Harley-Davidson to close facilities, lay off 1,100, reduce shipments

23/01/2009 by info.

Export sales appeared to be the only good news for Harley-Davidson as the release of its fourth quarter and 2008 year end results were accompanied by a range of cost-cutting announcements that include lay-offs, production cuts and facility closures.Confirmation of the as-expected poor performance and economy measures comes with its dealer network gathered in Washington, D.C., for the firm’s annual Winter dealer convention.

In an effort to stabilize its finances the Motor Company is planning to consolidate its two engine and transmission plants in the Milwaukee area into its facility in Menomonee Falls, Wisconsin, and also consolidate paint and frame operations at its assembly facility in York, Pennsylvania.

The firm’s distribution facility in Franklin, Wisconsin, will be closed, with Parts and Accessories and General Merchandise distribution being taken on by a third party, and it will also discontinue operation of its own domestic transportation.

Some 1,100 jobs are expected to be lost in 2009 and 2010, with up to 70 percent of them going within 12 months.

Talking about the changes to the business structure, Jim Ziemer, the CEO and ‘Harley lifer’ who recently announced his intention to retire, said: “We obviously need to make adjustments to address the current volume declines, but we are also determined to do that in a way that will make us more competitive for the long term. Our management group will engage with union leaders, through our partnering relationship, regarding these changes.”

It is hoped that the changes will result in an annual saving of approximately $60 million to $70 million.

As the first quarter of 2009 progresses the Company says it plans to ship between 74,000 and 78,000 new motorcycles, a 3.0 percent to 8.5 percent increase versus the first quarter of 2008.

However, for the full year the Company plans to ship between 264,000 and 273,000 new Harley-Davidson motorcycles, a 10 percent to 13 percent reduction from 2008.

“We reduced our production levels prudently in 2008, helping our dealers achieve lower inventory levels,” said Ziemer, “and we’re going to show similar discipline in 2009. That’s not only critical for the health of our business, but for our dealers’ businesses, as well.”

These shipment figures come despite a marked increase in international sales in the final part of 2008 for the Motor Company.

Retail sales grew 0.7 percent in the Company’s international markets during the fourth quarter of 2008 compared to the year-ago period.

Fourth quarter retail sales increased 3.4 percent in Europe, with all international market retail sales increasing 10.3 percent for the full year.

Domestic U.S. retail sales of Harley-Davidson motorcycles declined 13.0 percent for the full year, in a U.S. heavyweight market that was ‘only’ down by 7.0 percent for the year.

Revenue for the full year was 2.3 percent down (at $5.59 billion) on shipments of 303,479 for the year (down 8.2 percent).

www.harley-davidson.com

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