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Flexible-WorkersWe read everyday how the economy is ever so slowly improving and there was some good news this week for the long-term unemployed.

According to news reports the motor company is hiring 400 temporary workers as part of a seasonal surge in production at the assembly plant in York, Pa.

York is where Harley-Davidson assembles heavy weight motorcycles.   You might recall the widely publicized dispute with the union a few years ago that allowed them to use “casual” workers to do some of the production work at all their existing plants.  A “casual” worker is a temp worker, not employed year ’round, to manage temporary high volume.

According to Harley spokeswoman Bernadette Lauer the jobs start at the end of January and run through the end of May with salaries ranging from $16.75 to $23.30 per hour.  To apply or request to be contacted visit H-Dflexibleworkforce.com.

Harley’s revenues are still well below their pre-crisis highs, but they get credit for revenues and unit sales which have enjoyed a nice bounce over the last year and there is new swagger in the brand.

Photo courtesy of H-D.

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Harley-Davidson's new factory in York, Pa.

A new Harley-Davidson motorcycle rolls off the assembly line in York, PA.

You might recall that one of the first moving assembly lines was at Ford Motor Company in 1913.  Until this time automobiles were built one at a time and were quite expensive.  With the Model T, they began experimenting with different production techniques and the conveyor belt system was born.  At its peak a finish Model T came off the assembly line every 10 seconds.

Workers could not stop the line even if parts were wrong.  Workers were not allowed to think on the job.  They were allowed to only do their assigned task and do them ever quicker.  They required almost no skill to perform and were highly repetitive.  Many workers were unfulfilled and became bored and dissatisfied with their jobs.  As a result, absenteeism rose and employee turnover became high.

Fast forward 100+ years and everything has changed, right?.

The “New Factory York” is Harley-Davidson’s largest motorcycle factory.  Once there were 41 buildings on the huge 232 acre plot, but most have been demolished along with 2300 jobs.  The entire manufacturing facility is now housed in one building.  It’s a model of efficiency which H-D plans to “copy-exact” in Menomonee Falls and Tomahawk.  The process is centered on advanced manufacturing techniques that are used at Toyota and Caterpillar that are well known for their quality and efficiencies.

The Milwaukee changes are a com’in… because effective this month adjusted labor contracts went into effect giving the company more flexibility with the workforce.  Similar to the York plant there can be the use of seasonal employees who are not entitled to medical or retirement benefits and receive less pay for the same work done by regular employees.  While still unionized they are paid about $16.80 to $26 per hour versus $30.50 to $38 per hour for regular employees.

But, just like in 1913 not all the workers seem to be infatuated with the changes.  There is a great article written by Rick Barrett at the Journal Sentinel which captures the mixed opinions and whether the transformation has resulted in a better workplace.   We all know that change is messy, but some of the comments had me wondering if some in the workforce would prefer a return to the Model T era.

Photo courtesy of H-D

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Ice Racing -- Franky Zorn

Yes, it’s been ten years!

Magazines and newspapers with decade-ending rankings have started to appear.

Over the next month, we’re going to be deluged with statistics.  Telling us who the winners were.  People who provided fodder for the system, that you consumed, and forgot.  Best movies, best athlete, best TV shows, best songs, best companies etc.  So, I thought it would be good to go back and compile highlights on the Harley-Davidson decade.

It wasn’t all good news—marked by the roughest economy since the Great Depression.  In pulling together the data I was reminded of a song by James McMurtry’s “We Can’t Make It Here”.  It’s a favorite and one I would vote as the “best” song of the twenty first century, yet it never seems to get air play.  But, this isn’t a rant about how they killed radio and now have us anesthetized in front of the flat screen, selling us products we don’t need, that we put on credit cards that charge 29%.  Sure, McMurtry’s lyrics are poignant, but there’s a hypnotic groove that hooks the listener.  It makes me want to play the song again and again.  But, I’ve moved a little off topic… here is a look back:

2000 — The Softail Deuce is introduced.  All 2000 Softail models have the Twin Cam 88B engine, a counter-balanced version of the Twin Cam 88.

2001 — The V-Rod is introduced for the 2002 model year. Inspired by the VR-1000 racing motorcycle, the V-Rod is H-D’s first motorcycle to combine fuel injection, overhead cams and liquid cooling.  It delivered 115 horsepower.

