Harley-Davidson to remain in Wisconsin

September 24 2010

“Change is never easy,” said Harley-Davidson President and CEO Keith Wandell following contract votes by the Company’s unionized employees. “We have asked our employees to make difficult decisions. However, we are pleased to be keeping production operations in our hometown of Milwaukee.”

The decision to call off the movers was made after the Sept. 13th ratification of a seven-year labour agreement with their unionized employees represented by the United Steelworkers (USW), International Association of Machinists and Aerospace Workers (IAM). Wandall viewed their vote of confidence as another step towards a healthier Harley-Davidson. “Together,” he said, “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.”

The new labour agreements are said to provide employees with a very competitive compensation package while enabling the production flexibility and efficiency needed for Harley-Davidson to be cost-competitive. The changes, which will take effect in April 2012 when existing contracts have expired, will leave its Milwaukee-area facilities with approximately 700 full-time hourly unionized employees, “about 250 fewer than would be required under the existing contract”. In its Tomahawk production facility, Harley-Davidson estimates there will be a 200 strong workforce when the contract is implemented, “about 75 fewer” than currently required. Supplementing their Wisconsin workforce will be 150 to 250 casual employees to cover seasonal production volume spikes, vacations and other absences.

The bottom-line for Harley-Davidson is the expectation that the new contracts will generate about $50 million in annual operating savings in its first full year of the agreement. Combined with its previously announced restructuring activities, Harley-Davidson also expects to incur one-time charges around $530 million and an annual ongoing savings of approximately $300 million. That translates into a lot of motorcycles.

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