Harley-Davidson 2009 Austerity Plan

harleyheadquartersToday Harley-Davidson Inc. announced that it will cut 1,100 jobs over two years, close some facilities and consolidate others. The company also reported its fourth-quarter profit down 58% and said it is slashing motorcycle shipments to dealers by 13% to adjust with reduced demand. The 2 engine & transmission plants in Milwaukee, Wis. will be consolidated in 1 into its plant in Menomonee Falls, Wis. The frame & paint plant in York, Pa will be reduced and the distribution facility in Franklin, Wis will be closed and work will now be subcontracted to a 3rd party. Harley-Davidson also announced that its financial-services division swung to an operating loss of $24.9 million in fourth quarter, hurt by write-downs totaling $63.5 million. The company has been unable to unload its debt in the financial markets and is looking at different options to fund its hemorrhaging HDFS (Harley-Davidson Financial Services) lending division. Many analysts think it should be sold as fast as possible. The Harley stock (HOG) is down 69 percent in the last 52 weeks and is a favorite of Wall-Street short sellers.

26 Responses to “Harley-Davidson 2009 Austerity Plan”

  1. 1 Jeff Nicklus Jan 23rd, 2009 at 10:32 am

    I said over a year ago, on this blog, that Harley Davidson was a ticking time bomb and was, and is currently, actively seeking foreign investor dollars to sell the company …. don’t be surprised if that doesn’t come to pass within the next 6 months. Also, you can bet the conductor is yelling “All aboard” for the Chapter 11 Bankruptcy train as we speak!

    What of the HD Dealers who were forced by HD to build these multimillion dollar “Shrines” on every high dollar piece of dirt that could be found in America ….. these guys are going to lose their financial ass ….. and that my friends sucks.

    Over & Out,


  2. 2 BadMonkeyMW Jan 23rd, 2009 at 11:11 am

    And so it begins………

    Jeff is right about the dealers as well. They are the ones who will suffer the most, but it’s their own fault for getting in bed with a corporation that has become as obssessed with greed as H-D has. It’ll be interesting to see how it all plays out.

  3. 3 fuji Jan 23rd, 2009 at 11:19 am

    Jeff, Spot on.

    Back in July I sent this e mail to a corrospondent – investor that I know.

    quote: What is Harley Davidsons value without making advances to the future, my opinion this is why they purchased M V Agusta for some day if not soon this Co will be for sale and to whom? A US investor, or across the seas. you answer that. }

    Sad day but no surprise. I feel for the people “1100 ” that are losing there jobs, that sucks.

  4. 4 dowright Jan 23rd, 2009 at 11:20 am

    Not to worry. $35 T-Shirts and $50 do rags for the loyal HOGer’s will carry them through. Forget the razor. Sell the blades!!!!

    What about the MV Agusta purchase for $107m?

  5. 5 Conrad Jan 23rd, 2009 at 12:46 pm

    I love how the Execs are not afraid to lay off over 1,100 people who, most of, have families and need to job. But I would bet money that they are still going to recieve their insanely huge salary and still fly around on their Private Challenger jets. But I guess they can because they are the “executives”. Thats fucked to not think about the others while they only think about their bank account.

  6. 6 Bobberiz Jan 23rd, 2009 at 3:29 pm

    Screw Harley they did it to themselves with shady lending practices and an I don’t give a shit attitude. This recession is going to weed out alot of limpdick companies that have gotten away from their flagship products. If Harley concerntrated on building quality motorcycles and making sure people can pay for them instead of Tee Backs, Cigarette Lighters and other junk from China,we would not be having this debate.Willie G. should grow a set of nuts and stop letting stock holders and outside investors run the company his family started over 100 years ago.

  7. 7 Dave B. Jan 23rd, 2009 at 6:40 pm

    I’m going to respecfully disagree with all the comments so far, and say that I think HD will be around for a long time to come.
    These layoffs and consolidations are what all companies do when sales wain, get leaner and meaner. They also invest and diversify, such as the acquisition of MV Augusta.
    When times are good, develop new products like the Buells, and even the V-Rod (I am not a fan of the V-Rod but it was at least an attempt at something different). And of course there are the officially licensed products, bolt-ons, service, and logo-wear (which creates huge revenues).
    It is a shame that people will lose their jobs but remember, these are jobs that were added when sales were skyrocketing… this is a reaction to a slowing market and nothing more. I don’t think it is eminent proof of a doomed company. At least that’s my 2 cents.

  8. 8 spackler Jan 23rd, 2009 at 6:56 pm

    Company will survive. But they need to remember, it’s all about product. That means good motorcycles, not tee shirts and ancillary income products. The product line could use some updating.

  9. 9 Brett Jan 23rd, 2009 at 7:10 pm

    While there is some possible reality that Harley is seeking a foreign investor to buy them out, the reality of this entire recession is that America’s dollars still rule. Our recession has caused a global recession. Meaning I doubt there is a foreign investor able or willing to buy it.

