Harley Davidson May Have to Leave Wisconsin If Costs Don’t Go Down
Serioiusly, motorcycles scare me. I stick with riding bicycles. I knows my speed.
I remember a friend during high school in San Jose offering to take me home on his bike. I demurred, not wanting to take a chance that he would try something stupid five blocks from my home. And then another high school friend ripped up his leg so badly when he and his bike were hit by a car and lost months in the hospital mending that I swore I would never get on one of those things. It saved him from Vietnam, though.
But I totally understand why dudes–and dudettes–love motorbikes and revere Harleys as if they were gods. This news can’t be sitting right with aficionadoes, flag wavers, and Wisconsin residents and workers.
Don’t even think black folks aren’t working in the factories, or buying bikes. I’ve known black folks with their motorcycle fetishes and their proud memberships in motorcycle clubs–all black, and also integrated.
That’s the cost of being a very American company in the age of NAFTA and a global economy. And the unions have had to take less and less and face the spectre of job loss.
Determined to slash manufacturing costs, Harley-Davidson Inc. says its Wisconsin factories could be in jeopardy if belt-tightening measures aren’t successful.
Would the iconic company really stop making “Milwaukee Iron” in factories not far from the shed where Bill Harley and Arthur Davidson built their first motorcycles in 1903?
Thursday, Harley executives said there were significant “cost gaps” that must be filled at the plants in Menomonee Falls and Tomahawk that, combined, employ more than 1,400 people.
Employees were told that Harley wants to slash $54 million a year in costs from its manufacturing here.
“Our preference is to keep the production operations in Wisconsin, but as part of due diligence we will also explore alternate U.S. sites” if necessary, company spokesman Bob Klein told the Journal Sentinel.
Union officials worry that Harley is following the same strategy it used last year in York, Pa., where about half of the production employees lost their jobs as the result of cost reductions. Under duress, the International Association of Machinists accepted a seven-year contract in York that eliminated nearly 1,000 jobs but kept the York factory from being moved to Kentucky.
Since January 2009, Harley has announced the closing of two factories and a distribution center. The company also has announced cuts totaling about 25% of its workforce — at least 2,700 hourly workers and 840 administrative employees.
The restructuring has come as sales and profits have plummeted. As recently as 2006, Harley had a profit of $1 billion, compared with a $55 million loss in 2009.
A final decision about the fate of the storied company will be made in the fall, although H-D officially is not considering outsourcing. They say.
Harley-Davidson will study the possibility of moving Wisconsin plants out of the state but isn’t considering moving them out of the country despite a recent job posting seeking a new director of corporate labor relations with international experience, according to a company spokesman.
Steve Brady, a negotiator for United Steelworkers, which represents about 1,500 Harley workers in the Milwaukee area, says he doesn’t believe the posting is an indication the company is considering moving operations overseas.
The new director would be starting during a tough time for Harley labor relations. In meetings with employees at Wisconsin facilities on Thursday, the company said it’s looking to cut $54 million in manufacturing costs. Officials said the company began studying ways to cut costs at its plants in Menomonee Falls and Tomahawk earlier this year.
“Our preference is to find a way to keep the present operations in Wisconsin,” Harley spokesman Bob Klein says. “But we will also be exploring alternative U.S. sites.” Klein says the largest potential savings identified in the company’s study were labor costs and operational flexibility.
Steve Weidman, current director of labor relations, is retiring soon, according to Klein, and the company is seeking a replacement. The posting says, “Ten-plus years of progressive-related experience in labor relations required. International labor experience is desirable.”
Some observers have questioned if the posting suggests that Harley, which has long marketed its motorcycles as American-made, wants to move jobs overseas. But Harley has long had a reputation for maintaining good relations with its unions.
Union leader Brady says USW has emphasized in negotiations that part of the company’s success is due to that American-made reputation. He says the company employs union-represented workers outside the United States, which would explain why it needs a director of labor relations with international experience.
Naturally, there are political rumblings in an election year about who and what is to blame. Republicans are saying that there have been higher taxes on businesses and that Democrats gave tax credits to, among others, a Spanish manufacturer of wind turbines rather than help The Hog.
The issue quickly took on political overtones, with Republican Milwaukee County Executive Scott Walker pointing a critical finger at Milwaukee Mayor Tom Barrett and Gov. Jim Doyle, both Democrats.
A spokesman for Doyle said the governor will work with Harley to make sure it remains competitive and stays in Wisconsin.
But Walker blamed Barrett and Doyle for tax credits given to a Spanish manufacturer of wind-turbine generators, Ingeteam, for its project in the Menomonee Valley, while he said Wisconsin’s tax policies are driving jobs away.
In turn, Barrett and former Congressman Mark Neumann, a Republican, both said they had called Harley-Davidson directly and offered their help.
In a statement, Barrett dismissed Walker’s comment, saying Wisconsin needs “adult leadership” in tough economic times. “What we don’t need is politicians who attack companies that are actually bringing jobs to Wisconsin, just to score cheap points,” Barrett’s statement said.
Neumann said he wants Harley to hold off until the state elects a new governor who can create a better business environment. Neumann also said he supports economic assistance if the money spent on a company will generate a bigger payback.
Barrett, Neumann and Walker all are running for governor.
It’s going to get interesting.