The vote is over and the employees in York, PA accepted the contract. Almost half of the jobs at the plant will be lost.
Wednesday, the union employees at Harley’s plant in York, Pa., approved a seven-year contract that will likely keep the motorcycle assembly operations in York but will result in the loss of nearly half of the 1,900 jobs.
It looks like the plant will survive, costs will be cut and HD will move forward but that is quite a downsizing. Will it be enough to keep the company going? Stay tuned.
Link: JSOnline
UPDATE: Harley Davidson press release:
MILWAUKEE, December 3, 2009 – Harley-Davidson, Inc. (NYSE:HOG) today announced it will keep its motorcycle operations in York, Pa., and move forward with plans to restructure those operations.
The announcement follows yesterday’s ratification of a new seven-year labor agreement by company employees at York, represented by International Association of Machinists and Aerospace Workers (IAM) Local Lodge 175, and today’s decision by the Harley-Davidson Board of Directors to approve the restructuring plan and related funding.
“A restructured York operation will enable the plant to be competitive and sustainable for the future, and the new labor agreement is critical to making that happen,” said Keith Wandell, President and Chief Executive Officer of Harley-Davidson, Inc. “On behalf of the Company, I want to thank the employees at York for their vote to make the changes necessary to create a more flexible and efficient operation, and we look forward to moving ahead together to achieve that goal,” Wandell said.
The new York operation will be consolidated under one roof and focused on the core areas of motorcycle assembly, metal fabrication and paint.
The operation will have a smaller, more flexible workforce, corresponding to the scale and scope of the operations, with about 1,000 hourly employees compared to about 1,950 today. The workforce will consist of about 700 to 800 full-time unionized production and maintenance employees and, on an annualized basis, approximately 200 to 300 unionized “casual” employees. Casual employees work as needed, depending on seasonal production and volume needs and to provide coverage for vacations and other absences. The operation will also employ about 150 salaried employees, compared to about 270 today.
When fully operational in 2012, the restructuring is expected to generate about $100 million in annual operating savings compared to the current structure.
The Company expects to incur approximately $200 million in restructuring charges related to York into 2012, of which about $100 million will be cash charges. The Company also expects to make capital expenditures in connection with the York restructuring of about $90 million into 2012.
On a combined basis, the Company expects previously announced restructuring activities, together with the additional restructuring of the York operations approved today, to result in one-time charges of $415 million to $445 million into 2012, and to produce annual ongoing savings of $240 million to $260 million upon completion of all announced company-wide restructuring activities. In 2010 on a combined basis, Harley-Davidson expects to incur restructuring charges of $175 million to $195 million and related savings of approximately $135 million to $155 million.
The financial impact of the York restructuring reflects approximately $15 million in incentives that the Commonwealth of Pennsylvania has committed for capital improvements and training.
“I want to acknowledge and thank Pennsylvania Gov. Rendell and his team for their support of the changes we are embarking on at York. They have been terrific to work with throughout our decision-making process,” said Wandell.
The decision to remain in York concludes a two-path assessment that began in May to determine whether the York operations could be restructured to be cost-competitive and sustainable, or alternatively whether the company would relocate those operations elsewhere in the U.S. In recent weeks, the Company identified Kentucky as the focus of its alternative site assessment.
“We also thank Kentucky Gov. Beshear and his team for their tremendous efforts, as well as the many Kentucky state and local officials who have been so helpful and gracious and who have devoted significant time and attention to our possible relocation,” said Wandell.
Woodman West says
I just read on Cyclenews that hD has pulled out of flat track racing also!
Tin Man 2 says
Hopefully layed off workers will be recalled when people retire and or the economy picks up again. Harley is pulling back in the face of this Financial Nightmare, Still making a small profit in this economy is a sign of good management…. P.S. It looks like VW is buying Suzuki, not MV Agusta as many hoped.
Rosscoe says
Woodman ~ go back and re-read the article in Cycle News. H-D hasn’t pulled out
of Dirt Track racing completely, they will still be sponsoring Kenny Coolbeth who
has been the only Factory H-D rider for a few years now. Their decision not to continue funding for Jared Mees the #1 Twins class rider or for Bryan Smith
and Joe Kopp seems a backward step. I’m sure Jared Mees derserves and
expected more for his efforts to win the #1 plate this season, but I say this as
a long term D/T fan and not the one paying the bills. Motorcycle racing is taking
a big hit everywhere for 2010 ~ the fact is, it costs so much to go racing on a
national level ~ so when sales are way down like they are, all the manufacturers
are cutting back.
Woodman West says
Got, it. I just scanned the headline.
steve w says
I am sure HD will be around for years. No one is in the shops right now. Not in the HD shops or the Honda shops etc, It is QUIET! Pity the people in York but they don’t have to feel alone.
kevin says
The slowdown hits HD harder than the other manufacturers because Harley’s are perceived to be costly ( I know there’s a lot of truth in that but they also have some less expensive models).
