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Jul 09, 2008 (York Daily Record - McClatchy-Tribune Information Services via COMTEX) -- HOG | Quote | Chart | News | PowerRating -- Harley-Davidson is looking for workers with seniority to take early retirement to help downsize its work force in Springettsbury Township.

Slow sales force a Harley-Davidson job slaughter: The company hopes most cuts will be retirees. About 300 will be trimmed at the local plant.
Wednesday, July 09, 2008; Posted: 05:01 PM
 

If that is not enough, the company will permanently let workers go according to the terms of a union contract.

About 300 union workers are being cut from the payrolls on Eden Road, the motorcycle maker's largest manufacturing plant. That represents about 80 percent of the 370 union jobs to be cut company-wide, Harley said Thursday.

It is part of a companywide plan to cut costs and slow production for the foreseeable future because of weak sales of its motorcycles.

"There is no sign about when things will turn around," Chief Executive Officer Jim Ziemer said.

Harley employs about 3,200 workers in Springettsbury Township, where it makes Softail and Touring motorcycles. About 2,800 are union workers.

Harley spokesman Bob Klein said the company's strategic plan calls for making fewer of those types of motorcycles, which is why most union job cuts will be at the Springettsbury plant.

He said those plans don't necessarily mean the motorcycles made in Springettsbury Township are not selling as well as others. Sales of motorcycles are down pretty much across the board.

The company said Thursday its new motorcycle sales in North America were down by about 13 percent in the first quarter of 2008 compared to the first quarter of last year.

Ziemer said production cuts are necessary to protect the brand from too many motorcycles building up on showroom floors. The company wants to avoid liquidation sales or similar moves by dealers that would lower the value of its motorcycles, Ziemer said.

The company had already cut production in late 2007 with a shutdown at its Springettsbury Township plant that lasted about a week.

Production also stopped early last year because of a labor dispute and work stoppage that lasted about 21/2 weeks.

Future shutdowns are on the table for the coming months, the company said.

Dealing with the cuts

Harley said its management would work with union leaders on the plan for job cuts.

Tom Boger, the business representative for the union that represents about 3,000 Harley workers in Springettsbury, said Thursday afternoon he didn't know what role the union would play in negotiating the planned cuts because it hadn't heard from Harley.

Boger said he found out about the job cuts Thursday, which is when the company issued a news release.

"Nothing surprises me with this company," Boger said.

Some workers said they believe

there are enough employees with enough years of experience to qualify for early retirement and take the brunt of the roughly 300 job cuts.

Eight-year employee Rodney Crumbling said the cuts probably "won't affect that many guys" because he believes a large number of workers could be eligible for early retirement.

Many workers leaving the plant Thursday said they felt their jobs were safe, but were waiting for more information from the company. They blamed the economy, and said they were not surprised by the job cuts.

For Harley, a nationwide plan

The majority of a planned 360 job cuts in the non-production workforce will be in Milwaukee, where the company is headquartered. Klein said he could not immediately say how many would be in York County.

Ziemer said the company is one of many fighting tough economic conditions.

Harley-Davidson's planned reduction of its workforce by 730 workers is expected to happen in the second quarter of 2008 for non-production employees. The second quarter runs through June.

Harley plans to cut the union workforce "over the next several months," Klein said. About another 14 percent of the union workforce cuts will take place at Milwaukee-area plants, the company told the Milwaukee Journal-Sentinel.

Union officials in Milwaukee told the newspaper that the job cuts would be by seniority if retirements were not enough to cut numbers.

The 370 union employees being let go comprise about 6.5 percent of its North American total union workforce.

The 360 non-production jobs that will be cut amount to about 10 percent of its North American non-production workforce.

Ziemer said the company is lowering most expectations for 2008.

The company expects to ship between 23,000 and 27,000 fewer motorcycles in 2008 compared to 2007, or between 303,500 and 307,500 motorcycles.

bburkey@ydr.com; 771-2035

BUY NOW

As workers at Harley-Davidson's Springettsbury Township plant wait to hear if they still have a job, one local financial expert is advising company shareholders to hold on to their stock.

Joseph Mahoney, a financial adviser with Edward Jones in York Township, said now, when Harley's stock is valued at $36.09, is the best time to invest in the company.

One year ago, Harley's stock sold for $66 per share, he said.

"Harley is a good-run company, and it will come back over the long term," Mahoney said. "I believe that it will come back very strong. When it does come back, people will be happy they bought now."

Mahoney said he is not surprised that Harley-Davidson is making cuts to its work force.

"Harley is known as a luxury item," he said. "It's kind of like the Cadillac of motorcycles. In a bad economy, people need money to pay their water bills and gas bills. They don't have enough money to spend on bikes."

Mahoney said Harley's decision to cut jobs now is a sign that the company is attempting to stem a deeper earnings drop in the second quarter.