Harley-Davidson Cutting 700 Jobs

Today Thursday, Harley-Davidson Inc (HOG) warned that it would reduce production, lay off hundreds of workers and report full year earnings well below its forecast. Harley-Davidson is a strong, quality company that used to grow rapidly. Now it’s still a strong, quality company that will grow more slowly. The company expects earnings to fall 15 to 20 percent in 2008, resulting in earnings of $3.00 to $3.18 per share. It previously forecast growth of 4 to 7 percent in 2008, which translated into $3.89 to $4.00 per share. As a result, Harley expects to ship 23,000 to 27,000 fewer bikes in 2008 than it did in 2007 and would temporarily shut down some plants in the coming months. It said 370 unionized employees-about 6.5 % of its North American workforce- and 360 non-factory employees would lose their jobs In the past, the financial arm of Harley-Davidson was willing to give loans that were 130 percent of the cost of the bike, which gave customers money to customize their bikes with saddlebags, extra chrome and other high-margin add-ons. The news was not entirely bad. Outside the United States, sales continued to grow, rising 7.8 percent in Europe, 19.5 percent in Asia, 31.1 percent in Canada and 53.3 percent in Latin America. And while the company’s U.S. sales fell, they didn’t fall as fast as the heavyweight motorcycle market overall, meaning its market share grew at the expense of Japanese rivals.

17 Responses to “Harley-Davidson Cutting 700 Jobs”

  1. 1 Choppy Apr 17th, 2008 at 10:43 pm

    No surprise there. It could have been worse. It will get worse (for jap bikes), then it will get better. That’s life.

  2. 2 Nicker Apr 17th, 2008 at 11:39 pm


    “…The news was not entirely bad. Outside the United States, sales continued to grow, rising 7.8 percent in Europe, 19.5 percent in Asia, 31.1 percent in Canada and 53.3 percent in Latin America…”

    That must be the up side to the falling dollar.
    So now the question is, exactly what caused the fall.


  3. 3 J Apr 18th, 2008 at 1:57 am

    The “fall” is due to more imports than exports., sending too many dollars out of this country,thus diluting its appeal to others. I wish everyone would get past the “fall” of the dollar- eventually a weak dollar can spark the reindustrialization of America.

    Want to solve the problem? Quit buying $40 bicycles at Walmart.- a “falling dollar” doesn’t hurt anyone in this country buying American goods and services, other than the price of oil, which is denominated in dollars…. Then again, they just discovered a 30 billion barrel oil patch in Brazil today, to go along with that 400 billion barrel find in North Dakota (more oil that the entire Middle East combined), so I wouldn’t get too wound up about oil

    But rather that go into a diatribe on global economic forces and how we’re really fighting a financial world war with China, I’d love to chat more about Harley’s 130% financing….. So, the CEO signs off on this go-go financing to artificially boost sales, then takes his $4M salary sans stock options this year as a plea of “Mea Culpa”;

    Tell you what, Harley- for a salary of only $3M next year, I’ll go in and arrange 150% financing on bikes;

    I await your call……

  4. 4 BikerDATA.com Apr 18th, 2008 at 7:37 am

    Great, more bad news…When is this falling trend going to stop? Just got off the line with a good friend confirming that the attendance at 2008 Daytona was down, and that he expects a bad turn out for Myrtle Beach Spring Rally. HE went on to say that, companies that have been long time customers for 15 years have sold their rigs (to pay bills) and will not be displaying at this years rallies.

    Is this the beginning of the end of the rally circuit…We need to set new priorities and set funds aside and get out there to support this industry…

  5. 5 Rodent Apr 18th, 2008 at 9:43 am

    When you flood the market you have to wait for the waters to subside, which they will. Harley suckered dealers to build huge cookie cutter buildings on expensive freeways in the high rent district and diluted the market by letting anyone with a dollar to use the Harley logo on every imaginable piece of junk, The business will shakeout and reinvent itself… Harley forgot their roots. Motorcycle Clubs, bad boys, and Hollister saved their asses once, so………

  6. 6 Steve Apr 18th, 2008 at 9:53 am

    Harley did not forget their roots, they have lost them.

  7. 7 Kiwi Mike Tomas Apr 18th, 2008 at 10:21 am

    There are many reasons why our market is this way but it in short it was long over due for a correction factor. Most things run in cycles (including m/c’s) and I find there is so much hype and smoking mirrors in this industry that when one reads between the lines things becomes very clear. Just because someone or some company says something they expect the masses to take it as fact. Strategy’s are usually employeed all too often and one has to be smart to get the true read on it. It’s what is not said along with their actions behind the scenes that lies the answers.
    We’re getting back to basics in this industry of what it really is all about. This is just another cycle that those who are dedicated and have the passion for will be around. Harley will be around for years to come.

