Harley-Davidson deepens cuts as 2Q profit tumbles
NEW YORK (AP) — Harley-Davidson Inc. said Thursday it is cutting 1,000 more employees and lowering its motorcycle shipment guidance as quarterly earnings continued to fall due to weaker sales.
The Milwaukee-based maker of the famous heavyweight motorcycles said it plans to cut another 700 hourly and 300 salaried employees from its ranks 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 in a statement.
Harley, the top seller of heavyweight motorcycles, said its second-quarter income fell 91 percent to $19.8 million, or 8 cents per share. That's down from $222.8 million, or 95 cents per share, in the same period last year.
Revenue declined 27 percent 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 as it sought to cope with weaker sales. Demand for Harley's motorcycles, which can run $20,000 or more, have taken a pounding in the recession as consumers pull back on discretionary spending.
Earlier this year, the company had said it planned to cut between 1,400 and 1,500 hourly positions 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 the facility aren't competitive, the company said, and a study remains 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 percent during the quarter. That was still better than the industrywide decline in heavyweight motorcycle sales of 48 percent.
Harley now expects to ship between 212,000 and 228,000 motorcycles to its dealers and distributors worldwide in 2009, down between 25 to 30 percent from 2008 shipments levels.
Previously, the company expected to ship between 264,000 and 273,000 motorcycles. In the third quarter, it expects to ship between 52,000 and 57,000 bikes.
The company is cutting production to meet reduced demand. It said Thursday it will implement production shutdowns at its York and Kansas City, Mo., production facilities, as well as 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, down from 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.
Shares of Harley-Davidson closed Wednesday at $17.49. The stock has fluctuated between $7.99 and $48.05 in the last 52 weeks.

Jul 17, 2009 at 9:16 a.m.
Suggest removal
Harley is still a profitable company. You can check out their balance sheet, and see they are still turning profit. That is a FAR cry from GM, who was loosing billions every single quarter.
.
Like many companies; Harley has managed to to afloat in the hard times by taking serious cost cutting measures (cutting jobs primarily). In fact many of the companies listed on the S&P have had better recent quarters then expected. The funny part is that people think that is a sign of "green shouts" or economic turn around, when in fact all it is the massive cost cutting measures these companies made (job cuts) after the markets everything tanked in the 1st Q. One of the biggest fallacies out there is the notion that unemployment is a lagging economic indicator. It is actually more of a leading indicator, and that will be proven in the very near future.
Jul 17, 2009 at 8:56 a.m.
Suggest removal
I would think a company that is still projecting sales in the 212,000 to 228,000 units ranging in the 13k to 31K price range in this time fiscal disaster is doing something right. If you ever ACTUALLY ride with a group of HD riders the age groups are VERY well represented across the board. Just because we do not ride YOUR idea of a bike does not mean it is bad or wrong or outdated it just not YOUR idea of a bike! I would not buy a Honda Civic to haul dirt for my construction company just as I would not want to ride two up crouched over in a knee dragging position on a sport bike for hundreds of miles in a day for a week. I ride both kinds of bike and they each have their place and do things I want them to do. So far as new technology I think Eric Buell is right out there and in the mix in the Superbike Series and you do not compete there without inovation and commitment.
Jul 16, 2009 at 10:16 p.m.
Suggest removal
Per the article:
"Harley said its worldwide motorcycle sales fell 30 percent during the quarter. That was still better than the industrywide decline in heavyweight motorcycle sales of 48 percent."
Looks like they are beating their competition, and the sales decline is due to the economy, not their business model. I'm wondering why you geniuses think HD needs to diversify. Why does HD need to compete in the sportbike segment to be considered successful? Because you don't like cruisers? HD has a bike for beginning riders. It's not a sportbike. Trying to appeal to the young (i.e. poor) riders means building cheaper bikes with thinner profit margins. There is absolutely nothing wrong with sticking to your core product and building the brand. Want to see HD sales decline even more? Put an HD badge on a moped or ATV or sportbike.
Jul 16, 2009 at 6:11 p.m.
Suggest removal
I would have to agree with Gilly, the Harley needs to be modernized. Just how many times can you put a little extra chrome here or there, maybe a fancy paint job on the tank or paint everything all satin black and sell it as a "new" model. You still have an old fashioned, air cooled V-twin, push rod valve-train engine, with a belt or chain drive. Apparently this old engine is a little underpowered since it seems everyone throws away the stock mufflers for a set of straight pipes to give her a little more power. Why doesn't Harley sue the likes of Orange County Choppers or West Coast Choppers and other custom Harley builders for copyright or patent infringement? Why, there ain't a Harley part on them, everything is made by the aftermarket. While your dressed up like a pirate, head on down to the Renaissance Fair in Bristol, they need actors.