    I really think Harley hurt themselves when they got rid of the lists from the 90’s, where you had to get on a list & in 3 to 5 years, you got your bike. Not only did it make a big demand for the bikes, but also helped their value. Then there is the market flood with them building a Sportster only production facility. No matter what, eventually everyone who wants a bike has one & eventually they quit trading in for a new one every year.

    Harley really needs to figure this out because I think they, like many others are panicking. I think Harley really needs to consider going back to how things were with the lists & also figure out, it’s time to build a better product. Instead of helping the EPA with the pipe laws & other things to try to get people to buy only their add ons, they should start concentrating on making better bikes. When you decide to go up to a 96″ engine, don’t make it a dog. Give it some real horse power. Start putting better brakes on the bikes.

    Maybe it’s time for another employee revolt like the one that got the company back from AMF. The problem is, until the last few years, no way employees were upset with the Factory. They had good wages & good benefits.

    It’s time for a new way of doing business for everyone. Can’t wait until Harley has to try to make an electric bike like GM & Ford are trying with autos.

  10. 10 fuji Jan 23rd, 2009 at 8:47 pm

    The European market is basically the test bed for what people want worldwide. Just to back this up is the fact that many new models of motorcycles are sent to Europe as a test bed — hard pill to swallow, but a fact.

    The company has seen a change coming for some time ‘SATURATION OF MARKET” and to do the research and development on sport bikes and smaller bikes would have been astronomical plus prohibitive. Along comes Agusta in financial trouble, purchase done.

    To keep HD value at a plus, Diversity was a must if a sale is to be made or even to survive.

    The market just happened to crash before all the dominos were in place.

    If you believe that there is no one out there to make the purchase guess again. What is Harley Davidson REALLY worth?

    You can’t go back on past years in sales for a true value. ‘SATURATION OF MARKET” again.

  11. 11 spackler Jan 23rd, 2009 at 9:33 pm

    Lists aren’t coming back. That was a unique and golden time for the company. Now there’s too much competition and the market is flooded. Impatient buyers won’t wait, and why should they? Lots of other options out there.

    And who would wait for a dog 96 inch motor? When you really evaluated the product, the 96 inch twin cam motor and 6 speed combo really wasn’t a reason to move up from 88 in. You can build a better 95 in out of the 88, and HD’s 6-speed was the answer to a question nobody was asking.

  12. 12 Evobuilder Jan 24th, 2009 at 2:28 am

    tough times for all…. Boeing cuts 4500, Microsoft cuts 5000, Intel along with soo many others with medium and small biz following suit. Yamaha shutting down ops for a week, Toyota doing the same… it is just getting ugly!

    HD is facing every tougher times as more people get laid off, lose their ability to buy, and pay for what they have already. We are only at 7% unemployment and they say we are heading for over 10. It hit 25% during the great depression, but still…. things are tough and will get worse before they get better. The biggest issue for HD (and other luxury businesses) is that (economists are saying this is not a recession, implying a rebound, but instead a resetting fo the global economy)… meaning that things will bottom, andd then slowly begin moving again… but not rebound back to where things were in recent years, hell, recent decades.

    No rebound…. no new buyers… no new money… means no one can afford luxury items, like 20K motorcyccles.

    This is depressing!

  13. 13 Bobberiz Jan 24th, 2009 at 7:49 am

    Letter to Willy G.
    Desperate times call for desperate measures. Here’s some idea’s that will help sales. LOWER THE PRICE OF YOUR BIKES BY 1/3. And get rid of all the redundent EXEC’S you have. Also start making ALL PARTS for Harleys in AMERICA.(jeez what do you think about that AMERICA?)This will result in creating jobs,helping cut costs for your dealers and make you competitve in the marketplace. Give up all the corporate perks and get down to business or another great AMERICAN ICON BRAND is gonna go right down the crapper.

  14. 14 Fred Jan 24th, 2009 at 11:10 am

    We are all forgetting something here. Manufacturers can make cutbacks, lower bike pricing, etc. to balance the bleeding. From what I hear ( rumors or fact?)Textron, GE are getting out of the flooring business, and only doing consumer financing. SO, manufacturers can’t “floor” bikes to dealers. How many dealers in today’s market are going to put up 50k-to 200k of their own cash to have bikes on their floors? What manufacturer or small builder can “consign” bikes to dealers’ floors?Unless manufacturers/builders have the ability to start their own “credit flooring companies” I think we are seing the demise of dealer networks and going to a direct sales. Something to think about. The “little guy” who builds 200-300 bikes a year, has great quality, and customer service, may become the next Icons of the Industry.

