Industry

Harley hit hard by recession

Global economic downturn forces American motorcycle giant Harley-Davidson to announce it’s to shed almost 1,000 jobs at the company’s main manufacturing plant in York, Pennsylvania.

The announcement comes as good and bad news to York’s 45,000-strong population: on the one hand the news ends months of speculation that Harley was planning to relocate the factory to another part of the country, putting all the plant’s 1950 employees jobs in jepoardy, while on the other Harley’s announcement comes bad news for half of the plant’s staff who are set to lose their jobs. Put in perspective, Triumph employs around 650 people at its factory in Hinckley, Leicestershire.

Harley-Davidson company spokesman, Bob Klein, said: “The proposed agreement meets the company’s need for significantly greater cost competitiveness, flexibility and efficiency.”

The bike maker has been in the financial doldrums for the past few years, suffering a sales dive and a drastic share price drop. In 2008, Visordown reported the company was laying off workers at its Springettsbury Township facility, due to a drop in demand for new machines. In January this year, the company announced it was to cut production by 13 per cent due to the global downturn. In the same month, share prices fell 12 per cent; analysts forecast Harley’s worst year in the downbeat economy since 1982.

In July this year, the company revealed a drop in profits of $19.8m (£12m) for the April to June quarter, down 91% from the $223m profit for the same period last year.

In October, Harley put MV Agusta up for sale, having acquired the company in August 2008 for approximately £55 million, which included the existing bank debt for approximately £31 million. Harley-Davidson President Matt Levatich said MV Agusta was “well positioned for the future” as a buyer was sought for the Italian subsidiary: “This decision was not made lightly. MV Agusta is a great company with a proud heritage and brand, high-quality exciting products, and a passionate team with whom we have achieved a great deal over the past 14 months,” said Levatich, former president and managing director of MV Agusta.

In the same month, Harley also pulled the plug on subsidiary company Buell, stating the global recession and subsequent lack of sales as the cause behind their decision. Although the announcement came as a shock to many, the writing had been on the wall for sometime. Two months earlier, in September 2009, Buell announced it was to cease production until January 2010, temporarily laying off 50 of the company staff in the process. But there is some good news: a few weeks after Erik Buell announced his company was no more, the man behind the quirky marque announced he was to continue building made-to-order racebikes for a limited amount of customers under the name ‘Erik Buell Racing’.

Harley’s decision to drop Buell and sell MV Agusta effectively puts the US manufacturer out of sportsbike production. The move means the company will now focus their operations at doing what it knows best: building cruisers.

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