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H-D announces more job cuts

300-400 production jobs to be eliminated

By Motorcycle.Com Staff, Apr. 16, 2009
Harley-Davidson is cutting 300 to 400 production jobs on top of the previously announced elimination of 800 positions.

The Motor Company announced the job cuts with its first quarter 2009 report on April 16. The quarterly report also cited a drop in worldwide Harley-Davidson motorcycle sales of 12% and a decrease of 9.7% in the U.S. from the same period in 2008.

Outgoing president and chief executive officer Jim Ziemer says the decrease in revenue was not as large as what the Harley-Davidson saw in the second half of 2008 but the company will continue to cut costs.

“While we are mildly encouraged by the fact that the U.S. retail sales rate declined less in the first quarter than in the prior two quarters, we remain cautious and continue to expect 2009 to be an extremely challenging business environment,” says Ziemer. “We continue to make good progress in executing our strategy for the economic downturn, and we will continue to manage our business with strong discipline.”

In January, Harley-Davidson announced a 10%-13% reduction in production that would eliminate 800 production jobs and 300 non-production jobs in 2009 and 2010. The latest cuts resulted from further restructuring of production plans, though Harley-Davidson says it is maintaining its initial target of shipping between 264,000 and 273,000 motorcycles in 2009. The Motor Company says it shipped 74,670 motorcycles in the first quarter of 2009, compared to 71,868 over the same period in 2008.

Harley-Davidson declared its first-quarter Sportster trade-up program a success.“We don’t make any job reduction decisions lightly,” says Ziemer. “But based on further planning since January and a deeper analysis of our production requirements, we have now determined that fewer production employees will be required. We will continue to work with the union leadership as we move forward, and as always, we will appropriately manage Harley-Davidson based on business conditions and the needs of the marketplace.”

Harley-Davidson reports a net income of $117.3 million in the first quarter 2009, down from $187.6 million in 2008. Much of the decrease in net income is attributed to restructuring costs over the quarter, totaling $34.9 million, and a one-time $22.5 million tax hit due to a recent change in Wisconsin tax law. 

For the second quarter, Harley-Davidson plans to ship 55,000 to 59,000 motorcycles. Starting in April, Harley-Davidson initiated a national “Super Ride” program, offering more test rides for a wide range of models at participating dealerships.

“Demo rides have proven to be one of the most effective ways to turn dreamers into customers and to get current customers excited about a new motorcycle. Through all of our marketing, we are reaching consumers in ways that support the brand and the value proposition of our motorcycles,” says Ziemer.

Harley-Davidson estimates annual savings of $70-$80 million upon completion of its restructuring plans, with savings of $20-$25 million in 2009 and $40-$55 million in 2010.

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