Harley Davidson 2013 Annual Report Download - page 26

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Restructuring Activities(1)
Restructuring Costs and Savings
In 2013, the Company completed work related to its various restructuring activities that were initiated during 2009
through 2011, as described below. During 2013, the Company incurred a restructuring benefit of $2.1 million related to
combined restructuring plan activities. This included approximately $5 million of benefit related to restructuring reserves
released in the second quarter of 2013 in connection with the decision to retain a limited operation at the New Castalloy facility,
as described below. On a cumulative basis the Company has recognized $482.2 million in restructuring and impairment
expense since its restructuring activities were initiated in 2009. The Company has realized or estimates that it will realize
cumulative savings from these restructuring activities, measured against 2008, as follows:
• 2009 - $91 million (91% operating expense and 9% cost of sales) (actual);
• 2010 - $172 million (64% operating expense and 36% cost of sales) (actual);
• 2011 - $217 (51% operating expense and 49% cost of sales) (actual);
• 2012 - $280 million (42% operating expense and 58% cost of sales) (actual);
• 2013 - $310 million (39% operating expense and 61% cost of sales) (actual);
• Ongoing annual - $320 million (approximately 37% operating expense and approximately 63% cost of sales)
(estimated)(1).
2011 Restructuring Plans
In December 2011, the Company made a decision to cease operations at New Castalloy, its Australian subsidiary and
producer of cast motorcycle wheels and wheel hubs, and source those components through other existing suppliers by the end
of 2013. Since 2011, the Company has successfully transitioned a significant amount of wheel production to other existing
suppliers. However, during 2013, the Company made a decision to retain limited operations at New Castalloy focused on the
production of certain complex, high-finish wheels in a cost-effective and competitive manner. The Company also entered into a
new agreement with the unionized labor force at New Castalloy.
In connection with the modified 2011 New Castalloy Restructuring Plan, the New Castalloy workforce was reduced by
approximately 100 employees, leaving approximately 100 remaining employees to support the ongoing operations. The original
plan would have resulted in a workforce reduction of approximately 200 employees.
In February 2011, the Company’s unionized employees at its facility in Kansas City, Missouri ratified a new seven-year
labor agreement. The new agreement took effect on August 1, 2011. The new contract is similar to the labor agreements ratified
at the Company’s Wisconsin facilities in September 2010 and its York, Pennsylvania production facility in December 2009, and
allows for similar flexibility, increased production efficiency and the addition of a flexible workforce component.
The 2011 Kansas City restructuring plan resulted in approximately 145 fewer full-time hourly unionized employees in its
Kansas City facility than would have been required under the previous contract.
2010 Restructuring Plan
In September 2010, the Company’s unionized employees in Wisconsin ratified three separate new seven-year labor
agreements which took effect in April 2012 when the prior contracts expired. The new contracts are similar to the labor
agreement ratified at the Company's York, Pennsylvania production facility in December 2009 and allow for similar flexibility,
increased production efficiency and the addition of a flexible workforce component.
The 2010 restructuring plan resulted in approximately 250 fewer full-time hourly unionized employees in its Milwaukee-
area facilities than would have been required under the previous contract and approximately 75 fewer full-time hourly
unionized employees in its Tomahawk facility than would have been required under the previous contract.
2009 Restructuring Plan
During 2009, in response to the U.S. economic recession and worldwide slowdown in consumer demand, the Company
committed to a volume reduction and a combination of restructuring actions that were completed at various dates between 2009
and 2013. The actions were designed to reduce administrative costs, eliminate excess capacity and exit non-core business
operations. The Company’s actions included the restructuring and transformation of its York, Pennsylvania production facility
including the implementation of a new more flexible unionized labor agreement which allows for the addition of a flexible
workforce component; consolidation of facilities related to engine and transmission production; outsourcing of certain
distribution and transportation activities and exiting the Buell product line. In addition, the Company completed projects under