its York, Pa. facility.“We continue to take these difficult actions to manage through the current challenges and we also continue to take major steps in creating the operational effectiveness that is essential to our long-term future,” says Wandell. “We are committed to doing what is required to enable Harley-Davidson to operate as a competitive business and employer over the long haul.”

Harley-Davidson’s powertrain production operations in Menomonee Falls and Wauwatosa, Wis. and assembly facilities in York, Pa. and Kansas City, Mo. will be affected by the decrease in production. The final assembly operations for Sporster and V-Rod motorcycles as well as V-Rod powertrain production at the Kansas City facility, and the Sportster powertrain production in Wauwatosa will be shut down for 14 weeks including the entire fourth quarter. Other production operations may be shut down an additional five weeks over the rest of the year.

The volume reductions and restructuring are expected to cost between $150 million to $190 million over 2009 and 2010, but Harley-Davidson estimates ongoing annual savings of $140 million to $150 million.

Harley-Davidson has also examining whether to make additional restructuring changes to the York facilities or relocate operations to another U.S. location.