The economic outlook for Harley-Davidson right now is not looking good. Just last year, the Bar & Shield brand cut 118 jobs from its plant in York, citing the need to cut production costs, and to reduce factory capacity so that it was more inline with consumer demand. That demand has seemingly dropped even further though, as Harley-Davidson will cut 260 jobs from its production ranks, losing roughly 800 positions in Kansas City, but adding 450 positions back to its York facility, where it is consolidating. The news comes as part of Harley-Davidson’s recounting of its rough go at 2017. The American brand saw its sales in the United States down 8.5% (down 6.7% worldwide), with the fourth quarter of the year taking a particular beating: down 11.1% in the USA (9.6% worldwide).
Two labor unions have ended a partnership agreement with Harley-Davidson, citing differences with how the Bar & Shield brand handles staffing issues at its factories (Harley has been accused of replacing hourly union workers with temporary seasonal workers). The move comes after a meeting on Monday, which saw leaders from the International Association of Machinists & Aerospace Workers (IAM), United Steelworkers (USW), and Harley-Davidson President & CEO Matt Levatich unable to agree on how to handle staffing issues going forward. While the disagreement ends an accord that has existed between the unions and Harley-Davidson for the past two decades, it does not affect the collective bargaining agreement that the unions have with Harley-Davidson, which has been incorrectly reported elsewhere.
Ducati Motor Holding has reached a new agreement with its workforce, particularly those workers who are responsible for building the Italian company’s iconic two-wheeled machines. The agreement with the unions sees 13 new jobs created in the Italian factory, which will now stay open on seven days a week — a big move for a country that is usually resistant to working on Sunday. The factory workers will also go from 15 to 21 shifts per week, with a format of three days on, and two days off. In exchange, factory employees will work fewer hours per week on average, though will make higher average wages for their time.
Last week Harley-Davidson reached a deal with the leadership at the International Association of Machinists and Aerospace Workers (IAM) Local 176 and the United Steelworkers (USW) Local 760 labor unions, but details on the deal were under wraps until the labor unions’ membership at Harley-Davidson’s Kansas City plant could vote on the deal. Ratifying the seven-year contract, Harley-Davidson will be implementing a new production operating system that is being rolled out across all of Harley’s production facilities, including the Missouri plant.
While Harley-Davidson’s new production system is expected to provide greater flexibility for seasonal and other volume-related production changes, it will also allow for great flexibility in customizing customers’ bikes directly on the assembly line. Harley-Davidson has been touting its H-D1 factory customization service, and this new production system would appear to be the back-end changes necessary to make that program possible. We imagine the union members cared less about this added flexibility in Harley’s production line, and were instead more concerned over the 145 workers who would be moved from full-time positions to flexible positions.
Get ready to pour some peanut sauce on your spaghetti as Bologna Bullets destined for the Southeast Asian markets will soon be produced in Ducati’s newly planned factory in Thailand. Being called a “final assembly” plant, the move is similar to the one that Harley-Davidson undertook late last year, where the Bar & Shield brand setup an assembly plant in India in order to side-step the extremely high tariffs the country puts on foreign-made motorcycles. In addition to Harley-Davidson, Ducati will be joining the likes of Honda, Yamaha, KTM, and Brembo, all of whom have increased their presence in the Asian markets within the past year to capitalize on the growing economies of India, China, and Southeast Asia.
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, the 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.
Through an Enterprise Zone tax credit, the Wisconsin Department of Commerce has handed Harley-Davidson a $25 million tax break for coming to terms with its labor unions in the company’s Tomahawk and Monemonee Falls production facilities. In a move that saw unions cave to Harley-Davidson’s ultimatum, the Bar & Shield brand has disclosed to the SEC that the agreement will save the company $50 million in annual operating expenses, but not before the company writes off a one-time charge of $85 million in restructuring costs, which includes the severance packages for laid off workers.
Workers at Harley-Davidson’s Menomonee Falls plants have caved to Harley-Davidson’s labor restructuring ultimatum today, voting to approve a seven-year labor contract that would see 275 jobs cut and a two-tiered workforce implemented in the company’s Wisconsin-based production plants. The vote comes after Harley-Davidson threatened to move its Wisconsin production outside of the state (Kansas City being one of the alternatives), which would see the unions losing its entire 1,350 member workforce.
After getting his first offer to purchase Moto Morini rejected by the local unions, Paolo Berlusconi looks to have overcome the setback, and could finalize the purchase of the other Bologna brand by as early as next week. This news comes after provincial administrators called an emergency meeting, which resulted in some concession by Berlusconi.
At the center of the controversy is the number of workers Berlusconi will keep on at the Bologna-based plant. According to reports, this number has been increased from 20 to 26, out of total of 57 workers who worked at the plant before it entered into receivership. This concession does not come without consequences though.
You have to love labor unions sometimes. Faced with the prospect of being completely out of work, the labor union negotiators have rejected a proposal from Paolo Berlusconi that would save Moto Morini from going completely out of business. Of course us Americans can relate to this plight, as we just recently watched the UAW try to pull the same tactic while the US automotive industry crumbled around them. The blocked agreement is obviously bad news for Moto Morini, but Berlesconi is likely not done pursuing the troubled Italian manufacturer.
Harley-Davidson is looking to slash costs wherever they may be, and that includes its assembly/manufacturing line labor costs. HD and Milwaukee go together like peas and carrots, but Harley-Davidson has warned that if it doesn’t see lowering labor costs, it could walk away from Wisconsin all-together. At issue is nearlt $54 million in what Harley calls “costs gaps”, which the company attributes to the high cost of manufacturing at its Menomonee Falls and Tomahawk facilities.