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Harley-Davidson Inc.’s first-quarter earnings and revenues were down, but some analysts see signs of a turnaround.
What does the company’s recent performance mean for Harley’s plant in Kansas City, which received a huge setback when 458 factory workers were laid off in the second half of 2009?
A union official said that more than 300 of those production workers were recalled in January when production resumed on all three models built at the Northland plant.
Currently, 341 of the 458 people laid off last year have returned while the remainder stay on a recall list, said Tony Wilson, president of Machinists Local Lodge 176. The Machinists and Steelworkers unions represent about 700 production employees at the plant.
Wilson said it was uncertain whether the 117 employees who remain on layoff will return soon.
“You don’t want to create any false expectations,” he said. “What we’ve communicated to everyone who went on layoff is to do what they need to in terms of finding another job, and they’ll stay on the recall list. Hopefully, we’ll eventually get everybody back.”
Harley’s first-quarter sales were down 19 percent, and earnings were well below the same period last year. However, one analyst said retail sales appeared to have bottomed out and production cuts from last year had reduced inventory.
“More bikes are selling at (or) above MSRP (manufacturer’s suggested retail price) as supply gets tighter,” analyst Craig Kennison of Robert W. Baird & Co. said in a recent report. “We see a compelling turnaround story led by a credible CEO (Keith Wandell) with extensive automotive background.”
During last week’s conference call, an analyst asked whether Harley was looking to cut additional costs at its plants, such as the one in Kansas City. In December, the company and the union at Harley’s biggest plant in York, Pa., agreed to job cuts of nearly 50 percent, more flexible work rules and an unusually long seven-year contract.
The York agreement also allows for the use of “casual” employees who work on an as-needed basis at wages 30 percent less than full-time workers. Eventually, 25 percent of York’s hourly work force could be made up of casual workers.
The Kansas City plant’s bargaining agreement with the two unions does not expire until July 31, 2012. Wandell said last week that the York contract would be used as a benchmark in terms of establishing work rules and more flexibility companywide.
Meanwhile, production at the local Harley plant resumed Sunday evening after a temporary shutdown over concerns about benzene levels within the plant. Air-quality testing showed that only low levels of benzene existed, well within industry safety guidelines, a company spokesman said.
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