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Harley cuts costs and lays off staff

Harley-Davidson FLTRXS Road Glide Special Billiard Red patriotic costs loan pull

Following in the footsteps of Indian Motorcycle, Harley-Davidson has made cuts to costs that start with the CE and Board of Directors’ salaries and include “temporary layoff” of all global staff.

Harley-Davidson has halted production since March 18 due to the COVID-19 pandemic.

Now, acting president and CEO Jochen Zeitz who took after Matt Levatich was allegedly sacked in February has announced cost-cutting measures to lessen the impact of the stoppage. 

Matt Levatich Harley-Davidson CEO politics silicon confirms sacked
Matt at the 115th Harley party in 2018

It follows the company’s decision to withdraw its earnings forecast for this year, saying pandemic-induced disruptions could dent its ability to supply and sell motorcycles.

Financial analysts expect Harley sales to slump by 25% this year. 

“The effects of COVID-19 on economies around the world have been swift and unprecedented,” Zeitz says.

“It is essential for us to respond quickly, adapt and position the company to manage near-term challenges while preparing to re-energise the business for the recovery and beyond.”

Costs cut

Harley 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% reduction for executive leadership;
    • 10 to 20% reduction for most other salaried employees in the United States; and
    • No merit increases for 2020;
  • Implementing a hiring freeze.

The statement that the board and boss will “forgo salary/cash compensation” is a disingenuous gesture since there will be no performance bonuses given the loss of sales this year.

However, the 30% pay cut may be significant as it was revealed Levatich was paid $US11m last year.

Harley is still searching for a replacement for Levatich, a poisoned chalice if there ever was one with this pandemic adding to their recent sales woes.

Indian Cutbacks

Scott Wine Polaris boss Indian salary
Polaris boss Scott Wine

The Harley cutbacks compare with cost-cutting by Indian Motorcycle parent company Polaris where CEO Scott Wine suspended his entire salary for the rest of the year.

Other Polaris cutbacks include delaying salary rises for staff, two weeks leave without pay for some staff and pay reductions of 20% for other staff including the executive leadership team.

Global Harley cuts

Harley-Davidson says they will take similar cost-cutting action outside the United States.

Salary reductions will be reassessed at the end of the second quarter as the company continues to closely monitor business conditions. 

The majority of its global production employees are on temporary layoff. Medical benefits remain intact for all global employees, the say. 

“We understand that navigating this new reality has a real impact on our employees,” Zeitz says.

“Their dedication to Harley-Davidson is never taken for granted, and we thank them for supporting one another and rallying together as we manage the profound impact of COVID-19.”

Harley-Davidson will release its first quarter 2020 financial results on Tuesday, 28 April 2020. 

American deaths from the virus now top 20,000 which is the highest in the world. More than half a million Americans are now infected.

President Donald Trump called the coronavirus a “hoax” on February 28, blaming the media for “hysteria”, saying it was the Democrats playing politics and claiming the virus was nothing compared with the seasonal flu.