Har­ley-David­son plans to cut jobs

Northwest Arkansas Democrat-Gazette - - BUSINESS & FARM - RICK BAR­RETT

MIL­WAU­KEE — Har­ley­David­son Inc. is elim­i­nat­ing about 180 pro­duc­tion jobs at its U.S. plants, union of­fi­cials said Tues­day, with plants in sub­ur­ban Mil­wau­kee and in Kansas City, Mo., ex­pected to be hit the hard­est.

The per­ma­nent job cuts are com­ing in the next cou­ple of months as the Mil­wau­kee­based com­pany throt­tles back pro­duc­tion.

Tem­po­rary fur­loughs also are ex­pected this fall.

“It’s not look­ing too good at this point,” said Ross Win­kl­bauer, a sub-dis­trict di­rec­tor for the United Steel­work­ers union, which rep­re­sents Har­ley work­ers.

Ear­lier Tues­day, Har­ley re­ported that net in­come fell 7.7 per­cent to $258.9 mil­lion, or $1.48 per share, in the sec­ond quar­ter that ended June 25, from $280.4 mil­lion, or $1.55 per share, a year ear­lier.

Rev­enue from mo­tor­cy­cles and re­lated prod­ucts fell to $1.58 bil­lion from $1.67 bil­lion.

Har­ley said its world­wide mo­tor­cy­cle sales were down 6.7 per­cent from a year ear­lier and U.S. sales were down 9.3 per­cent.

The com­pany, which pre­vi­ously fore­cast that bike ship­ments for the full year would be “flat to down mod­estly,” said it now ex­pects to ship 241,000 to 246,000 mo­tor­cy­cles in 2017 — down 6 per­cent to 8 per­cent from 2016.

The new pro­jec­tion in­cludes a 10 per­cent to 20 per­cent de­cline in pro­duc­tion in the third quar­ter.

In a con­fer­ence call with an­a­lysts, Chief Ex­ec­u­tive Of­fi­cer Matt Le­vatich said work­force cuts would be an­nounced to em­ploy­ees start­ing Tues­day. No fur­ther de­tails were im­me­di­ately avail­able.

“Lower ex­pected ship­ments means we will need to re­duce plant pro­duc­tion, and this has an im­pli­ca­tion for our man­u­fac­tur­ing fa­cil­i­ties, our peo­ple and our fi­nan­cial per­for­mance. This ac­tion will re­quire an hourly work­force re­duc­tion at some of our U.S. man­u­fac­tur­ing plants,” Le­vatich said.

He de­scribed the sec­ondquar­ter earn­ings as dis­ap­point­ing and said the com­pany would be ag­gres­sively man­ag­ing its mo­tor­cy­cle in­ven­tory.

The earn­ings beat Wall Street ex­pec­ta­tions. The av­er­age es­ti­mate of nine an­a­lysts sur­veyed by Zacks In­vest­ment Re­search was for earn­ings of $1.37 per share.

The com­pany said it now ex­pects its full-year op­er­at­ing mar­gin to be down ap­prox­i­mately 1 per­cent­age point com­pared with 2016.

“Given U.S. in­dus­try chal­lenges in the sec­ond quar­ter and the im­por­tance of the sup­ply and de­mand bal­ance for our pre­mium brand, we are low­er­ing our full-year ship­ment and mar­gin guid­ance,” Le­vatich said.

Har­ley said its U.S. mar­ket share for the quar­ter was 48.5 per­cent in the heavy­weight mo­tor­cy­cle cat­e­gory.

Har­ley and other mak­ers of cruiser and tour­ing mo­tor­cy­cles have seen their U.S. sales fall as the econ­omy has fal­tered in some states.

Also, the com­pany has faced pres­sure from Ja­panese and Euro­pean mo­tor­cy­cle man­u­fac­tur­ers, as well as ri­val In­dian Mo­tor­cy­cle Co., based in Min­nesota.

Har­ley-David­son shares have de­clined 11 per­cent since the be­gin­ning of the year, while the Stan­dard & Poor’s 500 in­dex has climbed nearly 10 per­cent. The stock has in­creased 8 per­cent in the past 12 months.

Har­ley shares fell $3.05, or 5.9 per­cent, to close Tues­day at $48.95.

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