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Harley-Davidson Knows This Might Get Worse

Illustration for article titled Harley-Davidson Knows This Might Get Worse
Photo: AP

Harley-Davidson shut down its American factories on March 18, around the same time automakers in this country were idling their plants as well. Those factories have remain shuttered, while Harley today said that it was making deeper cost cuts as the coronavirus pandemic persists in shutting down the world.

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If Harley was in a precarious position before coronavirus hit, they are in a somewhat desperate position after. Harley sales have been down for half a decade now, and now an expensive heavy motorcycle is one of the first things Harley riders—some of whom may have been laid off, almost all of whom are likely carrying a high amount of economic anxiety—will likely be choosing not to buy the longer the pandemic rages.

Fitch, a credit rating agency, thinks the hit to Harley sales will be about 25 percent, according to Reuters, for anyone who has seen car sales absolutely fall off a cliff this past month that feels conservative, if anything.

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And Harley knows it, cutting pay for its staff today while confirming a global layoff for its production employees.

In response to the near-term impacts of COVID-19, the company is taking the following actions to lower costs:

  • Significantly reducing all non-essential spending
  • Temporarily reducing salaries
  • CEO and the Board of Directors will forgo salary/cash compensation
  • 30 percent reduction for executive leadership
  • 10 to 20 percent reduction for most other salaried employees in the United States
  • No merit increases for 2020
  • Implementing a hiring freeze

Outside of the United States, the company will take similar actions as based on regulations governing each of its operating locations. Salary reductions will be reassessed at the end of the second quarter as the company continues to closely monitor business conditions.

Harley might also soon brush up against some real cash concerns. From Reuters:

Separately, Moody’s expects declining sales to undermine Harley’s liquidity position. At the end of 2019, the Milwaukee-based company had $2.6 billion in cash and committed credit facilities, which the rating agency says would marginally cover the $2.3 billion of debt that is due to mature in the coming twelve months at Harley’s financial arm.

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Harley will release its first-quarter sales results on April 28, and while those will probably be bad, they will only account for about two to three weeks of the pandemic, since they encompass the first three months of 2020. A more complete look at the impact of coronavirus won’t be known until second-quarter numbers come out in July, at which point Harley’s current CEO, Jochen Zeitz—who is actually interim CEO following the ouster of Harley’s old CEO in late February—will know just how high this mountain is to climb.

News Editor at Jalopnik. 2008 Honda Fit Sport.

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DISCUSSION

Sigh. Another H-D thread filled with the same commenters hating on H-D.

We get it, you hate the pirate poseurs and loud pipes. So do I.

What I DON’T hate are the motorcycles. And we would be poorer off for losing them.

Are they my personal favorite? No, they’re not. Some I like, many I don’t. I also don’t drive a Mustang, or a Camaro, or an F-150. But millions do, and those vehicles— like H-D motorcycles— are a piece of Americana that millions of good people— your friends, family, and neighbors— enjoy today. It would be a shame to lose all of that.

Yes, let’s all rehash again how H-D screwed up fifteen years ago, and made the wrong bet that the good times would always be there. Let’s all rehash how they were stupid to get rid of Buell, or that they make too much more money on licensing t-shirts, or whatever other exhausted complaint you have.

I’d rather make a NEW complaint— H-D wouldn’t be in this position if it had diversified with more smaller bikes overseas sooner. They’ve taken steps with their India production, but they haven’t gone far enough. Having a stable of sub-300cc bikes that they sell overseas would come in REAL handy now that the globe is facing years of serious economic downturn, where poorer people are going to be forced into buying scooters and motorcycles instead of the cars they aspire to. Instead, they’ve kept all their eggs in the American basket— and worse, a basket that was growing old and threadbare. H-D missed out on the cafe racer trend, they missed out on the ADV trend, and they missed out on the neo-standard trend. I give them credit for pursuing electrification with a passion, but the LiveWire is a tech demo, not a serious competitor, and a bike like that will be the first to go in the coming economy.

I don’t want H-D to fail, and if you’re honest, most of you readers don’t want that, either. You want H-D *to change*, to evolve, so it thrives while still capturing the heritage of a great American company.

Alas, it may not get that chance. And as someone who loves motorcycling, all styles of motorcycling, from ALL manufacturers, it will be a damn shame if we lose them forever.