Harley-Davidson Cuts Salaries and Freezes Hiring

Harley-Davidson cut salaries and froze hiring, following up from last month when it furloughed most of its production workers worldwide.
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Shares of Harley-Davidson  (HOG) - Get Report fell on Wednesday, as the Milwaukee motorcycle major announced salary reductions and a hiring freeze.

It last month had suspended a majority of its U.S. production facilities and furloughed a majority of its global production workers.

The moves, of course, are a reaction to the coronavirus pandemic, which has decimated motorcycle sales as consumers stay at home.

Harley-Davidson said Wednesday that it’s “significantly reducing all nonessential spending.” Acting Chief Executive Jochen Zeitz won't take a salary, the board won't receive its cash compensation, and executive leadership saw its salaries cut 30%.

The company also is implementing a 10% to 20% percent reduction for most other U.S. salaried employees and deploying a hiring freeze.

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

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

Harley-Davidson already was suffering from a slump in demand before the pandemic, as younger consumers appear less interested in its bikes than older cohorts are.

Zeitz took over as CEO in February while the board searches for a permanent leader.

“We believe Zeitz was chosen due to his previous exposure to consumer goods, including stints at Puma (a brand that he helped revitalize) and Kering, which could help bring a fresh perspective to Harley’s positioning of its brand,” Morningstar analyst Jaime Katz wrote in a report last month. Kering is the Paris luxury-goods company.

Harley-Davidson shares recently traded at $18.20, down 6%, compared with a 1.9% decline for the S&P 500. Harley stock has dropped 49% over the past three months.

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