Brace For Impact As Harley-Davidson Announces Layoff

News about Harley-Davidson during the month of August has been a bit of a wild ride.

There was the consent decree and $15M settlement with the EPA. Then the announcement that Harley expanded the list of bikes on recall that may have been built with defective hydraulic clutch systems.  Then the biggest engine-product launch for the company since 1988, when the Twin Cam made its debut.

And now today, the day before the Milwaukee Rally kicks off, Harley-Davidson announced that approximately 200 employees will face layoffs starting in October as the company adjusts motorcycle production due to slower sales.

According to various news reports including Rick Barrett, of the Milwaukee Journal Sentinel, the union stated many of the layoffs will take place at Harley’s assembly plant in York, Pa., and some will occur at the engine plant in Menomonee Falls, where the company employs approximately 1,000 people, as well as in Tomahawk.

Given that the Sturgis Motorcycle Rally attendance was down roughly 40% from a year ago (some of which was expected), suggest that some riders are busy doing other things than throttling down rural America’s roads to a rally which makes the launch of its Milwaukee-Eight engine motorcycles key to amp up any new motorcycle sales.

Photo courtesy of Sturgill Simpson Video.

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Harley’s Humpty Dumpty Prevention Program

Humpty Dumpty Prevention Program

Most chief executives are entering 2011 with big decisions to make—especially how to revive sales.

But, some have deeper problems to address.  Facing down “significant cost, efficiency and production flexibility gaps” as well as fierce competition for some, such as Harley-Davidson who last November told Kansas City union officials that it might move operations to Harley’s Springettsbury Township plant if a contract wasn’t ratified by early March.

Well it’s March and their “no blink” management style resulted in the members of the International Association of Machinists and Aerospace Workers Local 176 and United Steelworkers Local 760 not letting “Humpty Dumpty” fall.  They ratified a contract by a vote of 467 to 185 and the new labor agreement takes effect in August.

The “fall prevention program” has been implemented and proven to be an effective tool in the loss of all jobs in Kansas City.  Congrats to Local 176 and Local 760.  The new contract is a 7-year deal that, when implemented, will result in the Kansas City plant having about 540 full-time, hourly unionized employees compared with about 685 today.  Yes, it’s a loss, but it does keep many high-paying manufacturing jobs in Kansas City and brings all H-D plants under one umbrella for production flexibility.  The company stated that the new contract, which will be implemented in phases, will result in about $15M in annual savings starting in 2013.

To all the folks who railed on my public union previous blog post, you see private unions have to adjust to economic conditions.  Unlike the Wisconsin public union members who have protested for days because they have been ask to pare back their benefits, Harley-Davidson has budgetary constraints that can’t be fixed by raising taxes. If we used the public union mentality I suspect they would ask Harley-Davidson to respond by raising prices and demand that motorcycle enthusiasts just pay more for a scooter instead of buying something else?

And if all that wasn’t enough… this item falls into the “what were they were thinking” category… I read that in Minnesota a local pipefitters union has purchased the Hillcrest Golf Club in St. Paul, paying $4.3M – yes, you read that correct at $4.3M – for the private club and vowing to keep it private for at least two years.  That does a lot for the unions  being frugal perception…

Photo courtesy of NYTimes.

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