On Tuesday, Harley-Davidson, Inc. (NYSE: HOG) announced workforce cutbacks after reporting weaker quarterly earnings after U.S. motorcycle sales fell more than 9%. Net income fell 7.7% to $258.9 million on June 25 ending the second quarter and $280.4 million a year before. Revenue overall from motorcycles and related products dropped to $1.58 billion from $1.67 billion. Worldwide motorcycle sales were also down 6.7% last year while U.S. sales were down 9.3%.
Harley Davidson now expects to ship 241,000 to 246,000 motorcycles in 2017 which is 6%-8% from last year. This would mean a 10%-20% decrease in production in the third quarter and lower expected shipments would lead to reduction in plant production. This would require an hourly workforce decline at some U.S. manufacturing plants and CEO Matt Lavatich intends to announce this with employees starting today.
Since U.S. industry challenges in the second quarter and the increase in supply and demand balance, Harley Davidson intends to lower their full year shipment and margin guidance. Not only is this company facing a sales decline, but other makers of motorcycles have been experiencing this as well in some states. Pressure from Japanese and European motorcycle manufacturers is also a factor while Harley Davidson continues to recall some of their motorcycles that they started to in June.