2002 — The all-new Buell Firebolt is launched.

2003 — Buell launches the Lightning XB9S.  More than 250,000 people come to Milwaukee for the final stop of the Open Road Tour and the H-D 100th Anniversary Celebration.

2004 – The Sportster family models receive rubber engine mounting, a new frame, and a wider rear tire. The Road King Custom is introduced with a low rear suspension and wide handlebars it brings a beach cruiser look to a classic motorcycle.

2005 — The XL 883L Sportster 883 Low brings a lowered seating position to the Sportster line.  H-D and the Muscular Dystrophy Association (MDA) mark the 25th anniversary of their partnership.

2006 — The first of the 6-speed transmissions are made available on 2006 model year Dyna motorcycles. The 2006 model year includes the all-new Street Glide, a lower profile touring motorcycle. H-D appoints Beijing Feng Huo Lun (FHL) as the first authorized H-D dealer on mainland China.

2007 — Union rejected a proposed new collective bargaining agreement for employees and went on a strike at its final assembly operations in York, Pa.  H-D launch the Sportster XL 1200N Nightster. The H-D Foundation and the Disabled American Veterans (DAV) Mobile Service Offices (MSOs) launched the Harley’s Heroes Tour.  H-D celebrated 100 years of Police Motorcycle Sales.

2008 – H-D teamed up with the Ultimate Fighting Championship (UFC).  H-D holds its 105th Anniversary Celebration and the H.O.G. 25th Anniversary.  H.O.G. launched the Million Mile Monday ride. A H-D Softail stars in the new Indiana Jones movie. H-D acquires MV Agusta Group expanding presence in Europe.  The H-D museum opens to the public. H-D introduces the 2009 Tri Glide Ultra Classic motorcycle (3-wheel).  For 2009 touring models H-D introduces the all-new frame, swingarm, engine mounting system, wheels and tires and new chassis.   The H-D XR1200 is launched in the U.S.

2009 — CEO James Ziemer retires and is replaced by Keith Wandell. H-D reports decreased revenue, net income and diluted earnings per share and provides a new strategy and restructuring update. Buell named Official Pace and Safety Bikes of AMA Pro Road Racing. H.O.G. set a 5 Million Mile Monday goal, but falls just short of the goal. H-D launched the Ride Free II Guarantee program.  H-D rolls out nine new motorcycle models for 2010 across six model platforms. H-D formally enters the motorcycle market in India. H-D unveils long-term business strategy after poor Q3 revenue and announced the discontinue of its Buell product line and plans to divest its MV Agusta unit.  Erik Buell leaves the company to establish Erik Buell Racing.  H-D announced it will keep its motorcycle operations in York, Pa., that includes a restructuring plan which eliminates almost 50% of the workforce.

H-D Revenue: 2000 = $2.24 Billion (2000 was the 15th consecutive year of record revenue); **2009 = $4.08 Billion (back-to-back yearly declines — in ’06 revenue = $4.55B)

H-D U.S. & Canada Market Share (651+cc): 2000 = 45.9%; **2009 = 45%

H-D Gender:  2000 = Male (90%); Female (10%); **2009 = Male (89%); Female (11%)

H-D Median Age: 2000 = 44.2; **2009 = 48.1

H.O.G. Membership: 2000 = 582,400; **2009 = 1.3 Million

Unit Shipments: 2000 = 204,592; **2009 = 225,000

(** indicates estimates as final results not tabulated/reported and subject to change)

From record revenue and income to record downsizing and decline.  I didn’t mean to get you reaching for the Prozac, but it’s not all that bad.  Just like ice racing in winter months can be slippery with the occasional crash, H-D will continue to modify, adapt and adjust to come out on top.

Photo courtesy of Rutger Pauw;  Statistical Sources: H-D; H-D Investor; Google Finance and various analyst estimates.

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H-D announced a recall order that according to the National Highway Traffic Safety Administration (NHTSA) could affect up to 111,569 motorcycles.

Touring motorcycles are manufactured in York County, PA at the Springettsbury Township plant which has been under a lot of pressure to ratify a new labor agreement.  More information HERE on the approval of that agreement.  In addition, H-D announced this week that effective December 16, 2009 Ed Magee would be general manager of the plant replacing Fred Gates who will retire in 2010.

