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Posts Tagged ‘Q2’09’

HDFS_CarsonCityThe eastern slope of the Sierra Nevada mountains offer motorcycle enthusiasts an interesting blend of motorcycle rides and some of the best scenery in the west.

Unfortunately, Northwestern Nevada is also the location of Harley-Davidson Financial Services (HDFS) who took quick action after the parent company, Harley-Davidson, posted disappointing Q2’09 financial results.   More than 100 employees were laid off of which many came from the facility in Carson City, NV.

HDFS provides financing for H-D dealers to buy inventory for their showrooms as well as loans for customers who are buying motorcycles.  The Carson City facility is co-located on the Western Nevada College campus and one of the largest HDFS facilities.  H-D negotiated a $750K tax break with the Nevada Commission on Economic Development and opened the new 100,000 sq-foot-office in 2005.  Laurie Cole (Director of HDFS Communications) stated that HDFS has 770 employees with the largest number based in Carson City and there were now ~300 employees remaining at the Arrowhead Drive office.

The economic changes have been dramatic and it’s a difficult time for the folks who have made this beautiful area their home.  The process of making H-D leaner and more efficient is filled with painful actions effecting really good people.  H-D is a good company that will continue to deliver great products. It may not feel like it today, but motorcycling enthusiasts around the world are counting on you to bring us the products we want and need in the future.

Photo courtesy of H-D and WNC.

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shred_dollarNot to buzz kill the summer riding season, but the current recession is the longest we’ve seen in the post-war period. 

Inclusive of the current downturn, there have been 11 recessions since WWII.  Having officially started in December 2007, this month marks the 19th month of the current “slump.”

As you would expect, cut-backs in consumer spending are visible throughout the economy (see below chart) and Harley-Davidson has felt the weight of the “great recession” too.  The company released its Q2’09 results today and worldwide retail unit sales of new H-D motorcycles were down 30.1% compared to the year-ago quarter. Retail new H-D motorcycle sales in the U.S. were down 35.1% and declined 18.2% in international markets compared to last year’s Q2.  On a “positive” note the company’s earnings were $19.9M on $1.15B revenue and industry-wide retail sales of heavyweight motorcycles in the U.S. declined 48.1% for the same period indicating that H-D performed better than its competition.

In his first quarterly report to the investment community as the new President and CEO Keith Wandell stated:

“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.”  Wendell went on to say: “We plan to ship fewer Harley-Davidson motorcycles worldwide this year than we anticipate dealers will sell at retail,” which is meant to protect the brand.

consumer_spendingDue to the declines in retail motorcycle sales, the Company has lowered its 2009 shipment expectations by 25-30%.  Because of the lowered shipment volume, H-D announced further headcount reductions of approximately 700 positions in the hourly production workforce and 300 positions in non-production, primarily salaried headcount, including some at HDFS. This is in addition to the previously announced reduction of ~1200 positions bringing the total reduction to approximately 2,200.  H-D started the year with 10,100 employees and of course H-D shares rise on news of the additional layoffs.

Looking forward, the company will introduce its 2010 models on July 25th at its Summer Dealer Meeting in Denver.  I wonder if it’s time again for import duties or a Motorcycle Czar?  For now let’s just hope for a great lineup of motorcycles that will create some riding buzz and motorcycle passion!

Photo and chart courtesy CEA.

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