Maybe they should push there less expensive bikes more in these times.
Pierre says
… Or HD should make better bikes instead of ‘pushing their less expensive bikes’…..
Definitely time for some evolution in their company if you ask me… And simply laying off half of your staff (how is it possible to run a company with only HALF of the people? Now you know why a HD is so expensive….) is NOT a sign of evolution….
Hawk says
I feel sorry for the HD dealers that were forced to go “Excusively Harley or nothing” a few years ago …..
Woodman West says
I just went and looked at an $18,000 Kawasaki Voyager, as I may pull the trigger on a new full touring cruiser for the big 5 0 in April. There was so much cheap plastic on this thing that I may just reconsider paying more for an HD ElectraGlide…Of course the Roadstar runs great and is paid for…
Tin Man 2 says
Pierre, Do some research, Harley reliability is second to none, and the fit and finish is the Benchmark others aspire to. Harley prices are very competitive across the board, and their big Touring Bikes are less expensive then the Imports.They weigh LESS then the competition. That is why they Dominate the market. Just as the Imports dominate the Small and Midsize market. If I want an Enduro I buy a Yamaha, If I want a Sport Bike I buy a Ninja or Ducati, But a Cruiser? Harley Defines the Breed.
Nicolas says
Tin Man points are valid in terms of comparison with other brands of cruisers. Now I have an issue with the term “cruising” : does crusing mean riding slow in a straight line …? In this case, no substitute possible, it’s HD or nothing. Does cruising mean riding in a relaxed way for miles and miles ? In this case I’d see more of a Beamer or a FJR1300/Concours1400/Whatever1500 …
Now, it sucks to be a HD employee, really wish them luck
anon says
“Does cruising mean riding in a relaxed way for miles and miles ?”
I think most of us call that ‘touring’.
As for the story, it’s sad to see people lose their jobs, but it is good to see at least one union waking up to the new reality…
Paul says
Keep in mind that the ‘crisis’ that forced half of these workers to lose their jobs was the fact that HD only made $20 million in the second quarter, meaning they will only make around $100 million this year, instead of around a half a billion dollars in profits, like they did last year. They are a huge corporation that is only accountable to their shareholders; they play off their customers’, dealers’, and employees’ misguided loyalty to make the most profit. That’s how Corporate America works.
Can someone start a worker-owned motorcycle company? I’m tired of supporting these corporate privateers who abandon their employees as soon as they can find cheaper skilled labour in China or India.
woolyhead says
It is time for all manufacturers and riders to re-evaluate their needs. Small bikes needn’t be for beginners only…..they’re just pure fun and extremely practical in the 250 cc range….give or take a few cubes.
Nicolas says
Sorry for confusing “cruising” and “touring” … although I thought “touring” involved higher speed … whatever.
Really sad for the employees …
MikeC says
“They are a huge corporation that is only accountable to their shareholders”
“I’m tired of supporting these corporate privateers who abandon their employees as soon as they can find cheaper skilled labour in China or India.”
Paul, do you have any investments in the money markets either through direct stock purchase, or mutuals etc? If you do, you might want to consider another investment that isn’t based on public company profits (I hear the US Gov’t could use some dough).
If I owned Harley stock, I would want them to do whatever it takes to turn a profit, or at least not drive the share price below my purchase price.
Regarding the employees, while I hate to see anyone laid off, union derived wages are part of the problem. During the good times the union brings the weaker employees up to a wage level that the individual cannot sustain if they were on their own, and that employee enjoys those benefits for that time. In the slow times, management looks at value, and cannot see it in the high wage/low productivity (relative) employee and away they go. If that were non union, that same employee would typically not be at a wage level higher than they are worth, and have a much better chance of remaining employed. They may still be laid off, as could anyone, but have a better chance of survival in this current climate.
steve w says
I keep seeing unions mentioned in a negitive way. While many don’t support union wages, you might also need to be aware that if it wasn’t for unions you wouldn’t have good working conditions and a decent wage in non-union plants (they usually pay close to union wages to keep unions out). As unions are being pushed aside, the day will come when everyone wonders why they are treated so poorly, have no decent health insurance (oh nobama) and can’t get a raise as cost climb. HD might not be able to survive in the long term as people won’t have enough money to buy more than a 250cc. Maybe they can revive the Sprint.
Tin Man 2 says
MikeC, While many are quick to blame workers earning a decent wage for the US not being competitive, The big difference is Executive Compensation. Our Execs make obscene amounts compared to the workers, In Japan it is rare for management to make 10 times the wage of a worker, Here an Exec can make 100 times the wage of a worker, and no one bats an Eye. Add that to the Legal costs and Financial managers in the USA and then blame the Unions.
todd says
Usually the person earning 100 times the wage of a worker is worth at least that much more than the worker. I’m sure Walt Disney was paid much more than the trash pickers at the park and he was probably worth every penny. If you can make the sort of decisions that earn a company tens of millions of dollars that’s worth a whole lot more than someone who cleans the toilets.
