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After the dust-up surrounding Harley-Davidson's rumored evacuation of Wisconsin, the motorcycle manufacturer has announced that it will be staying in the Midwest. Unionized employees voted on September 13 to keep production operations in both Tomahawk and Milwaukee right where they are. Three labor organizations ratified a new seven-year contract that will take effect once the current deal expires in April of 2012.
Earlier this year, Harley-Davidson began an assessment program to determine whether or not it would be in the company's best interest to move production outside of Wisconsin, and they had even gone so far as to scope out a few likely new homes. However, the new labor contract agreements will allow for a $50 million savings by the end of 2013, making the company's old plants more attractive than uprooting and starting new facilities elsewhere. Part of those savings come from the fact that by the time the new contract takes effect, the company will have 250 fewer full-time hourly unionized workers than what's outlined under the current agreement.

While these and other restructuring changes will incur a number of one-time charges, Harley-Davidson is looking to see annual ongoing savings of anywhere between $290 million and $310 million. Hit the jump for the full press release.

[Source: Harley-Davidson]

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Harley-Davidson Production Operations to Remain in Wisconsin

Ratified New Labor Agreements Enable Production Flexibility and Efficiency for Long-Term Competitiveness

MILWAUKEE, Sept. 14 /PRNewswire/ -- Harley-Davidson, Inc. (NYSE:HOG) announced today it will keep production operations in Wisconsin, following yesterday's contract votes by the Company's Wisconsin unionized employees.

The decision follows Monday's ratification of three respective new seven-year labor agreements by employees represented by United Steelworkers (USW) Local 2-209 and International Association of Machinists and Aerospace Workers (IAM) Lodge 78, both in Milwaukee, and USW Local 460 in Tomahawk, Wis. The agreements take effect in April 2012 when the current contracts expire.

Harley-Davidson produces motorcycle powertrains (engines and transmissions) at its plant in Menomonee Falls near Milwaukee and motorcycle components such as saddlebags in Tomahawk.

"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," said Keith Wandell, President and Chief Executive Officer. "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."

A key component of Harley-Davidson's restructuring is a standardized continuous-improvement production system across company facilities. That system focuses on greater flexibility for 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 production system includes the addition of a "casual" workforce component - unionized employees who work as required, depending on seasonal needs and to provide coverage for vacations and other absences.

The decision to remain in Wisconsin concludes a two-path assessment that began earlier this year to determine whether the Company could achieve the needed changes for the Wisconsin operations to be competitive and if not, relocate those operations.

All three of the new Wisconsin labor agreements contain essentially identical provisions except for variances in wage rates and incentives related to contract ratification. All provide a very competitive compensation package while enabling the flexibility and efficiency needed for the Company to be cost-competitive. The agreements also move full-time hourly employees to the same health benefits plan that salaried employees have and maintain a non-contributory defined benefit pension plan at current benefit levels funded entirely by the Company.

Based on the new ratified labor agreements, the Company expects to have about 700 full-time hourly unionized employees in its Milwaukee-area facilities when the contracts are implemented in 2012, about 250 fewer than would be required under the existing contract. In Tomahawk, the Company expects to have a full-time hourly unionized workforce of about 200 when the contract is implemented, about 75 fewer than would be required under the current contract. The Company also expects its Wisconsin production workforce to include 150 to 250 casual employees on an annualized basis to cover seasonal volume spikes, vacations and other absences as the new labor agreements are implemented.

The new contracts are expected to generate about $50 million in annual operating savings in 2013, the first full year of the agreements. The Company expects to incur approximately $85 million in additional restructuring charges related to the new contracts through 2012, of which about $55 million will be cash charges.

When fully implemented, the Company expects previously announced restructuring activities, together with the implementation of the new contracts at the Wisconsin operations, to result in one-time charges of $515 million to $545 million, and annual ongoing savings of $290 million to $310 million. In 2010 on a combined basis, Harley-Davidson expects to incur restructuring charges of $225 million to $245 million and to generate related savings of approximately $135 million to $155 million.

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    • 1 Second Ago
      • 4 Years Ago
      As long as the union workers continue to get over paid HD's profits won't get any better and neither will the company's future.....and we wonder why manufacturing is shipped over seas. I think the unions should shift their focus on the long term viability of a company for whom its workers realy on rather than these short term "wins" that temporarily hold over people's jobs....
        • 4 Years Ago
        "mike boerer 7:44PM (9/14/2010)

        i guess it would be better if illegals made this product, for your hating the unions,just remember they are the last line of defense against the illegals, and the last bastion of middle class in this country. so go ahead and hate the unions, but don't complain when the illegals do take over and you will be expected to work for cheap like they do. "

        Unions are only the bastion of the middle class if you're an uneducated, unskilled, or semi-skilled worker. Hence why "the illegals" can come and do your job. I'm not worried about an "illegal" taking my job from me.

        I support the American job market, and keeping jobs for Americans, and I support our local industries, but maybe if the Auto Union (and by proxy, their individual workers) were more willing to take realistic wages for the level of work they do, with the goal of keeping workers and laborers, it be easier to support them.

        I mean I've noticed a trend, Union Workers, when it comes down to it, are more willing to watch someone else lose their job, if it means they can keep their (often) over-inflated wage. If Union workers really cared about each other, then they'd collectively agree to take less or gain less to keep the number of workers high.

        I know it may not be that simple, but it sure feels that way.
      • 4 Years Ago
      I would rather build my own v-twin panhead. Harleys cost to much to buy. When there patent ran out they lost a lot of sells to the after market. Aftermarket engines and trannys are much better nowdays. Choppers rule stock bikes suck.
      • 4 Years Ago
      What's REALLY killing HD is the BAD business decisions they have made! Buying and selling some dumb bike companies etc. Management is LOUSY!
      Dave Peterson
      • 4 Years Ago
      ForePlay I guess your wife doesnt have an ass cause you dont own a Harley. Go spread your rice on the road and shut up
      • 4 Years Ago
      Fazz, do you work for Harley?
      How do you already know how much the employees make (or what they gave up) on the new contract to bash them?

      While neither my wife nor I are in a union, nor employed by a union, I for one am happy that agreements were made and that H.D. is staying where it is.

      We both have motorcycle endorsements on our licenses and my wife is a huge Harley fan who still aspires to own one. Her old ACE 1100 is nearing its end. Had Harley moved off shore or anywhere, I don't think my wife would buy one.
      • 4 Years Ago
      Great news.
      • 4 Years Ago
      HD has absolutely no idea how to sell a sportbike superx. Ain't going to happen. Polaris/Victory will have a real sportbike before HD will.
      • 4 Years Ago
      UNFORTUNATELY, HD is VERY POORLY run business. They have made horendous mistakes. Too Bad!
      • 4 Years Ago
      I love it my favorit bike your econcierge Gerry from Berlin Germany
      • 4 Years Ago
      One of that few remaining non-NAFTA-ized manufacturers left in the country.

      oh wait, harley gets many of its components from mexico and asia...
      • 4 Years Ago
      Anyone realize that not a single HD bike is made in Wisconsin? Just the engines? The only HD bike made (assembled) in WI in a long time has been those from Buell...and they were not even union.
        • 4 Years Ago
        I believe you are correct...most final assembly is York, PA. Not sure where VRod production is though. We are still talking about a decent number of jobs in Milwaukee in any case.
      • 4 Years Ago
      When I first heard of the possibility that HD would look at a move to the south, I am sure the union leadership had to duck to avoid being hit by that warning shot. I am not suprised they reached an agreement. The possibility of moving south will always be an arrow in the quivver of the Motor Company, but they are very connected to Milwaukee.
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