Harley Davidson is an American icon, the bike of choice for outlaws and stock brokers alike.
Hard to remember, but once upon a time it seemed like Harley was going to vanish. That'd be back in the early 1980s when the Japanese manufacturers made a big push in the States. In 1981, some members of management bought out the company and retooled it. They instituted Japanese managment methods, such as just-in-time inventory.
And they also worked to improve labor relations.
From an Oct.3, 1985 New York Times story:
Labor relations, which had been tense, softened, in part because of management efforts to maintain an open door policy and discuss employee complaints. Absenteeism has dropped sharply.
Indeed, the management tried to put more decisions in the employees' hands, by coaching them to evaluate their work and improve the quality of components. All employees, from secretaries to workers on the assembly line, get about 40 hours in training in statistics.The idea is that they then can understand better how to measure the quality of work and improvements in it.
The company says that,as a result of these changes, 99 percent of motorcycles coming off the line at the York plan are free of defects, compared with 50 percent five years ago.
Noted friend of labor Ronald Reagan noted labor's contribution to the turnaround.
"Harley's shape-up was not relying just on top management," Ronnie said during a visit to the York plant in '87. "Everyone from the board room to the factory floor was involved."(Quote from a 2/17/91 Milwaukee Journal story -- we miss ya, MJ!)
Labor relations at Harley had been a case study and grist for news stories for years. Back in September 2005, the labor group Americans Rights at Work commended Harley for its "commendable labor relations strategies that balance profitability with workers' rights, including the freedom to choose union representation."
Safe to say that era of good feeling came to an end today, when the same York plant Reagan visited twenty years ago -- the plant that makes the Touring and Softail bikes -- went on strike rather than approve a concession laden contract that would create a two-tier wage structure (i.e., new hires come in at a lower rate ... because we're a poorer country now or something).
(You may recall that Harley workers here swallowed such a deal in exchange for a promise from management that they would add jobs here.)
From the Journal Sentinel:
The proposed contract called for a 4% wage increase in each of the three contract years. Two percent of the increase depended on the union accepting the company's health care plan for salaried employees or another plan that would save the company an equal amount of money.
Currently, the union employees at the York plant pay no premium for health insurance coverage and have minimal out-of-pocket costs, according to the company.
This was Harley's response:
“We are obviously disappointed by the union's decision,” said Fred Gates, General Manager of Harley-Davidson's operations in York. “The proposed contract was structured to help manage future costs that could be detrimental to our business over the long term,” Gates said.
“While Harley-Davidson is a strong company today, we don't want to find ourselves in ten years in the same position that the Detroit auto industry is in now.”
Harley is trying to hit the right notes -- sure we're doing fine now,but, man, we don't want to wind up like Ford in 10 years ago -- but to the Brawler this smacks of bullshit.
Labor is not a blind unreasoning beast. If Harley truly felt they needed to do this to avoid financial ruin they could have brought the union in as a partner to figure out a solution. The Machinists may be tough but they're not stupid.
But that's not what Harley did. Harley in effect issued a diktat. And the workers balked because they sense this is a money grab. And the Brawler suspects they're right. (Note to any reporters who follow this story: Don't rely on analysts to deduce whether Harley is telling the truth. Talk to forensic accountant/pension expert types. Wall Street analysts are, by definition. anti-union. Accountant are too, but they may feel professionally obligated to address the actual numbers vs. day what's good for a stock price bounce. Though talking about 10 year time horizons is a dubious prospect at best.)
Analysts predict this strike could cost Harley more than $2.5 million a day. Who knows. The workers might very well choose to go back tomorrow. But no matter what happens, the Brawler suggets Harley already has lost something very important that can't be quantified in dollars and cents.