Declining sales over the past five years, coupled with the ill effects of COVID-19 pandemic, made Harley-Davidson reach this decision
American motorcycle manufacturer Harley-Davidson shares that it would have to lay off 140 workers across its production plants in the USA. The decision comes at a time when the company seeks to adjust production volumes and workforce in a bid to minimise losses. The job cut will affect 90 production workers at the company’s York plant (Pennsylvania) and 50 employees at the Tomahawk factory in Wisconsin.
Harley-Davidson has been noting falling revenues over the past five consecutive years. Changes in management have made an impact as well. Earlier this year, Matt Levatich stepped down as CEO and his position was taken over by then Director Jochen Zeitz.
The company had also announced a new ‘Rewire’ business strategy for a revised five-year plan. However, COVID-19 pandemic struck around the same time and production at Harley-Davidson’s two facilities came to a halt for a brief period in March 2020.
Sales across the US dipped by 16 per cent in the first quarter while over 50 per cent of company dealerships had to shut stores as a result of the pandemic. Harley-Davidson went into a cost-cutting mode in April with the CEO and Board of Directors foregoing their salaries, executives taking a salary cut of 30 per cent while other employees’ salaries were cut by 10-15 per cent.
The cost-cutting measures also included curbing capital spending, putting further recruitments on hold and completely doing away with merit benefits to its employees. Still, Harley-Davidson has stated that these salary reductions would be reassessed once again at the end of the second quarter. The brand was apparently working on some interesting projects.
Though business operations have commenced from May 2020 and dealerships were opened, retail sales are slated to go down by another 40 per cent later this quarter. Furthermore, Harley-Davidson has announced that fewer models will be shipped during the course of this year to dealers in the US. The American automaker has updated almost its entire Indian portfolio to BS6 emission norms amid the country’s lockdown.
Global production will be limited to a few bestsellers and preferred colour choices while the company intends to temporarily discontinue customisations for the rest of this year. New motorcycles might not be shipped to around 70 per cent of the company’s 698 dealers in the United States. Though these decisions are currently being taken in the home market, similar procedures are expected outside the continent in the months to come.