Wisconsin is offering Harley-Davidson up to $25 million in tax breaks after The Motor Company stated it will keep its Tomahawk and Menomonee Falls plants open.
Wisconsin has offered Harley-Davidson up to $25 million in tax credits days after The Motor Company agreed to keep its Tomahawk and Milwaukee plants open. The decision to stay in Wisconsin was made after workers approved a seven-year contract that freezes pay and cuts hundreds of jobs while delegating other assignments to part-time employees.
Wisconsin Gov. Jim Doyle made the announcement September 17th, four days after Harley workers ratified the latest contract. The incentive package gives H-D up to $25 million in Enterprise Zone tax credits over a nine-year period in exchange for Harley keeping jobs in-state and making capital investments. The state’s offer was based on the number of manufacturing jobs at risk, roughly in the area of 900 full-time union employees. The tax credits are related to Harley’s employment levels, capital investments and purchases from in-state suppliers.
“Through hard work and cooperation Harley-Davidson will keep its production operations open in Wisconsin, and keep hundreds of jobs in this state – both at Harley and their suppliers,” Doyle said. “This has been a challenging time for Harley and its great employees, and I want to thank everyone who came together in difficult circumstances to ensure this iconic Wisconsin company stays in Wisconsin.”
“The state has worked closely with Harley-Davidson to bring about a good outcome in this tough situation. I personally spoke with Harley’s CEO, and the state has offered a strong $25 million incentive package to help the company stay in Wisconsin. The incentive package created by the state consists of tax credits primarily linked to jobs at Harley, and with their Wisconsin suppliers.”
Harley-Davidson had threatened to move its production operations to another state if the new labor contracts were not passed. The contract called for the cutting of 325 unionized jobs, but keeps about 1,000 full-time union workers employed. The company’s new leaner, more flexible business model will utilize more seasonal “casual” workers during peak production periods. Now The Motor Company has two of the successions it perceives as necessary in order to reduce labor costs and return to profitability.
“Together with our employees we are making the changes necessary for us to compete and win in a global marketplace. We have worked closely with the state of Wisconsin and we appreciate their efforts to foster a competitive business environment that will help us succeed here long term. As we look to the future, we are confident that Harley-Davidson will be as great going forward as it has been in the past,” said Harley-Davidson CEO, Keith Wandell.
Offering big businesses tax incentives to keep their base of operations in-state is a common practice. The offer Harley-Davidson received is smaller than the package Wisconsin extended to Mercury Marine Inc. last year for expanding its Fond du Lac operations instead of moving to Oklahoma. Mercury Marine was pledged up to $70 million in state tax credits, plus a $50 million loan funded by an increase in the Fond du Lac County sales tax.