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-Davidson Creates Rumble With Kansas City Layoff Notice

From 2012 Annual Report — “For employees at the Kansas City, Mo., plant, building bikes is more than just a job.”

Falling sales and rising profits.

It’s a contradiction that many companies experience and one that Wall Street is impressed with if the HOG stock price is any indicator.  It closed at a 52-week high ($59.48) today.

Despite the surging profit in Q1, WDAF-TV in Kansas City is reporting today that H-D plans to lay off between 130 and 140 employees effective June 30th.  Seventy-five of the workers are “casual-employees” or seasonal workers who typically help during a surge in production.  The remaining employees that will be let go are full-time.  The Kansas City plant produces the Sportster, Dyna and VRSC models.

Harley management has consistently stated a restructure goal to have a more flexible work force and to permanently be in a position to generate strong profits on a lower revenue base.  You might recall the restructure move is all part of a new labor agreement signed in February 2011 that went into effect in August 2012.  The agreement included reducing the overall full-time employment at the plant to about 540.  Harley-Davidson management advised Kansas City workers that if they didn’t agree to the concessions, the plants work would be moved to York, PA.

It now seems that H-D is conserving cash and keeping a close eye on production.  It might be because there continues to be uncertainty about the stability of the recovery or it’s as simple as they’ve reached the end of their 2013 production run.

In the TV video the interviewed employee, Benjamin Stark stated that workers were walking around like zombies.  Not good.

American businesses have gotten used to being much leaner and the joblessness shows only a few signs of easing.  There is nothing I can say that will help ease the effects of being laid off, but I sincerely hope everyone affected rebounds quickly.

Photo courtesy of H-D.

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Harley-Davidson Fond of York

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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Harley-Davidson Contract Surfaces

International Association of Machinists and Aerospace Workers

The York Daily Record reported that union workers at the Harley-Davidson Springettsbury Township operations got their first look at a proposed contract that if approved will stop the motor company from relocating the York Vehicle Operations to an alternative site in Kentucky.

You can read the detailed contract highlights HERE.  Briefly, it’s a 58 page document that covers the next 7 years.  H-D will commit to investing up to $90 million to restructure the operations and stop efforts to relocate to Kentucky.  For those workers who lose their job as part of the restructuring there are a number of alternatives from lump-sum payout to volunteering for the reduction and receiving benefits if they lose their job.  Workers received copies of the contract today at the Toyota Arena where members met. They will vote to ratify or turn down the deal on December 2nd.  The company has until December 12th to approve.

Reading the “tea leaves,” I anticipate the International Association of Machinists and Aerospace Workers (District 98) will ratify the new contract.  Do they have any other choice?  The company has worked all angles during this down economy to their advantage and will obtain significant concessions from the workers who need a job.

UPDATE: December 3, 2009 — H-D announced the union ratified the 7 year labor agreement.

Photo courtesy of IAMAW

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