Harley-Davidson eliminating 700 jobs; CFO Olin leaves company
Harley-Davidson Inc. says it is eliminating 700 jobs this year as part of its comprehensive effort to rebuild the company.
Chief Financial Officer John Olin, who has been with Harley 17 years, has left the company. His duties are being assumed on an interim basis by Treasurer Darrell Thomas, the company said in a news release.
“Significant changes are necessary and we must move in new directions,” Jochen Zeitz, chairman, president and CEO said in the release.
The changes are part of Harley’s efforts called “Rewire.” About 200 of the 700 positions being eliminated are already vacant, the company said, and the remaining 500 will be eliminated by the end of the year.
Worldwide, Harley has 6,000 employees. It does not make public the number of people who work at the company’s headquarters in Milwaukee, but the Pilgrim Road factory in Menomonee Falls employs roughly 1,000 people.
Harley says initial Rewire actions are expected to result in $42 million in restructuring costs in the company’s second fiscal quarter which ended June 30, and earlier said planned spending cuts would preserve approximately $250 million in cash in 2020.
In a significant cost-savings measure, Harley is now producing motorcycles at its new plant in Thailand and shipping those bikes to the European Union and China.
Earlier this year, Zeitz replaced CEO Matt Levatich, who left the company after 26 years. Before taking over the CEO position, Zeitz was credited for a dramatic turnaround of the Puma sporting
goods brand.
Harley spokeswoman Jenni Coats said Zeitz would not do an interview for this article.
Coats said more details on Rewire would be released when Harley announces its second-quarter earnings later this month.
Rewire sets the stage for a five-year strategic plan that’s expected to be unveiled in the fourth quarter. While the overhaul is expected to be completed by the end of the year, Harley said it will likely cause additional restructuring charges in 2021.
“The Rewire is progressing very well and substantial work is being done to eliminate complexity and get HarleyDavidson on a path to winning,” Zeitz said in Thursday’s news release.
“Our new operating model is simpler, more focused and enables faster decisions across the entire company. We’ve taken a hard look at our entire setup, our spending, and how work is getting done, to align our operating model, structure and processes. We are building a strong foundation to drive a high-performance organization in the future.”
Changes to the company’s operating model include all areas of the business globally, from commercial operations to corporate functions, according to Harley, which declined to provide details on the job cuts.
In recent years, Harley-Davidson has eliminated hundreds of positions as it’s struggled in a global economy tarnished by tariffs and trade wars.
In response to weak sales, the company has lowered production, resulting in 140 layoffs last month at its factories in Wisconsin and Pennsylvania.
The latest cuts are in addition to those layoffs.
In June, Harley-Davidson was removed from the Dow Jones S&P 500 list, a key benchmark for U.S. stocks. In 2019, the company saw its motorcycle sales in the U.S. drop for a fifth straight year and its global bike shipments at the lowest level in a decade.
Harley-Davidson’s sales have been declining as its baby-boomer customer base ages out of motorcycles and young people aren’t widely embracing the big cruiser and touring bikes. The damage to the global economy from COVID-19 has caused further harm to Harley’s sales.
After Thursday’s announcement, Harley shares closed at $25.75, up 16 cents.