Harley-Davidson Keeps Wisconsin Plants Running

OFF THE WIRE
BY: Henny Ray Abrams
Source: cyclenews.com
Union ratifies, and board agrees to, new contract.
Harley-Davidson will continue to build their iconic American motorcycles in Wisconsin following the ratification of contracts by union employees at two plants.

The new seven-year contracts, which take effect in April 2012 when the current contracts expire, allow the company to achieve the cost savings to keep the jobs in state. H-D executives had previously said they'd consider moving the jobs out of state if the contracts, which include a number of concessions, weren't agreed to.

The two factories affected are in Menomonee Falls, which builds engines and transmissions, and Tomahawk, which builds other components and accessories.

In a statement released by Harley-Davidson, president and CEO Keith Wandell said, "Change is never easy, and we have asked our employees to make difficult decisions. However, we are pleased to be keeping production operations in our hometown of Milwaukee and in Tomahawk. Together, we are making the necessary changes across our entire company to succeed in a competitive, global marketplace while continuing to meet and exceed the expectations of our customers."

Provisions in the contract freeze employee pay and cut hundreds of production jobs. H-D said it would lose about 250 more jobs than are covered under the existing contract at its Milwaukee-area facilities. The Tomahawk plant will lose 75 jobs. Some of those jobs will also be replaced by between 150-250 part-time workers.

Those changes will allow the company to better adjust to "seasonal and other volume-related production changes, an enhanced ability to vary product mix in line with customer preferences including the customization of motorcycles at the factory, and greater production efficiency overall," the company said in the same statement.

In 2013, the first full year of the contract, the changes are expected to generate about $50 million in annual operating savings.

The thought that Harley-Davidson could even consider moving operations out of their home state for over 100 years was seen as shocking by many, but the recent economic downturn has forced the company to keep a closer eye on the bottom line. Harley-Davidson has been reinventing itself as a leaner, more focused company in the past year. The Buell division was shut down late in 2009 and MV Agusta was sold back to its original owners earlier this year.

In a July second quarter financial report, Harley-Davidson reported that income from continuing operations was $208.0 million, or $0.89 per share, a 28.9 percent increase from the year-ago period. Sales of new bikes were down 5.5 percent compared to the second quarter of 2009. U.S. sales were down 8.4 percent with international sales mostly flat.

The company shipped 112,720 units through the first six months, down 15.2 percent from last year's 132,489 for the period. Revenue from motorcycle sales was $1.64 billion, a 9.8 percent decrease compared to the same period a year ago.

The target for 2010 is to ship between 201,000 and 212,000 Harley-Davidson motorcycles to dealers and distributors

Harley-Davidson stock, which trades on the New York Stock Exchange under the symbol HOG, was up 1.33 percent at midday, trading at $27.65, roughly the middle of the range for the past year.