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

  • Scooter2

    Who cares? I am not interested in Harley Davidson’s outdated & overpriced motorcycles so they can build the dam things where ever they want. Besides, I would not look good in the standard Harley pirate outfit anyway. I am too young and I don’t have any tattoos, beer belly or pony tail.

  • Hayabrusa

    I agree -who cares! Having H-D move production to India, China, etc., only cheaapens the brand, so if they are willing to tarnish their own image, more power to them! I’ll stick with my BMW.

  • Willie

    Whatz a pig apologist gonna do now ?

    To an earlier Ed. post on HD’s future: again, there is no plan other than to play out the Hell’s Angels schtick in whatever market will fall for it.

    The stock is still dead money, below levels of 10 years ago.

    What’s the point of even following this story ? It can’t even generate a rant from posters anymore.

    Got any Triumph news ?

  • Odie

    Oh, imagine what the Harley True Believers are gonna say to $20,000 1950’s tech POS bike made in INDIA. Maybe they should change the name to “Hardly Davidson”.
    What a joke.
    Regardless if EBR actually makes it as a company, Erik will be able to say “Well, at least people respect me”

  • Odie

    Wait, doesn’t HD stand for Hard Drive? Who is this “Harley Davidson”? Isn’t that a clothing company?

  • R1 owner

    Just like Scooter markets and sport-bike markets, the cruiser market will be around forever. The trouble is that the Japanese actually make a “better” bike. Harley has it’s followers and will only be around forever if they run there business right,, which is to say, scale down. They need to break away from the union because American Unions create an unnecessary high cost of doing business. They add an additional 10% operating cost compared to a union-less employee business. Unions helped bankrupt our American car companies. Ocean port unions have exclusively caused out of control shipping charges. Unions are Harley Davidsons biggest problem.

  • irksome

    Yeah, blame the unions for HD’s (and GM, Chrysler, Ford) for being top-heavy companies that are glacier slow at responding to market changes. Blame the HD unions for paying tens of millions for MV and then selling it back (to the same guy they bought it from!) for a dollar. Blame the HD unions for having a product line heavy on models/initials but light on technology development. HD’s unions aren’t blameless but the problem lies in the board of directors, not the shop floor. Maybe they should hire the MV guy (instead of the blue jean guy). HE knows how to make a buck! … Oh and Willie (above); Triumph is STILL turning a profit and still getting MY business.

  • Tom

    People who blame the unions are simply ignorant about the reality of doing business against the Western World. Japan has unions that are more powerful than any in the US as does Germany and Italy. yet, motorcycle (and car) manufacturers from these countries can make cars at a profit despite having powerful unions and higher taxes. How can this be? A major reason is health care costs. Yes conservatives, if you really want to help American business, you’d support universal healthcare. But, conservatives value their political ideology over what actually just works to help you win. They’d rather engage in an argument in order to feel righteous than do what works to outcompete foreign competitors.

  • Willie

    Guess I was premature on the “can’t even generate a rant” thing.

    And Irksome, I LIKE Triumphs too. Even owned a few. Will probably try the Tiger 800.

    I’m an old guy (just got my 1st social security deposit) but I’ve long accepted that “tradition” can’t compete with
    new and improved in motomarketing. The seminal change in motorcycling may well have been initiated by the British bikes of half a century ago.

    The lesson to take from HD is age old: adapt or die. RIP HD. It was fun. At least back then.

  • 76

    Blame? if you want to place it look to the bloated bureaucracy that the United States business model has become. Once they were a success, then they where a bankable because of namesake, then the namesake alone would not do as others passed. Then they made things cheaper, then nobody wanted their POS. What is incredible is most of these companies have the best talent money can buy. Then the take that talent and say, your wrong, it does not match the previous business plan, or the last focus group they conducted, or simply the fact the VP’s kid dosent like red so in turn all of gen Y dosent like red. We spend more time figuring out how to make the work place equal & fair than we do focusing on the product…

    You know how many training classes I have had on ethics, culture, harassment, saftey in 2 years….
    You know how many classes I have had focused on making what I do actually better?

    You figure it out, unions are just an easy scapegoat, sure, not blameless but nothing close to the Lawyers and never ending wisdom guiding these companies with leaders made of straw and egos that can sink a ship.

  • Jim

    It’s difficult see a business scenario in which HD remains an independent company short of the company becoming a rich man’s bauble in the manner of professional sports teams. The demographics of the HD buyer, the lack of investment in new product to broaden the base, the reality of the demographic challenges facing the entire MC industry in an economic environment that isn’t going to be robust soon, are all against it.

    Five years from HD will be a subsidiary of some corporate roll-up focusing on life-style brands, think of it as a modern AMF if you will. It will creak on making a small profit but the swagger will definitely be gone.

  • Scooter

    Harley markets there crap to the 50’s and 60’s bikers who like to buy into the “lifestyle”. These people do not care about technology or they would not be riding an outdated motorcycle. They care more for the leather chaps, do-rags, and other Harley “stuff”. They like to “feel bad ass” by riding around making a lot of noise and looking tough in there Harley Village People outfits. If there was a nation wide helmet law and a nation wide noise ordinance then Harley would be out of business. Most of the Harley riders only buy the bike because they think it sounds cool with out a muffler. Maybe Harley can get the people in India to like pirate outfits too!!!!!!

  • Rg

    R1 cracks me up with the sameole conservarant, so predictable.
    its always the guys that work the tools earning $30 an hour dragging a company down, never the upper management types paying themselves $5,000 an hour.
    whats your real name R1, Keith Wandell?

  • Willie

    Who did the Money Skull graphic ?

  • Westward

    Harley Davidson, ride American – made in India… LoL

    Blaming the unions for fighting for the the value of an american worker is down right evil in my opinion. Sure they can go to India and take advantage of their people. but then too they have some sort of universal healthcare.

    Maybe if we weren’t the only industrialised nation without it, the unions wouldn’t always have to fight for it with employers. Then the only battles would be working conditions, vacations, and termination disputes…

    BTW – Im not nor have ever been in a Union, its just my impressions as an outsider. Plus I don’t ride a Harley anyways, so like the others on here, I really don’t care…