Harley-Davidson warns employees it might move Milwaukee operations if it can’t lower costs

Harley-Davidson may leave Wis. if costs don’t fall

MILWAUKEE — Motorcycle maker Harley-Davidson Inc. warned its employees Thursday it could move its Wisconsin manufacturing operations to another U.S. state if it can’t cut millions of dollars in costs.

A recent analysis found a number of significant “cost gaps” that must be filled for the company to remain competitive, Harley spokesman Bob Klein said. The largest gaps involved labor costs and scheduling flexibility, Klein said.

“We’ll be talking with the unions about how to close those competitive gaps,” he said.

One of Harley’s largest unions, the Local 2-209 chapter of the United Steelworkers International Union, did not immediately return messages seeking comment.

The Wisconsin plants at risk include its powertrain operations in Milwaukee. Those operations, with about 1,320 employees, are already being consolidated, and company officials have said the move would result in an unspecified number of job cuts.

The other Wisconsin plant, in Tomahawk, makes components including motorcycle windshields. It has about 375 workers, Klein said.

Even while holding discussions with union leaders, the company plans to look at sites in other states, Klein said. He declined to say which states, or how many sites, were under consideration.

The announcement was first reported by the Milwaukee Journal Sentinel.

Milwaukee Mayor Tom Barrett pledged in a statement to do everything he could “to ensure Harley-Davidson remains a proud Wisconsin company for generations to come.”

The Milwaukee-based company has been struggling with sluggish sales, particularly of its high-end bikes. It reported last week that its first-quarter profit plunged 72 percent from the same period last year, while revenue dropped 19 percent. Retail sales of its heavyweight motorcycles fell more than 18 percent worldwide, the company said, with sales in the U.S. falling by nearly a quarter.

In December, Harley and its union agreed to a seven-year contract at its main motorcycle assembly plant in York, Pa. Under that contract, Harley would shut down one of two factories there and lay off nearly half the unionized work force of about 1,950 employees.

Harley-Davidson has many factors working against it in the U.S., including an aging customer base and growing competition from rivals. The company has long said it is focusing more attention and investment in markets overseas, where it has more room for growth.

Harley shares rose 83 cents, or 2.4 percent, to close at $35 on Thursday. Shares have traded in a 52-week range of $14.99 to $36.13.

On the Net:

Harley-Davidson: www.harley-davidson.com/