  8. 8 mike Apr 18th, 2008 at 11:15 am

    i would like some feedback on what i say here. its been said before , but fill me in on others thoughts. once baby boomers have bought harleys they dreamed of who will buy harleys. the younger generation has grown up on video games and crotch rockets and honda cars. they truely think harleys are past tense and bubble blowing slow junk. some say that when they get old they will buy harleys, but when you grow up thinking tech you live that way. does harley need to build a real sports bike? it will have to probably faster than a jap bike to even get youth to even look at it though. does there need to be tv commercials targeting youth and harley coolness? youth has no connection with bearded old bikers. i could go on!

  9. 9 Nicker Apr 18th, 2008 at 12:16 pm


    Ya well….
    “… eventually a weak dollar can spark the re industrialization of America…”

    One can only hope. But, i’m thinking the only way that can happen is after a full global-economy melt down.
    The “not-built in America anymore” stuff may have gone too far.

    And the cause… ? Too many smart-ass MBA’s ( IMHO anyway).
    Seems to me that’s how the “…Harley’s 130% financing…” you wanted to talk abut happened.

    Just another version of the banks loaning out more money than the House was worth.

    So is that that the bank’s fault or the fault of the idiot that wants to take the equity out of his house to buy stuff he can’t afford?
    Sort-a like sawing off the limb yer-sitting on, isn’t it?

    I just calls-em as i sees-em……… 🙂

  10. 10 jspfc Apr 18th, 2008 at 12:17 pm


    Being a younger guy, here are my thoughts on the situation. 1) Young people like sport bikes because the lines are cool. They usually have strong aggressive stances and look real sporty with loud vibrant colors. 2) For around $10k you can basically get the newest/baddest sport bike out there.(Not including Ducati, Augusta, etc.) Meanwhile in the V-twin market, $10k either gets you a new sportster or a 4 or 5 year old soft tail that is dated. And for $5k you can get a great bike that is a couple years old.

    Also, if you look at young people tinkering with Honda’s, it is like when the baby boomers would go buy a Camaro, GTO, SS, Mustang, etc and tinker with that. The only difference is that in this day and age, the Honda’s are what the young people can afford. As the Baby boomers and their toys grew up, so did the cost of what they played with and Ford and Chevy never replaced those cars with something fun and affordable for the younger generation(and no a focus or escort is not a replacement). You can look at that happening today, Ford, Chevy, and Dodge are using old lines for Mustangs and Camaros, and re-introducing old models(the charger and GTO) that they stopped making but the prices start at around $25k. What kid or young guy can afford to pay that and then put money in it to fix it up to look unique?(Sorry this was off topic, but applicable in the motorcycle market as well.)

    So to answer your question, Harley either needs to build a new “hybrid” type of bike that is affordable, does not look so big and bulky and has some flair or build a sport bike. I think the V-Rod was a step in that direction, but it is way too expensive and the color schemes are boring. And the best marketing for young people is to put the new product in a movie or video game.

  11. 11 Nicker Apr 18th, 2008 at 12:36 pm


    OK, so since someone said Buell Blasts are littering the countryside….

    Then how about a turbo Blast…???

    If Goldammer can run a one lung HD on the salt with good results, seems to me you could open some smug eyes with a street sleeper, and have some fun to boot … 🙂


  12. 12 mike Apr 18th, 2008 at 1:20 pm

    there seem to be a real delema at h-d. the union workers went on strike for more money while the downturn was picking up steam. did employees of h-d not see this or are they blinded by union mentallity? this has reflections of uaw auto strikes of the past. now we see that when you look at the door tag of your once made american automobile it says “made somewhere else ” . bottom line is if youth looks for a more affordable bike ( also fast and dependable ), how will harley provide it with this type of situation? i also note that detroit now is a ghost town .
    i and most others hope all at h-d have the thinking cap on and never want them to leave.

  13. 13 jspfc Apr 18th, 2008 at 1:40 pm


    One other thing a little off topic, but I hope that Indian has thought about targeting new younger customers and not just trying to steal Harley’s or Victory’s consumer base.

  14. 14 J Apr 20th, 2008 at 5:35 am


    Umm, in a “full global economy meltdown”, no one will be industrializing anything. Hopefully the US has seen the worst of it, and now we can sit back and laugh as the rest of the world fights for fewer dollars.

