The confirmation comes on the heels of yesterday’s approval of a new contract by York County Harley-Davidson union workers that would cut the current workforce in half but keep the company in Springettsbury Township. The proposal was endorsed by 89% of voters and served as an impetus for Harley’s decision to remain in York as a vote by H-D’s Board of Directors was not expected until Dec. 10.
“A restructured York operation will enable the plant to be competitive and sustainable for the future, and the new labor agreement is critical to making that happen,” said Keith Wandell, President and Chief Executive Officer of Harley-Davidson, Inc. “On behalf of the Company, I want to thank the employees at York for their vote to make the changes necessary to create a more flexible and efficient operation, and we look forward to moving ahead together to achieve that goal.”
Restructuring of the plant means consolidating operations under one roof and focusing on the core areas of motorcycle assembly, fabrication and paint. Whether it will continue to produce Harley’s Touring and Softail models was not announced. The facility is projected to be fully operational under the new plan by 2012 with restructuring costs estimated at $200 million. H-D expects to make additional capital expenditures during that time of around $90 million. On the flipside, the restructuring is expected to produce approximately $100 million in annual operating savings in comparison to the current structure. Harley-Davidson further commented on the financial implications of the agreement, stating:
“On a combined basis, the Company expects previously announced restructuring activities, together with the additional restructuring of the York operations approved today, to result in one-time charges of $415 million to $445 million into
The Vaughn L. Beals Tour Center is a popular attraction to the streams of tourists that visit the York plant.
2012, and to produce annual ongoing savings of $240 million to $260 million upon completion of all announced company-wide restructuring activities. In 2010 on a combined basis, Harley-Davidson expects to incur restructuring charges of $175 million to $195 million and related savings of approximately $135 million to $155 million.”
The decision ends months of speculation as to what the fortunes of the storied York plant would be. Opened in 1973, the York plant is a popular tourist attraction, with daily tours and motorcycle displays at the Vaughn L. Beals Tour Center. It’s also hard to quantify the financial impact losing 3,000 jobs would have on a community whose population was listed at 41,000 in the 2000 census.
Harley-Davidson considered moving the plant to Shelbyville, Kentucky, as both Kentucky and Pennsylvania began offering financial incentives in their attempts to sway H-D’s decision. Harley CEO acknowledged the efforts of both state’s governors in today’s announcement.