The NHTSA Campaign ID number is 09V457000 and the component effected is the gasoline storage tank assembly/mounting.  The front fuel tank mounts may distort in reaction to severe frame damage from a frontal collision which in turn may cause a fuel leak at the weld of the front bracket to the tunnel.  The result could lead to a fire.  Dealers will install a left and right brace which is intended to reduce front mount distortion during certain crash conditions.  The repair is free of charge and the safety recall is expected to begin on or about December 14, 2009.  Owners can contact H-D at (414)343.4056 or the NHTSA at (888)327.4236.

The models effected are:

  1. All 2009 – 2010: FLHP; FLHPE; FLHR; FLHR SHRINE; FLHRC; FLHT; FLHTC; FLHTCU; FLHTCU SHRINE; FLHTCU W/SC; FLHTCUTG; FLHTP; FLHX;
  2. All 2010 – FLHXXX; FLHTCUSE5; FLHTK
  3. All 2009 – FLTR; FLTR3-CVO; FLTRSE3; FLHTCU4-CVO; FLHTCUSE4

In 2008, H-D announced recalling nearly 47,500 touring vehicles because of a fuel-filter shell issue.  More information available HERE on that recall.  Then earlier this year they announced a 2009 CVO Road Glide recall HERE.

Photo courtesy of H-D

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The WAIT is over.

Sometimes, fame comes to York.  The famous author, John Grisham wrote about York, PA in “The Associate” as it was the main characters hometown.  In fact, many of its residents have gone on to fame.

But, in the case of Harley-Davidson the bleak economy means financial fame in York.

It’s been a rough year for the factory tour capital of the world.  After a reduction of over 600 employees earlier this year the company announced today it will keep its operations in York, after ratifying a new labor agreement with IAMAW which involves nearly a 50% cut in jobs.  Under the new agreement structure, the plant will have about 1,000 hourly workers reduced from the current level of 1,950. Of the 1,000 workers, 700-800 will be full-time unionized workers and about 200-300 will be unionized “casual” staff, who work according to seasonal demand and as managers deem.

H-D expects to have about 150 salaried employees, or a little more than half of the current number.  The company will invest about $90 million in the restructuring of the plant and expects about $200 million in restructuring charges tied to the plant into 2012.  The restructuring is expected to generate about $100 million in annual operating savings compared with the current structure.

Many claimed that H-D employees were out-of-touch with the ‘real’ work world.  But, being faced with the prospect of operations moving to Kentucky they voted to cut their workforce, change their work rules to allow managers to shift workers around to various tasks in the plant and agreed that new hires will earn significantly less.

Sure it’s a positive note in a sea of bad news, but isn’t that just the point, the plethora of bad news?  The companies statement can be read in full HERE.

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Every time a U.S. President wants to demonstrate the benefits of free-trade, they hold up poster child Harley-Davidson, who was yanked from the Japanese jaws of death and a shrine for the ever faithful.

Today was no exception as Bush stumped on global trade and discussed how it “mostly helps” American workers during his speech on the Columbian Trade Agreement.  

The Wisconsin 6th District Congressman Petri was in attendance because he believes that Harley’s are a product that people around the world ought to be able to drive by making it more affordable.

Then pointing to the Motorcycle on the South lawn – Bush stated;

“…that motorcycle right there — 20 percent more expensive in Colombia, 8 percent more in Korea, and 15 percent more in Panama.  And so the purpose of a trade agreement is to reduce those tariffs; is to make the products less expensive.” He continued with “So if we get the deal done with Colombia, that motorcycle will be $4,000 less expensive,” Bush said. “The great quality of Harley will be the same. There will be no diminution of how cool one is when they drive a Harley. (Laughter.) But it’s going to be easier for somebody to buy it.” 

In his second year serving on the Bush appointed International Trade Advisory Board, Harley’s CEO Jim Ziemer must be feeling pretty special that his company is sharing the international presence spotlight!  All of this is like a perfect storm…Harley announced plans to reach out to customer groups that were not its traditional fans – women, young people, and minorities along with a shift from “pull” to “push” marketing. 

I would anticipate that South America has just as many mid-life testosterone driven, on their 3rd marriage buyers as the U.S. so why not push a policy of price parity?

 

Bush touring York, PA plant courtesy of USA Today – Eileen Blaas.

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