Harley stung by sales slump

Harley-Davidson Inc. said Friday that it would cut 1,100 jobs over two years, close some facilities and consolidate others as it grappled with a slowdown in motorcycle sales.

The Milwaukee company also reported its fourth-quarter profit fell nearly 60%, and said it was slashing motorcycle shipments in 2009 to cope with reduced demand.

The motorcycle maker said it would consolidate two engine and transmission plants in Milwaukee into its Menomonee Falls, Wis., facility. It will shrink its paint and frame operations in its York, Pa., plant and close its distribution facility in Franklin, Wis., whose duties will be handled by a third party.

Harley also is closing its domestic transportation operation -- its fleet of long-haul truckers who transport parts between manufacturing facilities -- and outsourcing duties to a third party. The cuts make up slightly more than 10% of the company’s total workforce.

Harley has been stung by the rapid downturn in motorcycle demand. The recession has prompted many consumers to put off purchases of its high-end bikes, while the credit crunch has kept some would-be customers from obtaining financing.

Harley said worldwide retail sales fell 13.1% in the fourth quarter, with sales in the U.S. -- its biggest market -- falling nearly 20%.

For the full year, worldwide retail sales fell 7.1%.

Harley said it was slashing motorcycle shipments in 2009 to between 264,000 and 273,000 to cope with the down market. That would be a drop of 10% to 13% from a year earlier.

Harley said its profit declined 58% to $77.8 million, or 34 cents a share, for the quarter ended Dec. 31, compared with $186.1 million, or 78 cents, last year. Revenue dropped 6.8% to $1.29 billion.

The earnings fell short of Wall Street estimates. Analysts surveyed by Thomson Reuters expected 57 cents a share on sales of $1.29 billion, on average.

Shares of Harley fell 90 cents, or 7.3%, to $11.50. The stock is down 69% in the last 52 weeks.