Harley-Davidson Inc is offering voluntary layoffs to hourly workers at three plants in the Milwaukee, Wisconsin area to reduce staff by about 26 percent, giving itself flexibility to hire seasonal workers.

The company began making requests for the voluntary layoffs the week of December 5. Workers have until December 23 to decide. It makes motorcycle engines and parts at the plants.

Harley-Davidson's plan for the layoffs was first announced in September 2010 as part of a new seven-year contract with about 950 union workers. It plans to lay off about 250 workers as of next April and hire 150 to 250 temporary employees for seasonal production spikes.

While Harley-Davidson's hourly workers are not paid a set salary, they are considered part of the company's overall headcount and are protected by union contracts that require negotiations on a variety of matters, including downsizing or changes to benefits.

Harley-Davidson spokeswoman Maripat Blankenheim said the company would wait until the December 23 deadline before deciding whether to implement involuntary layoffs.

Harley-Davidson, based in Milwaukee, has been retooling several aspects of its business since Keith Wandell became chief executive in 2009. In addition to restructuring its workforce and factories, the company has begun focusing on attracting a wider range of buyers in the United States and emerging markets.

It expects to save $50 million annually starting in 2013 due to changes in its contract with Wisconsin workers.

Workers affected by the contract are represented by the United Steelworkers and International Association of Machinists and Aerospace Workers. Harley-Davidson has manufacturing sites in a handful of Wisconsin cities, including Wauwatosa, Tomahawk and Menomonee Falls.

Last week, 3M Co sent early retirement offers to nearly 5,000 U.S. employees. Unlike Harley-Davidson's offer, which was telegraphed well in advance, 3M's was part of a recent effort to conserve cash and contain costs.

While profitable, Harley-Davidson has seen a substantial decline in volume from high sales levels in the middle of the last decade.

When the deal with the USW and IAM was struck in 2010, Harley-Davidson's U.S. retail sales were on their way to an 11.7 percent decline from 2009. The company's sales have recovered in 2011 but are still well below previous highs.

In 2009, Harley-Davidson laid out a plan to eliminate 2,700 to 2,900 hourly production positions and about 720 non-production positions through 2011. The latest layoff offers are in addition to that plan.

(Reporting By John D. Stoll; editing by John Wallace)