Harley-Davidson to reorganize as profits decline
About 250 workers to lose jobs globally

By Katherine Michalets - Freeman Staff

Oct. 20, 2015

MILWAUKEE — Along with its report of declining sales Tuesday, Harley-Davidson said it will reorganize the company in the fourth quarter, resulting in about 250 layoffs globally.

The Milwaukee-based company said the slump in sales and declines in profits during the third quarter could be partly attributed to a more competitive market. To help the company get on a better path, Harley-Davidson said Tuesday it will reallocate funds that will then be put toward employee separation and reorganization costs.

According to the financial report, diluted earnings per share were $0.69 during the third quarter compared $0.69 in the year-ago period. Third-quarter net income was $140.3 million on consolidated revenue of $1.32 billion compared to net income of $150.1 million on consolidated revenue of $1.30 billion in the year-ago period, according to Harley-Davidson.

Harley-Davidson said new motorcycle sales decreased 1.4 percent worldwide last quarter compared to the same period in 2014. Sales down 2.5 percent in the U.S. and up 0.9 percent internationally.

“We expect a heightened competitive environment to continue for the foreseeable future, and now is the time for us to dial things up with significant additional investments in marketing and product development,” said Matt Levatich, president and chief executive officer of Harley-Davidson, in a statement. “We have a strong plan, built on our incredible foundation, to further assert Harley-Davidson’s substantial market leadership and accelerate growth.”

That plan will include reallocating existing spending to fund the actions.  Harley-Davidson said it anticipated incurring one-time expenses of approximately $30 million to $35 million in the fourth quarter of 2015, primarily for employee separation and reorganization costs related to this reallocation.

Tony Macrito, manager of corporate relations for Harley-Davidson, said via email that “an early retirement incentive program will be offered to eligible employees in advance of what we believe will be a global reduction of around 250 salaried positions across the company, largely completed by the end of the year.”

Harley-Davidson employs around 6,400 full-time workers worldwide and of those approximately 3,775 are salaried. In the United States, Harley-Davidson employs approximately 5,560 workers, 3,170 of which are salaried.

“Adjustments in positions and structure will be made in essentially every part of the business to achieve the right focus and support the increased demand-generating investments,” Macrito said.

According to the report, Harley-Davidson will increase its investment in customer-facing marketing by approximately 65 percent above 2015 levels. The company also plans to increase its investment in new product development by approximately 35 percent from 2015 levels. The $70 million increase in investment will be focused in four primary areas: increasing product and brand awareness; growing new ridership in the U.S.; increasing and enhancing brand access; and accelerating the cadence and impact of new products. 


Email: kmichalets@conleynet.com