  15. 15 Nicker Jan 24th, 2009 at 3:37 pm


    “….The European market is basically the test bed for what people want worldwide. …..— hard pill to swallow, but a fact…”

    Well ya,… to the Europe public, Bikes & Scooters are a transportation staple.
    To the America public they have always been simply an “accessory.”

    Can’t recall hearing any European town rejecting motorcycles.

    “…If you believe that there is no one out there to make the purchase guess again…”

    That sure would open up the market to India and Victory….


  16. 16 James (Kiwi) Jan 24th, 2009 at 4:50 pm

    AAaargh……accessory what a horrible term for a motorcycle.

    Fuck this, I’m off to bounce another cheque at the pub…and I’m going to ride my accessory to the pub…

    30 degrees Celcius and a good day for a ride.

    Remember “every day on a Motorcycle is a good day”!!!


  17. 17 rodent Jan 24th, 2009 at 8:46 pm

    About 4-5 years ago I read in a rice rocket magazine a report from Daytona about the rice rocket riders were out somewhere playing rice rocket and that the cops were busy “chasing fat old men with fat old ladies riding Fat Boys.” Nobody has gotten any younger and Harley has flooded the market. The used bike market will boom for a few years and Harley will plod along.

  18. 18 Doc Robinson Jan 24th, 2009 at 10:21 pm

    Spackler, “The product line could use some updating.” – where the hell have you been the past few years? And Brett, “Start putting better brakes on the bikes.” – where have you been also?
    And Spackler, “HD’s 6-speed was the answer to a question nobody was asking.” – 6-speeds were going into most custom bikes as well as Harley-Davidson clones, plus Victory motorcycles. Sometimes the Motor Company can’t win. If they’re slow to move, they get criticized; if they make good timely moves (6-speed) they get criticized. Personally, I really like the 6-speed and in fact, before Harley did it I fitted a JIMS 6-speed to my 2004 FLHTCSE.

  19. 19 fuji Jan 25th, 2009 at 2:59 pm

    Here are some numbers to go with to make a decision with HOG investments. Even if sales were to escalate tomorrow the reality of year end dept will be overwhelming. This is scary but reality.

    Now do you understand why the CEO and CFO are vanishing. What lending institution is going to touch their paper, if so at what price. The more that I look into the mumbers the grimmer it looks.

    Quote: Harley only has a few hundred million dollars left of borrowing ability for its HDFS unit. The company also has $200,000,000 of debt coming due in 2010.
    There is a very real possibility that Harley will not be able to access the credit markets in 2009 to increase the lending capacity of HDFC.

    This puts over half the company’s revenues at risk. Credit is hard to come by so many potential buyers will have difficulty obtaining financing from other lenders. There is also the distinct possibility that the line of credit is pulled at year end. The dividend at Harley will have to be cut if it is not able to access credit or Harley will have to liquidate a portion of its loan portfolio at a large loss.

    Rumors are circulating that the coming cash crisis at Harley Davidson makes it a legitimate contender to be the first major American vehicle manufacture to declare bankruptcy. Just when some of us thought that HD had an upper hand on the big three.

  20. 20 spackler Jan 25th, 2009 at 3:51 pm

    Perhaps I should have said HD’s line could use some variety. There’s too much sameness in the line. You and I dig the distinctions but they are lost on most potential buyers.

    As for the 6 speed, yes, there are fine 6 speeds out there, like Baker’s, that can improve the ride. I just don’t think HD’s offering and combo with their 96 is very impressive. You may disagree.

  21. 21 Cade Jan 26th, 2009 at 10:22 am

    Doc Robinson
    you don’t know nothing unless someone tells you something.
    Done Deal

  22. 22 Kirk Perry Jan 26th, 2009 at 12:14 pm

    H-D Reports 2008 Sales Decreases, Planned Workforce Reductions

    H-D Reports 2008 Sales Decreases, Planned Workforce ReductionsHarley-Davidson Inc. has reported decreased revenue, net income and earnings per share for the fourth quarter of 2008 compared to the year-ago quarter. The Company said it plans to lower motorcycle shipments in 2009 and made public its overall strategy to deal with the current economic environment.

    “We have a strong core business anchored by a uniquely powerful brand, but we are certainly not immune to the current economic conditions,” said Jim Ziemer, outgoing chief executive officer. “We have a clear strategy to not only deal with the economic conditions, but also strengthen our long-term operations and financial results. We are executing that strategy with confidence and conviction.”

    Fourth quarter revenue was $1.29 billion compared to $1.39 billion in the year-ago quarter, a 6.8 percent decrease, with fourth quarter diluted earnings per share at $0.34, a 56.4 percent decrease compared to last year’s $0.78.

    Revenue for the full year 2008 was $5.59 billion compared to $5.73 billion in 2007, a 2.3 percent decline.

    For the full year, wholesale shipments of Harley-Davidson motorcycles were 303,479 units, an 8.2 percent decrease compared to 330,619 units in 2007.

