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Harley-Davidson announces job cuts and idle plants

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Harley-Davidson Inc. (NYSE: HOG) announced early Thursday morning that it would be cutting 730 jobs and temporarily halting production at some plants. Daily production rates will also be adjusted to account for lower demand of the motorcycles.

The company has definitely been affected by the slowed economy. Sales have been down, and losses in Harley's in-house consumer loan division have hit the company hard. The stock hit a 52-week low of $34.10 during Thursday's trading. It did rebound quickly in the morning, but things still aren't looking so hot.

Harley plans to cut shipments of motorcycles between 23,000 and 27,000 this year, which would mean total shipments for the year would be 7% or more below last year's total shipments of 330,619. The job cuts include 370 union positions (mostly in Pennsylvania) and 360 non-production jobs (mostly in Wisconsin), on a total current workforce of 5,600 production workers and 3,560 non-production employees. That makes for a total reduction of about 8%.


Earnings per share for 2008 is expected to be 15% to 20% lower than 2007, which was already down from 2006. As a company that sells what many would consider luxury goods, who knows when their sales numbers will rebound. They have also been hit by the credit crunch, and with few consumers with available equity in their homes, that is not a good sign for Harley's numbers either. I'm hoping that this American icon can hold on and weather the current economic storm.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

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Last updated: November 27, 2009: 02:50 AM

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