Harley-Davidson reached an agreement with union employees at its Kansas City plant on Monday.
The move will allow Harley to save about $15 million per year and implement a new production system, according to a press release from the company. The new seven-year labor contract goes into effect Aug. 1 and will be implemented in phases. The compensation and benefits component will take effect in August 2012, when the current contract was set to expire.
The Harley-Davidson Operating System, a new, standardized production system, will be implemented at all of the company’s production facilities beginning Aug. 1. The new system will allow for flexibility of seasonal and volume-related production changes, more product mix, customization and efficiency, according to the company.
“Together with our unions, Harley-Davidson is making the necessary changes across all our production facilities to succeed in a competitive, global marketplace,” Keith Wandell, president and CEO of Harley-Davidson Inc., said in a press release. “The company is well on its way to building a world-class, sustainable, lean operating structure, and I want to thank our employees at Kansas City for their participation in this journey. The ratification of the new contract will help ensure that we can continue to meet and exceed the expectations of our customers.”
With the new production system, Harley will have 540 full-time hourly, unionized employees in Kansas City, compared to the 685 that work there currently. It will also have on staff 145 flexible union workers, who will cover shifts during high production times and during other employees’ vacations and other absences. Had employees not reached a new agreement, Harley was looking to move the Kansas City operations its facility in York, Pa., according to the Kansas City Star.
Starting in 2013, Harley-Davidson expects to save $15 million annually in Kansas City with the new contract, though the International Association of Machinists told the Kansas City Star in January that the company was looking for $25 million in savings. With the Kansas City contract, and those in York, Pa., Milwaukee and Tomahawk, Wis., settled, Harley expects to spend a one-time $510 million-$525 million, while saving $305 million to $325 million per year, according to the company.
More information about the deal can be found at http://investor.harley-davidson.com/Events.cfm.