Jul 16, 2009 at 5:34 p.m.
Suggest removal
Send the jobs to Mexico.
Jul 16, 2009 at 5:26 p.m.
Suggest removal
I would agree that most of the Harley crowd nowadays has their AARP cards Gilly. That's funny.
I like some of the Harley's, but frankly y'all look ridiculous with the black leather and 'do rags. Ya bought their image, and that's about it.
Jul 16, 2009 at 4:48 p.m.
Suggest removal
Gilly - FYI, Ducatis are also V-Twins and are some of the most prestigious, quality bikes built. They are also weathering the storm better than anyone.
Jul 16, 2009 at 4:30 p.m.
Suggest removal
Some of my previous post was deleted--The Buell 1125R has a motor produced by Rotax--the same company that produces the engines for Aprilia....The 1125R comes in with right around 150 hp.........
Jul 16, 2009 at 4:27 p.m.
Suggest removal
"That broom is called Justice"????........oooookkkkk Gilly--whatever you say:) The VRod engine was a joint effort with Porsche. It's a heavy bike, but the engine works very well. The Rotaxright around 150--that package also works very well. The MV Agusta F4 and Brutale lines basically speak for themselves. Harley and it's affiliated companies are making headway. Stick to your 600cc Japanese bikes. They're good bikes if you're content with something cookie cutter without much character:)
Jul 16, 2009 at 4:20 p.m.
Suggest removal
OK Gilly, why don't you tell us how you really feel about HD riders and their machines?
Jul 16, 2009 at 12:40 p.m.
Suggest removal
As spark says, the entire market is weak. GM and Harley both rode the housing market wealth creation bubble and now they're both feeling the effects of its contraction. Money people had "in the bank" (their house) simply vanished, and they can no longer justify buying SUVs and -- let's face it -- expensive toys. Now, Harley is a strong company with an iconic brand, and they don't seem to be in the same dire debt/obligation situation that GM got to, so I'm pretty sure they will survive after hunkering down for a year or so. No consolation to the workers, of course.
Jul 16, 2009 at 11:49 a.m.
Suggest removal
Harley realizes that they have to diversify to survive. They understand that they have to capture a younger customer base that is a more tech and performance savvy that the typical Harley customer. The V-Rod, Buell's line up and the MV Agusta motorcycles will allow them entry into the markets that their older bikes couldn't dream of entering.....
Jul 16, 2009 at 10:31 a.m.
Suggest removal
It is only a matter of time before they are built overseas and shipped back.
Jul 16, 2009 at 9:19 a.m.
Suggest removal
Harley is a cruiser company. Always has been, probably always will be. That's not a bad thing. The entire market is weak right now. After Harley's 100th Anniversary came, everyone wanted a piece of the Harley lifestyle. Way more bikes were being built and the supply and demand increases. Before that, you had to wait to get one. This economy is simply putting them back where they were before. They will survive it. I do agree the bikes are too pricey and that's going to hurt them during times like this.
Jul 16, 2009 at 9:01 a.m.
Suggest removal
Harley tried the moped motor home route years ago and lost their rear end. To diversify does not mean your company will always do well. Harley builds big bikes...that's their thing. The reason they are doing poorly is because we are in a deep economic rut, not because of their product lines lacks a snowmobile.
Jul 16, 2009 at 8:32 a.m.
Suggest removal
Well, that is bad news. I like the Harley's, but for the most part they are waaayyy to expensive for what you get. Harley sold the "image" of the biker, unfortunately, many can't afford their price tag anymore. Another reason is that Harley has all their eggs in one basket. They only sell one type of bike, the cruiser, and varying versions of it. No sport bikes, mopeds, dirt bikes, ATV's, snowmobiles, etc... Many of the other bike manufacturers make some or all of them, and for a decent price, but then sales are down for everything.
Yes, there is Buell for the sport bikes, but they are a pretty small percentage.
Jul 16, 2009 at 7:31 a.m.
Suggest removal
As long as the jobs lost are not coming from Wisconsin, we cant take much more of a beating and keep on functioning as a state. Although it stands to reason that if bike production is cut they will also cut powertrain production and that IS Wisconsin jobs.We need a shot in the arm soon. I now know more people unemployed because of the economy than employed,myself being one of them.
Jul 16, 2009 at 7:01 a.m.
Suggest removal
Not good. That is a lot of lost jobs.
Before you post a comment, consider this:
Note: GazetteXtra.com does not condone or review every comment. Read more in our User Policy AgreementPost Comment
Commenting requires registration.