Harley-Davidson cutting 400 Jobs in York

Harley-Davidson is cutting 1,110 jobs over the next 2 years, 400 of those in York, Pa. The York jobs lost are primarily due to the decision to close and outsource the part trucking division, as well as shrink the paint and frame operations. According to an article on Lancaster Online, reasons include “the credit crunch has kept some would-be customers from obtaining financing”, and “the global economy that's impacting discretionary items, especially something that's as discretionary as a motorcycle." “Harley said worldwide retail sales fell 13.1 percent in the fourth quarter, with sales in the U.S. — its biggest market — falling nearly 20 percent. International sales crept higher, though, and the overall heavyweight motorcycle sales fell 25.5 percent in the same period, Harley said.”

O.K., we scooter and sportbike riders like to tease Harley. They are a clothing company that also sells bikes. They make heavy, low performance bikes that enable weekend posers, dressed like pirates, to get from bar to bar. 90% of the motorcycles HD made are still on the road; the other 10% made it home. But I don’t like to see local jobs cut.

Harley’s problem is that their bikes cover the spectrum from heavy-weight cruiser to heavier cruiser. Their smallest bike is the 550lb. Sportster 883, which they consider an entry-level bike and is only “sporty” compared to a Road Glide. This is at a time when scooter sales are up and Kawasaki is turning away customers for the Ninja 250. If your customer base views your product as “discretionary”, then you are going to be more subject to the fluctuations of the economy. Harleys are the soccer-mom SUV’s of the motorcycle world; big, heavy, overpowered lifestyle accessories. In these times, Harley needs a bike that it can market as economical transportation, not a discretionary luxury.

It’s ironic that international sales are up. Harley sold a bike in Europe this year that it did not sell in America: the XR1200. It is based on the dirt oval racers of the 70’s. Its foot controls are (gasp!) not way out front. It is actually sporty. Industry journalists and critics were begging for its release in the States. Harley eventually relented and is currently selling a limited run of them here. They seem to be saying, “If you want them, we’ll build a couple. But this isn’t what we do.”

This recession, with its preceding gas price hikes, is being compared to the 1970’s. You may recall that the Harley-Davidson brand took a hit back then when it was owned by AMF. That may be why HD CEO Jim Ziemer is now saying, “"We're going to show great discipline in protecting the value of the brand." If that protection is in the form of not adapting to market trends, I think we can expect more job cuts in the future. Harley-Davidson may become the marquee brand of ex-American motorcycles.