Harley-Davidson (HOG) has convinced its workers to agree to about a 50% cut in jobs and flexible working practices at its York, Pennsylvania, plant. In exchange, the U.S. motorcycle maker has promised to invest $90 million in the plant.
The deal includes reduction in the number of job classifications to 5 from more than 60. It has been approved by the members of the union body — International Association of Machinists and Aerospace Workers.
Harley-Davidson disappointed in its third quarter results, posting a net income of $26.5 million or 11 cents per share compared to the Zacks Consensus Estimate of 22 cents per share. The company addressed lower motorcycle shipments and the effects of the economy on retail and wholesale loan performance at Harley-Davidson Financial Services for the decline in earnings.
Harley-Davidson aims to improve its results by aggressive restructuring activities. As a part of its go-forward business strategy, the company has decided to discontinue its Buell product line and divest its MV Agusta unit in order to focus solely on the Harley-Davidson brand. The company estimates annual ongoing savings from restructuring of $140 million to $150 million.
Harley-Davidson has narrowed down its guidance for full-year 2009 shipments. The company expects to ship 222,000 to 227,000 motorcycles to dealers, including 35,000 to 40,000 units in the fourth quarter.
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