Not only that worldwide retail unit sales of new Harley-Davidson motorcycles dropped by over 30 percent, but two non-cash charges related to Harley-Davidson Financial Services, Inc. (HDFS) contributed to the recent dramatic low incomes (a $72.7 million credit loss provision for an one-time reclassification of motorcycle loan receivables and a $28.4 million charge to write off the total goodwill associated with HDFS).
"While the underlying fundamentals of the Harley-Davidson brand remain strong and our dealers' retail motorcycle sales declined less than our competitors, it is obviously a very tough environment for us right now, given the continued weak consumer spending in the overall economy for discretionary purchases," said Harley-Davidson President and CEO Keith Wandell in a statement for the press.
A chain reaction has started: the decline in retail motorcycle sales led to lower shipment expectations for Harley-Davidson, which made the company implement a further reduction this year of nearly 700 positions in the hourly production workforce. Moreover, the non-production positions will also be reduced by nearly 300 positions, including a reduction at HDFS.
This is the second time this year the Company is making employment cuts. Earlier this year, the Company had announced workforce reductions totaling about 1,400 to 1,500 hourly production positions in 2009 and 2010 and about 300 non-production, primarily salaried positions.
"We continue to take these difficult actions to manage through the current challenges and we also continue to take major steps in creating the operational effectiveness that is essential to our long-term future," added Wandell. "We are committed to doing what is required to enable Harley-Davidson to operate as a competitive business and employer over the long haul."
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