Motorcycle company Harley-Davidson is set to lay off over a hundred workers as the company experiences a production shift.
On April 20, Reuters reported that Harley-Davidson is planning to shift employment from its plant in York, Pennsylvania, to Kansas City, Missouri, starting in the 2018 model year. This will result in 118 layoffs at the York plant. Spokeswoman Katie Whitmore said that approximately 118 positions would be added to the Kansas City plant.
This change comes after a difficult year for the Harley-Davidson Company marked by a drop in shipments. The company reported a 25.6 percent fall in quarterly profit on April 18. At the end of the first quarter in 2016, the company's net income stood at $250.49 million, which amounts to $1.36 per share. At the end of the first quarter in 2017, which ended on March 26, those same figures stood at $186.37 million and $1.05.
These problems are by no means new. Back in November, The Motley Fool reported that Harley-Davidson had seen eight consecutive quarters of lower year-over-year sales.
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Some of this drop possibly has to do with competition from other motorcycle companies. Two of Harley-Davidson's biggest competitors are Japan's Honda Motor Co. Ltd. and Polaris Industries, Inc., which manufactures Indian Motorcycles. Both of these companies offer competitive discounts.
Polaris, in fact, has experienced some amount of growth during the past year, reports The Motley Fool. The company recorded a 13 percent growth during the first three quarters of 2016. This is particularly notable given that retail sales for motorcycles with engines 900 cubic centimeters and above were down during the third quarter.
Another factor in Harley-Davidson's drop in sales is the age demographic of its customers. According to BrandonGaille.com, there are four times more Baby Boomer motorcycle owners in the United States than Millennial motorcycle owners. In addition, 39 percent of motorcycle owners within the United States are between the ages of 51 and 69.
With this in mind, it appears that motorcycle manufacturers -- including Harley-Davidson -- are not receiving as much business from the Millennial and Gen X generations as their Baby Boomer counterparts. According to BrandonGaille.com, there may be a waiting period for growth in the motorcycle industry until these two younger generations have the same amount of disposable income as the Baby Boomers.
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This dynamic could help explain why Harley-Davidson -- who, according to Reuters, has a particularly loyal Baby Boomer customer base -- has been experiencing some financial decline.
Whatever the cause of these troubles may be, Harley-Davidson seems to be set in its decision to move forward with the York layoffs. It is set to start the shift of its production of Softail motorcycles from the York plant -- which currently employs 900 people -- to Kansas City on June 23, reports WGAL. Layoffs are set to be completed by the end of July.