H-D looks beyond Milwaukee for new engine plant – November 13, 2006
Harley-Davidson Motor Company plans to build an additional U.S. manufacturing and assembly plant outside of Wisconsin for expanded production of V-twin engines and transmissions.
The announcement follows an Oct. 16 vote by members of Harley-Davidson’s largest Milwaukee union, the United Steelworkers (USW), not to accept a plan the company says would have expanded capacity in Milwaukee through cost reductions and improved manufacturing flexibility.
The union said it rejected Harley-Davidson Inc.’s request for lower wages for new hires and reduced benefits in exchange for expanding facilities.
Harley-Davidson says its annual shipments of models containing Big Twin engines have nearly tripled in the past 10 years. The company invested $175 million in V-twin production in the Milwaukee between 2004 and 2006. The Twin Cam 96 was launched this past July.
Harley-Davidson said jobs of current Milwaukee production workers are not at risk in the plan to build a new plant elsewhere in the United States. Harley-Davidson currently has powertrain manufacturing operations at Wauwatosa and Menomonee Falls, Wis., and Kansas City, Mo., final assembly operations at York, Pa., and Kansas City, Mo.; and components manufacturing at Tomahawk, Wis.
Harley-Davidson says it had advised its unions of the need to add capacity and to do so in a way that would significantly reduce future costs and improve flexibility. The USW subsequently asked the manufacturer to identify the specific wage, benefit and work rule changes that would be needed to keep the expansion in Milwaukee, so that it could consider whether to seek the additional work.
Among other things, those wage and benefit changes would have included a reduced wage rate for new union workforce hires, and migrating union employees to a health care plan that achieves cost savings while still providing a premium level of service.
“We’re disappointed with the vote, but we need to address capacity, cost and flexibility in tandem,” said Rod Copes, vice president and general manager of Harley-Davidson’s Pilgrim Road Powertrain Operations in Menomonee Falls. “The proposal the union voted on would have made expansion here comparable to what we can achieve in a new unionized plant in some other part of the U.S.”
“Harley-Davidson is very successful today and all of us want to keep it that way. That means being good stewards and actively managing costs across the entire organization that could be detrimental to our business over the long term if we don’t start to control them now,” said Copes.
Harley-Davidson said its next move is to work with unions to find the best possible U.S. location for the new engine and transmission plant. psb
