In quest for lower costs, Harley-Davidson considers leaving Milwaukee after 107 years

After 107 years in Milwaukee, Harley could leave

MILWAUKEE — It’s the roar that made Milwaukee famous — the distinctive throaty rumble of a Harley-Davidson motorcycle. But that much-loved racket could be rumbling away to another state if the company cannot bring down its labor costs.

Harley-Davidson warned employees in April that it will move its Wisconsin manufacturing operations elsewhere if it cannot cut millions of dollars at the factories that build the bikes known as “Milwaukee Iron.”

Harley’s corporate headquarters would remain here, but that’s small consolation to a community that has already endured repeated blows to its civic identity.

“When you think of Milwaukee you think of beer, brats and Harley-Davidson,” said Steve Daily, a researcher at the Milwaukee County Historical Society. “Right or wrong, that’s what it is.”

But that’s been changing. For example, the corporate parent of beer giant Miller parent moved its U.S. headquarters to Chicago in 2008 after joining its domestic operations with Molson Coors Brewing Co. Then there was Schlitz, which billed itself as “the beer that made Milwaukee famous” until financial and labor problems forced it to sell out to a Detroit company in the 1980s.

That leaves Harley-Davidson Inc. as the city’s lone signature brand. It’s also a magnet for tourists, many of whom want to visit the factories where Harley engines are made.

“We get asked frequently where the plants are,” said Paul Upchurch, the president of the VISIT Milwaukee tourism bureau. “A lot of people around the world associate Milwaukee with the home of Harley.”

Harley chief executive Keith Wandell said the company will make its decision on whether to move in the next two months. Harley executives are already scouting out other states, though Wandell will not say which ones.

The company, he said, would also be open to incentives to keep the 1,630 manufacturing jobs in Wisconsin. But the idea that it could move production elsewhere stuns many Harley loyalists.

“You can’t describe it. They’ve got so much history here. They’ve just become the blood of the community,” said Tom Steepy, a lifelong rider and the director of the suburban Milwaukee chapter of the Harley Owners Group, or HOG. “If they moved their manufacturing, it would just create a void you can’t fill.”

Harley has been a local fixture for more than a century. It all started in 1903 when 23-year old William S. Harley and 22-year old Arthur Davidson began selling motorcycles built in a cramped wooden shed.

The company later built motorcycles for the U.S. military in both world wars, which helped introduce the bikes to a global audience that saw them as an American icon.

“They symbolize the classic American values of independence and hard work, freedom, all those values,” said Kanti Prasad, a marketing professor at the University of Wisconsin-Milwaukee business school. “Harley-Davidson is a uniquely American phenomenon.”

And a Milwaukee phenomenon. Prasad said when he travels to Europe, China or Japan most people respond blankly when he says he’s from Milwaukee. Then he points out it’s Harley’s hometown and their faces light up with recognition.

As storied a company as Harley has been, it’s weathered some rough spots, too, most notably in 1984, when a banker had the option of allowing the company to refinance a $90 million loan or forcing them to declare bankruptcy.

At the last minute, the banker allowed the company to refinance. According to the story, it’s because he owned a Harley.

The famed motorcycles have also had a long history with Hollywood. They’ve appeared in films from “Easy Rider” to the more recent “Simpsons” movie. Elvis Presley rode one. And so did the Fonz in the very early episodes of “Happy Days” — the classic TV sitcom set in Milwaukee.

So if the Milwaukee-Harley marriage is so solid, how could the company even think of straying?

Company spokesman Bob Klein said Harley wants to remain faithful, but its production schedule needs to be more closely aligned with seasonal demand, a change that would require approval from labor unions.

Negotiations with the unions began in late July. The president of Harley’s largest union did not return multiple messages seeking comment.

Prasad, the UW-Milwaukee professor, doesn’t see Harley’s threat to move simply as a negotiating tactic. A company with a 107-year history is more concerned with the next 100 years than with making idle threats to extract short-term advantages, he said.

Harley benefits the city’s image and its bottom line. When the company turned 105 two years ago, some 100,000 fans from around the world joined the Milwaukee celebration.

But even if Harley’s production goes elsewhere, there’s still a tourist draw here — the popular Harley-Davidson Museum. Whether that’s enough to help Milwaukee cling to the brand that keeps it on the map is another question.

Either way, the loss of Harley production would be another painful drop of water in the erosion of the city’s proud working-class history, Milwaukee historian John Gurda said.

“It’s important to have that identity. You need a certain level of civic self-confidence,” Gurda said. “And Harley-Davidson, that’s a brand that’s been imprinted on America’s imagination unlike any other Milwaukee-made product.”

Online:

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