Harley-Davidson cuts more jobs as profit tumbles

By
Dan Strumpf, AP Auto Writer
July 16, 2009, 12:38 PM ET
3 min read

NEW YORK -- Harley-Davidsonhog said Thursday that it is cutting 1,000 more employees and lowering its guidance on motorcycle shipments as quarterly earnings continued to fall due to weaker sales.

The Milwaukee-based maker of famous heavyweight motorcycles says it plans to cut another 700 hourly and 300 salaried employees as it copes with falling demand for its high-end bikes.

"It is obviously a very tough environment for us right now, given the continued weak consumer spending in the overall economy for discretionary purchases," Harley-Davidson President and CEO Keith Wandell said.

Harley, the top seller of heavyweight cycles, said second-quarter income fell 91% to $19.8 million, or 8 cents a share. That's down from $222.8 million, or 95 cents a share, in the period last year.

Revenue fell 27% to $1.15 billion from $1.57 billion a year ago.

Analysts surveyed by Thomson Reuters forecast 24 cents per share on revenue of $1.15 billion.

Harley has been restructuring since the beginning of the year to cope with weaker sales. Demand for Harley's motorcycles, which can cost $20,000 or more, have taken a pounding as consumers pull back on discretionary spending.

Earlier this year, the company said it planned to cut 1,400 to 1,500 hourly jobs and about 300 salaried positions.

In May, the company said it was weighing its options for its main motorcycle assembly plant in York, Pa. The operations at that plant aren't competitive, the company said, and a study is under way to assess whether production will remain in York or move to another U.S. site. It said Thursday it expects to make a decision by the end of the year.

Harley said its worldwide motorcycle sales fell 30% during the quarter. That was still better than the industrywide decline in heavyweight motorcycle sales of 48%.

Harley now expects to ship between 212,000 and 228,000 motorcycles to dealers and distributors worldwide in 2009, down 25% to 30% from 2008.

Previously, the company expected to ship 264,000 to 273,000 motorcycles. In the third quarter, it expects to ship 52,000 to 57,000 bikes.

The company is cutting production to meet reduced demand at its York and Kansas City, Mo., plants, and at its powertrain operations at Menomonee Falls and Wauwatosa, Wis.

The company's financing arm, Harley-Davidson Financial Services, posted an operating loss of $62.1 million in the second quarter, vs. operating income of $37.1 million a year ago. The tight credit markets have weighed on the unit, which has been heavily reliant on the battered securitization market for funding.