Harley’s Kansas City Workers Approve Contract

February 28, 2011
Bryan Harley
Bryan Harley
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Harley Davidson Motorcycles
Workers at Harley-Davidson’s Kansas City, Mo. plant agreed to the terms of a new seven-year labor agreement today.

Workers at Harley-Davidson’s Kansas City plant agreed to a new labor agreement today in a move to save their jobs. Employees had been told by The Motor Company that production in KC would be moved to its facility in York County, Pennsylvania if concessions couldn’t be made. The same method of bargaining went down at Harley’s plants in York back in December 2009 and at both its Milwaukee and Tomahawk, Wisconsin-based plants last September.

Kansas City’s unionized employees ratified a new seven-year labor agreement allowing Harley to move forward with plans for a new production system. According to the official press announcement, “The new labor agreement with employees represented by the International Association of Machinists and Aerospace Workers (IAM) Local 176 and the United Steelworkers (USW) Local 760 takes effect Aug. 1, 2011 and will be implemented in phases. Implementation of the Harley-Davidson Operating System — a new, standardized production operating system being introduced across all company production facilities — will begin at the onset of the agreement, while the compensation and benefits component generally takes effect starting in August 2012, after the current contract was originally set to expire.”

The concessionary contract comes at the price of about 145 full-time jobs as H-D expects to trim down to approximately 540 full-time hourly unionized employees at the KC plant, compared to around 685 full-time unionized workers currently on the payroll. Some of those will be transitioned into the 145 flexible positions Harley intends on utilizing. Flexible positions are filled by unionized employees who work when needed, depending on seasonal or sales-based demands in addition to covering for vacations.

With the new production system, Harley expects “to provide greater flexibility for seasonal and other volume-related production changes, an enhanced ability to vary product mix in line with customer preferences including the customization of motorcycles at the factory, and greater production efficiency overall.”

“Together with our unions, Harley-Davidson is making the necessary changes across all our production facilities to succeed in a competitive, global marketplace,” stated Keith Wandell, President and Chief Executive Officer of Harley-Davidson, Inc., in official company PR. “The Company is well on its way to building a world-class, sustainable, lean operating structure and I want to thank our employees at Kansas City for their participation in this journey. The ratification of the new contract will help ensure that we can continue to meet and exceed the expectations of our customers.”

Harley anticipates the operational changes in Kansas City will generate annual operating savings in the $15 million range in 2013 after the first full year in which the agreement is fully implemented. Until then, H-D expects restructuring charges related to the changes at Kansas City will cost approximately $15 million in 2012.

Negotiators reached the new agreement last week, but it did not receive majority union approval until today.

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