In wake of a depressed fourth quarter and an uncertain 2009, some of the industry’s largest manufacturers have recently made deep cuts in upcoming production schedules, plant closures and employees.
In a week’s period of time in late January, more than 1,500 OEM employees were either laid off or given notice of upcoming staff cutbacks.
Here is a look at what some of the largest OEMs announced in terms of current and ongoing cost restructuring.
The Milwaukee-based OEM says it will eliminate 1,100 jobs this year and 2010, including 800 hourly production positions and 300 nonproduction, primarily salaried positions. The company also is consolidating some of its plants and cutting production by 10-13 percent for the coming year.
“Our strategy is focused on three critical areas: investing in the Harley-Davidson brand, getting our cost structure right and obtaining funding for (Harley-Davidson Financial Services) to help our dealers sell motorcycles and our retail customers to buy them,” Jim Ziemer, Harley-Davidson’s CEO, said in a conference call reporting the company’s year-end financial results.
The company’s biggest facility changes will include four main components, says Tom Bergmann, the company’s chief financial officer:
Harley will close down its Capital Drive power-train facility and bring those operations into its larger Pilgrim Road operations, which is just outside of Milwaukee. The 432,000-square-foot Capital Drive location will continue to manufacture Sportster and Buell power trains through the second half of this year, Bergmann says. At that time, these engines will then be produced at the newer, 868,000-square-foot Pilgrim Road facility in Menomonee Falls, Wis.
Consolidating the York, Pa., paint and frame operations into its existing Softail operations on the same site in an effort to improve efficiencies;
By the end of this year, close its Franklin, Wis., parts and accessories warehouse and turn those operations over to a third-party. That means both Harley’s parts and accessories and general merchandise distribution will be handled outside the company from two U.S. facilities. “By combining and redesigning these two operations, we expect significant efficiencies as well as improved service levels to our dealers,” Bergmann said.
Harley-Davidson also will end its in-house, long-haul trucking operation, which primarily transported components between company plants. This hauling, which represents less than 20 percent of the company’s transportation activities, will be done by a third party, Bergmann says.
Ziemer says Harley-Davidson will continue to invest in the brand, noting the dollars spent per unit in marketing and product development will be slightly higher in 2009 than the previous year.
“We know that great brands require consistent support, through both the good times and the bad,” he said.
Polaris Industries will eliminate about 5 percent of its workforce, or 460 positions, and make cutbacks in its production for 2009, the company announced.
The workforce reduction affects approximately 160 salaried and hourly full-time positions and approximately 300 contractors, part-time and temporary positions spread across all product lines and multiple facilities worldwide.
Toward the end of 2008, Polaris also consolidated its core ATV and side-by-side divisions.
“We did this for a number of reasons: to better meet the changing market dynamics, the shifting product mix, to better attack costs and customer synergies and improve our marketing and distribution effectiveness,” Polaris President and Chief Operating Officer Bennett Morgan said in a conference call outlining the company’s year-end financial results.
Polaris is expecting lowered consumer demand for its core ATVs and side-by-sides in 2009, with sales in these arenas expected to decline 17-25 percent. The company also says it’s planning to reduce its Victory Motorcycles production by 25 percent in the coming year.
Production will stop for three months this spring at a South Carolina Honda manufacturing plant.
The Timmonsville, S.C., plant will halt production in March, April and May due to the weakened U.S. economy.
No layoffs are scheduled with the production stoppage, Bill Savino, manager of motorcycle press for American Honda Motor Corp., told Powersports Business. “The main thing is we don’t overproduce what we need and when this clears itself up, hopefully around June, that we’re ready to go and we can come right back to work and be wide open again,” Savino said.
Suzuki Motor Corp. is cutting back production on motorcycles and automobiles in the coming year and as a result has announced non-operating days in February for some of its Japanese facilities. These plants will stop production from anywhere between 3-8 days in February, the company announced on its Web site. The company has not indicated whether additional non-operating days will be announced in March.
Yamaha Motor Co. will temporarily suspend operations at its Japanese factories in February and March as a result of the global economic slowdown, the company said in a press release.
Eleven facilities, including those that manufacture motorcycle and ATV parts, will be affected.
Arctic Cat will cut about 100 jobs, about 7 percent of its total workforce, as the company is cutting its production lines from three to two to meet reduced demand. In the company’s upcoming fourth quarter, it will ship half as many ATVs as the prior-year period to better align dealer inventories with consumer demand.