Harley-Davidson Inc. is eliminating about 180 production jobs at its U.S. plants, union officials said Tuesday, with the Menomonee Falls and Kansas City plants expected to be hit the hardest.
The permanent job cuts are coming in the next couple of months as the company throttles back production.
Temporary furloughs also are expected this fall.
“It’s not looking too good at this point,” said Ross Winklbauer, a sub-district director for the United Steelworkers union.
Earlier Tuesday, Harley said net income fell 7.7% to $258.9 million, or $1.48 per share, in the second quarter ended June 25, from $280.4 million, or $1.55 per share, a year earlier.
Revenue from motorcycles and related products fell to $1.58 billion from $1.67 billion.
Harley said its worldwide motorcycle sales were down 6.7% from a year earlier and U.S. sales were down 9.3%.
The company, which previously forecast “flat to down modestly” full-year bike shipments, said it now expects to ship 241,000 to 246,000 motorcycles in 2017 – down 6% to 8% from 2016.
The new projection includes a 10% to 20% decline in production in the third quarter.
In a conference call with analysts, CEO Matt Levatich said workforce cutbacks would be announced to employees starting today. No further details were immediately available.
“Lower expected shipments means we will need to reduce plant production, and this has an implication for our manufacturing facilities, our people and our financial performance. This action will require an hourly workforce reduction at some of our U.S. manufacturing plants. We will be sharing details with employees beginning today,” Levatich said.
He described the second-quarter earnings as disappointing and said the company would be aggressively managing its motorcycle inventory.
The earnings beat Wall Street expectations. The average estimate of nine analysts surveyed by Zacks Investment Research was for earnings of $1.37 per share.
The company said it now expects its full-year operating margin to be down approximately one percentage point compared with 2016.
“Given U.S. industry challenges in the second quarter and the importance of the supply and demand balance for our premium brand, we are lowering our full-year shipment and margin guidance,” Levatich said.
Harley said its U.S. market share for the quarter was 48.5% in the heavyweight motorcycle category.
Harley and other makers of cruiser and touring motorcycles have seen their U.S. sales fall as the economy has faltered in some states.
Also, the company has faced pressure from Japanese and European motorcycle manufacturers, as well as rival Indian Motorcycle Co., based in Minnesota.
Harley-Davidson shares have declined 11% since the beginning of the year, while the Standard & Poor’s 500 index has climbed nearly 10%. The stock has increased 8% in the last 12 months.
Following Tuesday’s announcement, Harley shares were down about 9%, trading at $47.49.