    In the first quarter of 2009, the Company plans to ship between 74,000 and 78,000 new Harley-Davidson motorcycles, a 3 percent to 8.5 percent increase versus the first quarter of 2008. However, for the full year 2009, 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.”

    The Company is executing a three-part strategy that includes a number of measures to deal with the impact of the recession and worldwide slowdown in consumer demand, with the intent of strengthening its operations and financial results going forward.

    “Our strategy is focused on three critical areas: to invest in the Harley-Davidson brand, get our cost-structure right, and obtain funding for HDFS to help our dealers sell motorcycles and our retail customers to buy them,” said Ziemer.

    Harley-Davidson will consolidate its two engine and transmission plants in the Milwaukee area into its facility in Menomonee Falls, Wis.; consolidate paint and frame operations at its assembly facility in York, Penn.; close its distribution facility in Franklin, Wis., consolidating parts and accessories and general merchandise distribution through a third party; and discontinue its domestic transportation fleet operation.

    The plan will result in the elimination of about 1,100 jobs over 2009 and 2010, including about 800 hourly production positions and about 300 non-production, primarily salaried positions. About 70 percent of the workforce reduction is expected to occur in 2009.

    “We obviously need to make adjustments to address the current volume declines,” said Ziemer. “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.”

    On a combined basis, Harley-Davidson expects the volume reduction and changes to operations to result in one-time charges of approximately $110 million to $140 million over 2009 and 2010, and ongoing annual savings of approximately $60 million to $70 million upon completion of the restructuring actions.

    The Company said it is evaluating a range of options to provide the necessary liquidity for the wholesale and retail lending activities of Harley-Davidson Financial Services (HDFS). “We’re evaluating options in order to obtain the necessary funding to support Harley-Davidson dealers and customers throughout the year,” said Tom Bergmann, chief financial officer of Harley-Davidson, Inc. and interim president of HDFS.

  23. 23 mikey Jan 26th, 2009 at 3:26 pm

    lately when the workers were striking for more money, i was shaking my head. geeze, didnt they see this slowing down. everyone but them did. whats up guys? i cant even think of a harley not being made in america, get going and reduce those costs and fat. be more competitive. make a crotch rocket bike with attitude that youth likes ,is comparable priced and whips butt. h-d gave up on a mx bike along time ago. that bike would have been as good as anything out there now. again, the youth market.

  24. 24 gustian Jan 28th, 2009 at 11:18 am

    RE Nicker :

    “Well ya,… to the Europe public, Bikes & Scooters are a transportation staple.
    To the America public they have always been simply an “accessory.”

    There you have a point . Over here, the “bike-cult” isn’t in first place a “showing-off-mather”.
    Back in (my) time, it was only a way of transportation. And now, a motorcycle to the European public has become rather a mix off the usefull combined with pleasure. So, it’s a win-win situation.

    “Can’t recall hearing any European town rejecting motorcycles.”

    Ya, even back in time, when we were looked at as “scum”, never knew a town wouldn’t let us in because we rode a bike. Now , a motorcycle is to a lot off the “working-class” the most easy (and fast) way to get you from home to job and back.
    Even the government gives us profits , when using a motorcycle for the home-job-home travel.
    So, let us say, we are well accepted these times. (thanks God)


  25. 25 gustian Jan 28th, 2009 at 11:42 am

    RE: James

    “….accessory what a horrible term for a motorcycle.

    Fuck this, I’m off to bounce another cheque at the pub…and I’m going to ride my accessory …”

    I know what you mean James,

    but the point of Nicker was only to show the big difference between two different continents.
    I rather would have used the word “luxury ”
    If I see in this blog and in many magazines those bikes over there in America, the prices etc, etc…..
    This is simply something we only can dream off, (and only the happy few can afford over here).
    I don’t see anyone over-here riding a 50K bike to work in the rain (Belgium isn’t granted with much sunny days)

    RE :

    “30 degrees Celcius and a good day for a ride.

    Remember “every day on a Motorcycle is a good day”!!!”

    Only, 30 degrees Celcius is something we hope every year for summer. (sometimes the hope remains but not the temperature, lol)

    But YEAH , every day on a motorcycle is heaven to me too ! ! !

    Peace, gustian

  26. 26 J Jan 28th, 2009 at 5:20 pm

    Harley will always be around, in one form or another- they have paid-for assets, patents and trademarks;

    Who won’t survive are a large-percentage of the current dealers, who over-leveraged at the demand of corporate policies; Mandated bad business practices are- in the end- bad business practices.

    Who also won’t survive is the middle-sector of the custom market- sorry boys, this ain’t rocket science- Joe Six-Pack can no longer justify your $400 gas caps in order to sell the bike to the next-biggest schmuck;

    Game over

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Cyril Huze