The Myth of Fair Value - William Poundstone
It was rather fitting that last week Harley-Davidson workers in Milwaukee got their first look at a proposed labor agreement that would take effect in 2012 at about the same time as President Obama spent Labor Day at Laborfest where he announced a $50 BILLION jobs plan centered around transportation infrastructure including the rehab of 150K miles of road.
Well, I’ve traveled Milwaukee roads (and lived to blog about it!) and I can say they need rehab! No argument there. Bring on the new asphalt.
Speaking of jobs, Wisconsin has lost 35,000 manufacturing jobs since Obama took office in January 2009. A total of 182,000 manufacturing jobs since 2000. In July 2010 the unemployment rate was 7.8% a couple of points below the national average. A good job that pays a good wage with health care and provides for a secure retirement even if you’re not rich might sound like simple ideas, but American workers are in dire straits. There are job cuts and plant closings facing down families and the job cause is more urgent than ever.
This fact has not escaped Harley-Davidson executive management as workers in USW Local 2-209, USW Local 460 and IAM Lodge 78 will vote on a new labor contract Monday, September 13th which would preserve about 1,300 jobs in Milwaukee (PTO) and Tomahawk. You can read the full 65-page text of the agreement on the Cyril Huze blog HERE.
The key highlights are they plan to institute a 7-year pay freeze, implement salary cuts, create a two-tiered work force, cut a couple hundred positions and use seasonal workers (who would make about half what current full-time employees earn). According to the Kansas City Journal tier-1 employees would be paid between $30.50 and $34.38 an hour during the first year of the agreement, depending on job classification and tier-2 would earn between $21.96 and $29.87 an hour. Pretty dam good pay if you’re unemployed!
And now just days before the vote Harley-Davidson CEO, Keith Wandell sent a letter to employees “highlighting his concerns” or what some might call spinning “why you should earn less.” The letter was made available to JS Online by an employee. You can read the full text of the letter HERE. The key highlights are:
- An ultimatum — that if the contract is rejected the board will act the following day to authorize the process to relocate the production operations
- H-D is restructuring the design process to reduce development time and place a greater focus on “WOW”
- H-D is reducing the size of the dealer network
- H-D is challenging their suppliers like never before
- H-D is aligning all manufacturing operations under a common “production operating system”
- H-D is doing everything with fewer people (including salaried h/c) to run leaner at today’s lower volume
There is a Wisconsin metaphor: “You only worry as far as you can milk it.” The recession favors management as an excuse to slash costs and puts more pressure on workers to agree to the demands. In addition, the motor companies go-forward business strategy and restructuring is getting some traction. So, it looks like labor concessions are an insurance policy for the future.
UPDATE: September 14, 2010 — H-D posted a press release HERE on the ratification details of the new 7-year labor agreement. The company expects to have 325 fewer unionized employees in Milwaukee and the new contract will generate about $50M in annual operating savings in 2013.
Photo courtesy of William Poundstone
Northwest Harley Blog 
When has HD, or any other company, not looked for ways to secure their interests, which often don’t coincide with the interests of the core of followers? Perhaps more of us will realize that owning a Shovelhead sure beats what you’re getting for the prices of the new Evos.
[…] earlier this year I posted about H-D management giving it’s Milwaukee workers an ultimatum… approve a new labor agreement […]