Harley-Davidson Turns Down $25 Million Tax Credit

11/15/2010 @ 8:56 am, by Jensen Beeler15 COMMENTS

Two months ago when Harley-Davidson stuck an ultimatum to its union workers, the company asked for work force concessions while it threatend to move production out of its Tomahawk and Menomonee Falls. Hoping to help sway the vote and keep Harley put,┬áthe State of Wisconsin extended Harley-Davidson a $25 million tax incentive to help lure the company into keeping production at its Wisconsin facilities. While the unions eventually caved to Harley-Davidson’s will, the Bar & Shield company announced today that it will not be taking Wisconsin up on its offer for tax breaks.

With Wisconsin’s tax credits tied to Harley-Davidson’s employment levels, capital investments, and purchases from over 100 Wisconsin-based suppliers, Harley-Davidson would only receive the full tax credit if it met all of Wisconsin’s requirements. While the company does not plan to move its production outside of Wisconsin, Harley-Davidson is clearly still hedging its bets on its employment levels inside the state, and its overall long-term strategy with its workers.

The deal that Harley-Davidson brokered with its union workers left an out for the Milwaukee company to still move production outside of Wisconsin, only committing to the fact that if union workers did not agree to the labor concessions, the company would look elsewhere for its production and assembly. During that negotiation, Harley-Davidson made no guarantees that it would keep its Tomahawk and Menomonee Falls facilities open once the deal was done, which effectively meant the unions gained only time, and not security for its workers.

All of this comes just a week after Harley-Davidson announced that it would relocate its final assembly for motorcycles sold in the Indian market, a move which would allow Harley-Davidson to sidestep the country’s burdensome tariffs. Harley-Davidson is clearly now realizing that it cannot support its entire production needs inside of Wisconsin, and if the company is to continue moving forward, it will have remain operationally flexible in the future, something Wisconsin’s tax breaks would not have allowed.

Source: Milwaukee Journal Sentinel