Harley-Davidson Inc., having already shuttered its manufacturing plants during the coronavirus pandemic, now says its executive leadership will take a 30% pay cut and most U.S. salaried employees will take pay cuts of between 10% and 20%.
Acting president and CEO Jochen Zeitz and the board of directors will forgo salary and cash compensation, the company said Wednesday as part of additional responses to the pandemic. Harley also says it has implemented a hiring freeze and there will be no merit pay increases for 2020.
“The effects of COVID-19 on economies around the world have been swift and unprecedented. 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,” Zeitz said in a news release.
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The majority of the company’s production employees are currently on temporary layoff with medical benefits.
“We understand that navigating this new reality has a real impact on our employees,” Zeitz said. “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 says salary reductions will be reassessed at the end of its second fiscal quarter as the company continues to closely monitor business conditions. The company is scheduled to report its first-quarter earnings on April 28.
Outside the U.S., Harley says it will take similar actions based on regulations governing each of its locations, such as Thailand where it recently opened a manufacturing plant.
A flash of warm weather should be heating up motorcycle sales now, but the effect of coronavirus on the economy has kept buyers out of dealerships.
In the U.S., some Harley-Davidson dealers reported very slow business in the second half of March, according to recent survey by analyst Robin Farley with UBS Investment Research.
The world’s largest manufacturer of heavyweight motorcycles continued to ban its dealers from selling bikes online, she said, although “they have now looked the other way to let dealers sell parts and accessories online.”
Harley isn’t offering many sales promotions now, Farley said, which isn’t surprising given that scores of dealerships are temporarily closed anyway.
With a few exceptions, dealers won’t be getting additional model-year 2020 bikes, according to Farley, as the company has suspended manufacturing.
Many riding events have been canceled, including the Myrtle Beach Bike Rally, in South Carolina, that usually kicks off the riding season in May for thousands of motorcyclists.