It’s time to start figuring out how to be in management and earn good money instead of complaining about them. Hopefully all these people who lost their jobs will utilize the job training and education programs offered that will earn them better pay at their next job.
-todd
Woodman West says
I would argue that the main difference between “touring” and “cruising” is style based.
Sport touring bikes, Connie14, FJR 1300, BMW put function over appearance. Therefore are superior and have a few more options.
Big touring cruisers, ie: HD Ultras, Triumph Rocket Touring. Star Venture or the Kawasaki Voyager, while very capable, still place thier main emphasis on stlye. They outsell sport touring 10/1 easily. While costing and wieghing more. Most big purchases are still feeling based.
Most big touring cruisers can scrap the floorboards on the Dragon, that is far enough and fast enough for most. I posted earlier that I was considering spending $18K on the Voyager, but will look at the $20k HD. I can find left over FJRs or Connies for $11K. Both superior sport tourers but I need that “wow” factor across the parking lot when I see the bike walking out after work. I cruise at around 70 and I catch HDs all the time cruising along at 60.
Tom says
Webbikeworld reports that overall US motorcycle sales are down 44% for the first 9 months of 2009 versus the same period in 2008. HDI SEC filings for the first three quarters of 2009 indicate their US sales are down 23%.
My guess is that on the _business_ side of things that even in 2009 it remains as it has been for the last 20 years or so: anyone else in motorsports would be happy to swap places with their equivalent counterpart at HDI.
Nicolas says
I respectfully disagree, Todd, that the people who earn huge money are worth every penny. I don’t want to fall into a kinda populism or sthg, but take some recent examples : What about M. Nardelli who left GE to mess up Home Depot, then be CEO of Chrysler with the results we see today … are these type of guys worth the millions they make ?
There difference between cleaning the toilets and being a CEO is the result of a lot of different factors, from your social origins, your education, your DNA, your own willing to succeed and hard work, the choices you made in your life, but also it’s a lot about luck and being at the right place at the right time, having the right acquointances, and so on, but apparently is not much about your actual performance in the job.
Once again, it sucks to be a HD worker these days, union or not.
scott silvers says
“Cruising” is IMO any type of riding where you’re constantly battling having wind blow up the front of your pantleg…..
Never quite got the “Cruiser” riding position that Harley dominates….although I did ride a FatBoy once, and it’s fairly standard riding position [without the pant billowing pelvic exam riding position], low horsepower, lumbering weight, made it easy to just turn my brain off and just mindlessly “cruise” around. Fun and relaxing zone out machine. I had no desire to rip it up on such a beast – nor did I even feel like it – you just don’t even think about it. It’s definitely a different perspective on moto’ing and a nice change of pace from a sportbike that is always asking you to giddy-up.
Prolly never lust after a cruiser bike, but I wouldn’t outright cross Harley off my consideration list. A bike is a bike, at the end of the day….
Tin Man 2 says
Todd, To compare Walt Disney to a modern CEO is rediculous, Disney was a doer, inventer and self made man. Many CEOs today are just brothers in the old boy club, moving from one train wreck to another. Patting each other on the back as they destroy Companys that existed before they were born.,,, I was a skilled worker my whole life,and made good money. Modern Management has degenerated into meetings, catch phrases and grafic displays of useless information. When Higher Education decided that managers were made, not born(death of the great man theory)they created the modern school book manager who is resented because he knows nothing about thw work, only how to manipulate those who do. Im NOT talking about skilled engineers, Im talking about those with no tech background, Just a Bussiness Degree, put in charge of those who know what their doing.
Harley man says
Hey Woodman I have a 07 streetglide with a 6 speed. Don’t shift into the big hole until 70 mph, more than enough bike for touring and has the wow factor your looking for and priced in the range. Also want to say, Thinking about the folks in York hang in there!
Woodman West says
I agree 100%. Great looking bike that sell very well. Yamaha Star is now coming out with a version of the Streetglide for ’10. The Stratoliner Deluxe. About 5 years to late some would argue.
Chris Robson says
As a Pennsylvanian, I am happy for York since much of the area has lost most of it’s industial base. As for Harley’s future, it will take cooperaton from both labor and management. Attitudes have to change, the unions have to realize this is the 21st Century, not the 1930s, and Management has to see their labor force as an asset and stakeholders with more to gain and lose that some of those Pinheaded Corporate MBA types realize. The Union should encourage management to spend a day working along side them for a day and visa versa. It will build a stronger company.