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Manufacturers Continue Cutting Production Costs as Demand Slows

We haven’t heard much from Ross Perot lately, but if we did, he might report hearing a giant sucking sound as the world’s economy slowly swirls down the drain. And although the motorcycle industry hasn’t been as brutalized as automobiles, banking or executive-office decoration, it’s still suffering, despite some bright spots.

The latest bad news is Yamaha Motors. The company is experiencing the rapidly shrinking Japanese export market, which is down 45.7% in January compared to January 2008, the lowest figure in 10 years. Yamaha is responding by cutting production up to 24% for 2009, asking 10% of its U.S. employees to take voluntary retirement and generally revising its business plan. “We are now challenged to maximize our core capabilities just to survive,’ said Yamaha CEO Takashi Kajikawa in a statement on Yamaha’s website.

Honda is also cutting production. Most notably, the U.S. motorcycle plant in Marysville, Ohio will close when production of 2009 models ends in April. Although this closure was announced last year – before dismal 2008 sales figures were coming in – and has much to do with making production more efficient, Honda’s sales numbers are sinking with everybody else’s, and shrinking car-sales numbers don’t help. Domestic manufacturers like Harley-Davidson and Polaris are suffering too, as we’ve reported earlier.

European manufacturers are also feeling the pinch. A rumor that Triumph is laying off 45 employees (a substantial chunk of the company’s small workforce) and cutting production was reported by a local U.K. newspaper, although the company denied the rumor was factual. At Ducati, CEO Gabriele Del Torchio and other top officials are taking a voluntary 10% pay cut and will not draw bonuses for 2009. The Italian government is bailing out its motorcycle industry by offering incentives to consumers to buy “more ecological” motorcycles. Save the planet and buy a 1098R!

An interesting exception to this gloom-and-doom is BMW, which reported a small increase in sales for 2008, perhaps due to the expansion of its model range to include lower-priced, beginner-friendly bikes like the G650GS and F800. But with demand for big bikes plummeting in the USA and Europe – the world’s two largest markets – we’ll see if that bright spot will dim. Let’s hope not.