Harley-Davidson and Modine cut employees, A.O. Smith and Twin Disc post lower earnings, and DUECO makes a strategic acquisition
Harley to cut 645 jobs in Milwaukee area, 20 at Buell in East Troy
Milwaukee-based Harley-Davidson Inc. announced Friday that it plans to eliminate about 1,100 jobs during 2009 and 2010 to deal with the recession. The company also plans to shut down the engine and transmission plant in Wauwatosa on Capitol Drive and consolidate the operations at the engine and transmission plant in Menomonee Falls. The company also plans to close its distribution center in Franklin.
Approximately 645 of the 1,100 positions are being cut in metro Milwaukee, a company spokesperson said. About 415 of those workers are salaried production workers, and about 150 of those workers are in its Franklin distribution plant, the spokesperson said. The remaining 230 workers are salaried positions.
Additionally, Harley’s Buell Motorcycle division will cut about 20 production positions. The company’s production facility is in East Troy.
"We have a strong core business anchored by a uniquely powerful brand, but we are certainly not immune to the current economic conditions," said Jim Ziemer, chief executive officer of Harley. "We have a clear strategy to not only deal with the economic conditions, but also strengthen our long-term operations and financial results. We are executing that strategy with confidence and conviction."
The company also announced that it had a rough fourth quarter. Its net income for the quarter was $77.8 million, down 58.2 percent compared to net income of $186.1 million for the fourth quarter of 2007. The company’s revenue for the fourth quarter was $1.29 billion, down 6.8 percent from $1.39 billion in the fourth quarter of 2007. Worldwide retail sales for Harley motorcycles decreased 13.1 percent in the fourth quarter, compared to the fourth quarter of 2007 and U.S. retail sales for Harley motorcycles were down 19.6 percent in the quarter.
The company’s profits declined last year. For all of 2008, the company had net income of $654.7 million, down from $933.8 in net income for 2007. Revenue for 2008 was $5.59 billion, down from $5.73 billion in 2007.
The company shipped fewer motorcycles in 2008 and plans even fewer motorcycle shipments in 2009. Harley plans to ship between 264,000 and 273,000 new motorcycles this year, a 10 to 13 percent cut compared to last year. The company shipped 303,479 motorcycles in 2008, an 8.2 percent decrease compared to 330,619 units in 2007.
"We reduced our production levels prudently in 2008, helping our dealers achieve lower inventory levels, and we’re showing similar discipline in 2009." Ziemer said. "That’s not only critical for the health of our business, but for our dealers’ businesses, as well."
For 2009, Harley expects gross margins between 30.5 and 31.5 percent, compared to 34.5 percent in 2008.
Waukesha-based truck manufacturer acquires New York hybrid supplier
DUECO Inc., a Waukesha-based manufacturer of medium and heavy duty trucks for the utility and contracting market, recently purchased the assets of Odyne Corp., a Hauppauge, N.Y.-based clean technology company that specializes in propulsion systems for hybrid trucks and buses.
Terms of the acquisition were not disclosed. However, the New York company has been closed, and all production will be shifted to DUECO’s Waukesha headquarters, a spokeswoman told BizTimes Milwaukee. DUECO will incorporate Odyne’s name, website, intellectual property, software and systems over the next several months.
In mid 2008, DUECO began building hybrid trucks, to be used by utilities and contractors. Odyne was a supplier of key pieces of the hybrid technology and the acquisition will allow DUECO to expand its hybrid production.
“This acquisition strategically expands our ability to provide our customers with state of the art plug-in hybrid technology,” said Joe Dalum, executive vice president of DUECO. “DUECO has been a leader in providing plug-in hybrid medium and heavy duty trucks to the utility industry in this time of increased focus on improving our environment and reducing our nation’s dependence on foreign oil. The synergies created by this acquisition will allow us to accelerate market development and deployment of proprietary new hybrid technology for segments of the truck market with strong demand for cleaner, more efficient vehicles.”
DUECO will contract with several former Odyne employees over the next several months to train its workforce on the software and technologies that were acquired. After that time, the company will evaluate if it needs additional employees, the spokeswoman said.
To read a previous BizTimes story about DUECO’s hybrid vehicles, click http://www.biztimes.com/manufacturingweekly/2008/6/9/.
A.O. Smith earnings dip in ’08
Milwaukee-based A.O. Smith Corp. has reported 2008 net earnings of $81.9 million or $2.70 per share, down about 7 percent compared to 2007. The company’s sales for 2008 were $2.3 billion, essentially flat compared to 2007.
For the fourth quarter the company reported earnings of $6.6 million, or 22 cents per share, down from $17 million, or 55 cents per share, for the fourth quarter of 2007. Sales for the quarter were down 11 percent to $508.6 million.
"2008 was a solid year for our business, in spite of the rapid deterioration of the global economy in the fourth quarter," said Paul W. Jones, A.O. Smith’s chairman and chief executive officer. "The volatility of steel and copper prices throughout 2008, coupled with the continuing weakness in the domestic residential housing market, made 2008 a very challenging year. If you add to that the precipitous volume declines in the fourth quarter, 2008 changed from an unfavorable business climate into one of the worst in recent memory. As a result of the hard work of our experienced team, we ended the year with a strong balance sheet and debt to capital ratio of 34 percent. We are in a good financial position in spite of the recession. We continue to focus on preserving cash and reducing our cost structure to maintain our solid financial position."
Twin Disc 2nd quarter earnings down
Racine-based Twin Disc Inc. reported second quarter net earnings of $3.43 million, down from net earnings of $4.21 million for the second quarter of the previous fiscal year.
The company said its total revenue for the second quarter was $81.9 million, up a bit from the previous second quarter revenue of $81.6 million.
“While our balance sheet and overall liquidity remain strong, we continue to look for ways to improve our working capital levels, including inventory, accounts receivable and accounts payable management,” said Christopher J. Eperjesy, the company’s vice president of finance, chief financial officer and treasurer. “Like many industrial manufacturers, we are experiencing softness in certain of our core markets, specifically the oil and gas and mega yacht markets. We now expect demand from the mega yacht segment of the pleasure craft market to continue to weaken for the balance of the year. This will impact the company’s propulsion and boat management system product lines. Given the decline in the price of oil, future demand for land-based transmissions for the oil and gas markets remains uncertain, while demand for vehicular transmissions for the airport rescue and fire fighting and military markets continues stable. Demand for the company’s industrial product lines has improved year-over-year and activity in the commercial marine market is expected to remain steady."
Modine to cut 170 jobs at headquarters
Modine Manufacturing Co. has announced that it will reduce its workforce in its Racine headquarters by approximately 25 percent, resulting in the elimination of about 170 jobs lost.
The layoffs are across all levels of the organization, the company said.
Modine sells much of its thermal management technology to the automotive market. The company’s statement about the cuts said it has been severely impacted by the current global economic slowdown.
As part of its ongoing restructuring, Modine also is making significant job cuts to its European headquarters and TechCenter in Bonlanden, Germany.
"The decision to further reduce our workforce was extremely difficult, but it is one that is essential in these unprecedented times," said Thomas Burke, president and chief executive officer. "We are extremely grateful to these employees for their service to Modine and completely committed to provide resources and support to help them transition to other opportunities."