Harley Davidson Cutting 700 Jobs As Manufacturer Rewires Its Motorcycle Business

Harley Davidson (HOG) will eliminate 700 jobs as it looks to “rewire” its motorcycle business globally.

The motorcycle maker is looking to become a “leaner, more nimble organization,” which it said will cost it about $42 million in the second quarter of 2020. Savings for the company are expected to reach $250 million within the year.

The new Rewire plan will change virtually all areas of Harley’s global business from its commercial operations to its corporate units. This also includes 700 fewer positions across the company, including 500 employees that will exit the company in 2020.

About 200 of the positions to be cut are already vacant, the Milwaukee Journal Sentinel reported. Harley has a reported 6,000 employees worldwide.

“The Rewire is progressing very well and substantial work is being done to eliminate complexity and get Harley-Davidson on a path to winning. Our new operating model is simpler, more focused and enables faster decisions across the entire company,” Jochen Zeitz, chairman, president and CEO of Harley-Davidson, said in a statement.

“We’ve taken a hard look at our entire set up, our spending and how work is getting done to align our operating model, structure and processes. We are building a strong foundation to drive a high-performance organization in the future,” he added.

One of the changes announced early in the rebuilding of the company is the departure of John Olin, chief financial officer, who is leaving the company after 17 years. Harley Treasurer Darrell Thomas will assume Olin’s roles on an interim basis.

“Significant changes are necessary, and we must move in new directions,” Zeitz said.

The layoffs are also a response to weak demand for Harley Davidson motorcycles that have been hit by tariffs and trade wars globally. Last month Harley also eliminated 140 workers at facilities in Wisconsin and Pennsylvania, and has seen its sales continue to drop over the last five years.

The struggles for Harley continue as its key customer base of baby boomers have aged out of its motorcycle line up, while younger customers haven’t been quick to fill the gap. The drop in sales has been further impacted by the coronavirus as production and sales stalled.

Shares of Harley were trading at $25.75 as of market close, up 16 cents or 0.63%.