York, PA Harley-Davidson Plant
Harley announced back in May a major restructuring of its operations in York, Pennsylvania and the possible move to another U.S. location.
The two plants in York employ more than 2600 employees. I previously posted a bit of a tongue-n-cheek letter that was picked up in the local York, PA., press which recommended H-D to consider coming to Oregon, but I never heard back from the company…
At any rate, the reasons cited (my interpretation of reports) for a potential H-D move from York were:
- Inefficiencies – it takes too many employees too long to manufacture a motorcycle
- Salaries – cost structure is too high, meaning lower wages are needed to reduce the overall cost structure
- Economy – declining sales mean further job cuts required as production/output needs to align with sales
- IAMAW – in 2007 the York plant went on strike and negotiated a 12% wage increase over 3 years. H-D received few concessions and lost 16 production days which disrupted other assembly lines. At a time when they need to reduce the cost structure by $100M one of the largest cost contributors (wages) is set to steadily rise.
Arial of Springettsbury Township H-D Plant
For those of you unfamiliar, the plant in York opened in 1973, however, some of the buildings date back to World War II. It is the largest H-D manufacturing facility and the Softail factory recently received a $145M upgrade investment. The plants cover 230 acres and have over 1.5 million square feet under roof where the workers assemble the Touring and Softail models as well as “SE” limited production factory-custom motorcycles. This plant also has the dubious honor of being the most visited by a sitting U.S. President (Bush and Clinton) who’s administration’s leveraged the plant for free-trade discussions.
It’s been reported that after a week of H-D executives visiting various locations the short list was announced as four possible sites. Drum roll please…… they are:
- Shelbyville, Kentucky, located between Louisville and Lexington;
- Murfreesboro, Tennessee, located just southeast of Nashville;
- Shelbyville, Indiana, located southeast of Indianapolis;
- Kansas City, Missouri where Harley already has a major facility
It’s no accident that two of the four states (Tennessee and Indiana) vying for the new factory are right-to-work states and will have offered H-D numerous incentives to relocate. I would imagine items like Investment Advantages which allows for the waiver on income/excise/sales taxes etc.; Enterprise Zones which provide property tax incentives or abatement; Vocational Rehab Services for employees who need relocation training etc., and the concession list surely goes on. And at the same time officials in PA., are working feverishly to convince H-D to stay although they don’t have a blank sheet of paper to work from and it may limit what they can offer up. In 2008, Harley employees paid over $2M in local taxes and should the plant relocate it would be a major budget hit to the municipalities. The H-D “spin machine” continues to state that staying in Pennsylvania is the preferred option, yet in the same breath they also cite inefficiencies and cost structure issues with the York facility.
You know the mood these days isn’t just about banks or exec bonuses being Public Enemy No. 1. I think what disturbs Americans of all ideological persuasions is the fear that almost everything, not just government, is fixed or manipulated by some powerful hidden hand, from commercial transactions as trivial as the sales of a Seahawk football ticket to cultural forces in the news media. What this recession has crystallized for many of us is the sinking sensation that the American game is rigged — that the system is in hock to “the interests of powerful lobbyists or the “wealthiest few” who have run the “system” too long.
It’s hard to avoid the sense that H-D is wasting time trying to appease people who can’t be appeased. Is H-D really committed to moving the York plant or is this about the art of a negotiation… where they preview and think about taking every new concession. Isn’t it really just an indicator that any state can be punked?
York Plant photo courtesy of H-D.
Northwest Harley Blog 