    No, I disagree about the culpability of Harley management in this downturn. As another poster pointed out, Harley has been very imperialistic to inflict expensive conditions upon dealers.

    Taken a trip lately? More than any other product, billboards on highways advertise Harley dealers- it’s stunning the amount of billboard signage they are using now.

    Many dealers- mine included- required borrowers to purchase a certain amount of accessories at point of sale of the bike- that’s artificially inflating sales. Should the consumer say “no” to an effectively uncollaterized 30% loan? Hell no. You don’t see GMAC offering to loan out $65K on a $50K truck- this “mystery financing”- which I alluded to a few months ago, and we’ve see Harley already trip up on- is simply a shell game, and longer term, it’s poor fiscal management.

    All of this is done for one reason- short-term share price of the stock. Share price rises only with ever-increasing profits, and Harley senior management has been banking on their golden parachutes for years. Harley’s dealer network is ripe for abuse; They aren’t the Chevy garage, who can threaten to switch to Fords if Chevy tries to screw them- Harley dealers have to bend over and take it.

    Yes, I blame Harley- these are top-down problems, designed to make management a quick buck, at the expense of long-term interests, such as you and me. Securitizing their motorcycle sales? WTF…. That’s a “get rich today” scheme on a depreciating asset.

    Take a good look at Jim Zeimer, as he perches nervously atop a bike in his promo shots….. Think he’ll be riding five minutes after he retires? Hell no…… He’s here because he recognizes his opportunity to leverage this company for personal gain. Kudos to him for foregoing stock options in 2007- but chances are they wouldn’t have vested anyway. Besides, Jim took home $4M on an $800K salary, anyway- he hasn’t quite attained “pauper” status yet…..lol.

    (BTW, Harley- the cool kids don’t use stock options anymore- get with the program

    As a publically-traded company, Harley has long-term fiduciary responsibilities to shareholders. Their balance sheet is running fast and loose, and we have far too many examples (cough- GMAC/GM. Ford Motor Credit/ Ford) of what can go wrong if they trip up too often.

  15. 15 Nicker Apr 20th, 2008 at 11:09 pm


    OK, i guess the only thing i can come up with is:

    “…in a “full global economy meltdown”, no one will be industrializing anything…”

    Maybe not “Industrialized” as we know it.
    Some years ago while working with an older industrial engineer who took on a second careers as a Mfg. Prof at University of Utah… this guy laid out a rather comprehensive look at where the world economy could be headed.

    The interesting part of the scenario was that he didn’t see the “melt down” as an across the board depression (ie”no return to hunter gathering”). But rather a “soft landing” where markets turned inward…. local.

    He saw tech based economies that replaced large industry with small agile independent operators. More like some of the Silicon Valley medial equipment industry where one guy bids contracts on the Internet and programs NC machines running a 24/7 lights-out operation. UPS pickup & delivery….. etc. etc….

    Like a good Mormon he saw these one man operations working in rural arias, low overhead, each with their own business case. So if ya-wanna buy a Ferrari ya bid a bunch-a contracts and don’t do much sleeping. However, you had the option of trade off that work for farm work…. your business case…… you call the shots….. 🙂

    Fast forward to today….
    There are now machine shops that will bid on your fab needs, Just e-mail-em your CAD file.
    If you don’t have your own CAD system you can even use their’s, on line… So, may be the rest will simply fall into place when energy prices totally chane everyone’s business case.

    “…No, I disagree about the culpability of Harley management in this downturn…”
    How do the share holders feel about that?…”

    “… All of this is done for one reason- short-term share price of the stock. Share price rises only with ever-increasing profits, and Harley senior management has been banking on their golden parachutes for years…”

    Hell,…… blame Congress. The only reason corporations introduced Stock compensation in the first place was to allow their executives to skip out on paying the Capital Gains Taxes instituted by a Congress (in order to redistribute what the political progressives considered “exorbitant salaries”).


  16. 16 Simon Apr 22nd, 2008 at 6:37 pm

    Perhaps they should lower the price of the product to more reasonable levels.
    I dont think the jap or euro machines will be as affected as they are having increased sales in the UK(15%) and in Europe.
    I do belive Yamaha and Triumph actually increased sales in the US last year.
    Harley has made its own bed as a ‘niche’ market product so will have to lay in it and suffer the consequences unlike others who are more diverse in their product line.
    Harleys are wonderful evocative machines but they only appeal to a certain portion of the market, no ones fault but their own.

  17. 17 Jeff Apr 25th, 2008 at 1:23 pm

    Blather infinitum!

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Cyril Huze