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THE BUSINESS JOURNAL OF MILWAUKEE – BY Rich Rovito
Harley-Davidson Inc. has been inundated with calls from municipalities across the country interested in trying to lure the Milwaukee motorcycle manufacturer to move its production facilities from Wisconsin.
Moving production out of Wisconsin remains under consideration as Harley-Davidson management continues to study ways of making the company’s operations more competitive, said Keith Wandell, Harley-Davidson’s president and chief executive officer. At stake are nearly 1,700 jobs, including more than 1,300 in the Milwaukee area.
“We can’t turn our back on that as an option,” Wandell said in an interview with The Business Journal.
Although maintaining its Wisconsin presence remains the preferred option, Harley-Davidson management will give serious consideration to moving if goals for improved cost controls and efficiency aren’t met.
“It’s fair to say that our preference would be to stay here,” Wandell said. “Having said that, we’re going to have to find ways to deal with those competitive gaps. We’re coming to a conclusion here, but we’re not done yet. Soon we’ll have an answer about what we believe that gap is.”
Company management then will begin talks with the labor unions that represent workers at Harley-Davidson’s plants in Wisconsin. Gaps pertaining to costs and benefits must be addressed, as does flexibility pertaining to work rules, Wandell said.
“We are a seasonal business,” he said. “Given the work rules we have today, we have to go through inefficient periods of inventory builds. We have to find ways to be more flexible and be more in line with demand.”
The company has begun the process of identifying potential out-of-state sites in the event agreements can’t be reached with local unions. Wandell declined to disclose any sites that had been offered or what municipalities had contacted the firm.
Wandell hasn’t had any direct contact with officials from other states, who he said are being funneled through a process.
“Don’t get me wrong. We don’t say we’re not interested,” he said. “We say ‘Let’s get you in touch with these people and we’ll put you through the initial screening process and if you make it through that we’ll go on to the next step.’ The last thing I want to do is get involved in these conversations.”
The competitive gap will be narrowed to some extent when Harley-Davidson completes the consolidation of its Wauwatosa powertrain operations into its Pilgrim Road facility in Menomonee Falls.
“That’s certainly part of it, but it doesn’t get us where we need to be,” Wandell said.
The company also recently undertook a major restructuring of its motorcycle assembly operations in York, Pa., which it launched after conducting an analysis similar to the one now being conducted in Wisconsin.
After a seven-month process, Harley-Davidson decided to remain in Pennsylvania, but only after reaching an agreement with union-represented workers that will slash the work force from 1,950 employees to about 1,000 hourly workers. Several buildings at the York complex are being shuttered as a result of the outsourcing of nonessential operations.
Harley-Davidson had considered moving manufacturing from York to a site in Shelbyville, Ky., before reaching an agreement with the union representing workers in Pennsylvania.
Wandell said he’s had brief conversations with Milwaukee Mayor Tom Barrett and Milwaukee County Executive Scott Walker about the issue, but has had no direct conversations with Gov. Jim Doyle.
“The last thing we want this to be is anything to do with politics,” Wandell said. “This is our issue. It’s what we need to do in our company to secure our future.”
Harley-Davidson management said it isn’t interested in talking with political leaders about possible financial incentive packages until it addresses its own internal issues.
Nevertheless, the potential loss of Harley-Davidson has local political and business leaders scrambling to keep Harley-Davidson from moving manufacturing out of the region where the company was founded in 1903.
“We are standing at the ready,” Barrett said. “We continue to remain in contact with the company, but this is a labor relations issue at its core.”
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