Harley begins looking outside Wisconsin

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Officials with Harley-Davidson Inc. again are looking for sites for a potential relocation of major operations, but it is unclear if Shelbyville is being considered for this project.

Harley-Davidson has begun examining out-of-state locations as it moves deeper into the process of deciding whether to keep manufacturing in Wisconsin.

Harley-Davidson spokesman Bob Klein said the Milwaukee-based motorcycle manufacturer would prefer to remain in Wisconsin but, nonetheless, has begun an “in-depth analysis” of alternate sites in the event the company isn’t able to achieve the necessary solutions needed to improve the efficiency and cost-competitiveness of its Wisconsin operations.

“We are early in the process, but we are starting to do a deeper dive,” Klein said.

Harley-Davidson management would like to have a decision by fall on whether it will be necessary to move manufacturing out of Wisconsin. At stake are nearly 1,700 jobs, including more than 1,300 in the Milwaukee area.

Harley-Davidson began an intensive examination earlier this year of its operations in Menomonee Falls and Tomahawk, Wis.

The company already is consolidating its powertrain production operations at the Menomonee Falls factory. The move will lead to the closure of the company’s factory in Wauwatosa, Wis.

Despite the consolidation, there are “significant gaps” that remain in the competitiveness of Harley-Davidson’s Wisconsin operations, Klein said.

Harley-Davidson has implemented several major changes over the past year in an effort to remain competitive and profitable in the face of one of the worst economic recessions in U.S. history. The company has cut hundreds of jobs, closed its Buell Motorcycle Co. subsidiary in East Troy, Wis., and is attempting to sell MV Agusta, its Italian sport motorcycle subsidiary.
Pennsylvania retained plant

The company also undertook a major restructuring of its motorcycle assembly operations in York, Pa., which it launched after conducting an analysis similar to the one now being conducted in Wisconsin.

After a seven-month process, Harley-Davidson decided to remain in Pennsylvania, but only after reaching an agreement with union-represented workers that will slash the work force from 1,950 employees to about 1,000 hourly workers. Several buildings at the York complex are being shuttered as a result of the outsourcing of nonessential operations.

Harley-Davidson initially had considered four alternate locations: Kansas City, Mo.; Shelbyville, Ind., near Indianapolis; Murfreesboro, Tenn., in suburban Nashville, Tenn.; and Shelbyville, Ky., in Shelby County near Louisville. Harley-Davidson eventually narrowed its focus to the Shelby County location before deciding to remain in Pennsylvania.

Klein declined to say whether the Kentucky site, or any of the other communities previously examined, will be considered as viable alternatives for Harley-Davidson’s manufacturing operations in Wisconsin.

Officials with Kentucky Gov. Steve Beshear's office and Shelbyville Mayor Thomas Hardesty could not be reached to comment on Harley-Davidson's plan.

Libby Adams, executive director of the Shelby County Industrial & Development Foundation, said she has not been contacted by the company regarding its latest search.

“We would be more than happy to talk to any company that’s interested in moving jobs to Shelby County,” she said.
Wisconsin trying to hold onto iconic company

News of Harley-Davidson’s plans has Milwaukee political and business leaders scrambling to keep Harley-Davidson from moving manufacturing out of the region where the company was founded in 1903.

“We have been communicating with the company,” said Pat O’Brien, executive director of Milwaukee 7, an economic development group for the seven counties in southeast Wisconsin.

O’Brien declined to reveal details of the discussion with Harley-Davidson management, but he said it’s important to the local economy that the company keep its good, high-paying jobs in southeast Wisconsin.

Harley-Davidson also is vitally important to the area because it has its headquarters here.

“We like to take care of our own,” he said.

O’Brien pointed out that the prolonged weak economy has created financial woes for Harley-Davidson and has forced the company to make difficult decisions about its future.

“We’re sensitive to their manufacturing needs,” O’Brien said. “We’re trying to respond to that, but ultimately it’s their decision.”

Milwaukee Mayor Tom Barrett said the company wants to avoid turning the situation into a political debate. Company management told him recently that they’d prefer to stay in Wisconsin but that moving jobs out of the state “isn’t out of the question.”

“I think, at this point, the most important thing we can do is to urge Harley-Davidson management and its workers to work together and find a solution so that this great company can remain globally competitive,” Barrett said.
State tax credits offered in 2006 never used

In late 2006, Wisconsin offered a $4.5 million tax-incentive package aimed at encouraging job growth and a major capital investment at Harley-Davidson Inc.’s operations.

However, Harley-Davidson did not receive any of the tax credits because it never met the required job goals.

“They simply didn’t go forward with the project, so no credits were allocated,” Wisconsin Department of Commerce spokesman Tony Hozeny said.

“We didn’t take advantage of the tax credit program because we didn’t reach the job numbers attached to it,” Harley-Davidson spokesman Bob Klein said.

Economic conditions forced Harley-Davidson to cut motorcycle production, which precluded the company from hiring employees, he said.

Newly appointed Wisconsin Department of Commerce secretary Aaron Olver contacted Harley-Davidson management shortly after the company informed its employees on April 30 that it is in the midst of a study to determine whether it is financially feasible to keep manufacturing operations in Wisconsin.

“Our new secretary has already reached out to the company to see if we can be of any assistance,” Hozeny said. “We want to help keep the jobs here.”

Hozeny said it’s too early in the process to pinpoint what type of financial incentives could be offered to Harley-Davidson.

“The secretary simply has offered his services at this time,” Hozeny said.

New concerns about Harley-Davidson’s future in the area also drew an immediate response from Milwaukee Mayor Tom Barrett, who said he’s had direct discussions with Harley-Davidson management. Barrett said company executives informed him that they want to work directly with Harley employees and the unions representing them before discussing any potential financing deals aimed at preserving jobs in the area.

Rich Rovito is a reporter for the Milwaukee Business Journal, a sister publication of Business First. Business First reporter Ben Adams contributed to this article.

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