Harley Davidson to cut 180 jobs at Milwaukee and Kansas City plants
24 July 2017
On July 18, Wisconsin-based motorcycle maker Harley-Davidson announced it was eliminating 180 US manufacturing jobs due to a poor annual forecast and slumping demand. Its stock price plunged from $52.01 to $46.33, a fall of 11 percent, overnight on the announcement that motorcycle shipments would decline by as much as 6 to 8 percent compared to 2016.
The planned job cuts, which are to take effect in the next month or two, will hit workers at the company’s Kansas City and Milwaukee plants, according to officials from the International Association of Machinists (IAM) and United Steelworkers (USW). The company’s corporate offices are in Milwaukee and it has two plants in Wisconsin, one in Kansas City and one in York, Pennsylvania.
Neither the IAM nor the USW even made a pretense of fighting the threatened layoffs. In February, union officials joined company executives and President Donald Trump at the White House to praise the motorcycle company as an “American success story” and boost the president’s reactionary “Make America Great” economic chauvinism.
Last year Harley-Davidson cut 200 jobs, and in April of this year, another 118 workers were axed at the York plant with those positions to be shifted to Kansas City. With approximately 6,000 employees, previous and current cuts amount to about 10 percent of the workforce in one year’s time.
Since the financial crash of 2008, Harley has steadily slashed more than 25 percent of its workforce, or some 3,500 jobs. Hourly employment in the York plant has fallen from 2,000 in 2009 to 1,000. In 2015, 250 jobs were cut at the Menomonee Falls plant in Wisconsin.
The IAM and USW predictably denounced foreign workers for the job cuts, pointing to the company’s recent announcement it was opening facilities in the Rayong province of Thailand, largely to produce for the Asian market. The new facility, the United Steelworkers wrote, “puts in jeopardy one of the few remaining genuine US brands.”
Harley reported a drop in sales by 9.3 percent in the US and 6.7 percent worldwide. Since April 11, 2017 share prices have dropped from $62.03 to $48.26, a 22 percent slide. In a callous but observant response David Beckel, an industry analyst for the New York-based investment firm Alliance Bernstein, said millennials were not adopting motorcycling at rates that prior generations did. He then summarily downgraded Harley’s stocks.
The lack of interest on the part of so-called millennials is not so much a cultural problem but the product of the precarious lives and low wages jobs of younger workers. The exorbitant costs of the iconic motorcycles—which supposedly symbolize a lifestyle of rebellion and freedom—are out of reach for millions of working class people.
Harley’s CEO Matthew Levatich’s tag-line that “We are going from: ‘We build bikes’ to ‘We build riders’” is wishful thinking at best. According to the Milwaukee Business Journal, the company’s long-term plan is to add 2 million new Harley-Davidson riders in the US by 2027, grow the international business to 50 percent of annual volume, and launch 100 new models. This has been met with ridicule by industry analysts.
Despite the downturn in the company’s business prospects, Levatich saw his base pay increase 15 percent in 2016 to a current sum of $1,041,667. His total compensation, expected to reach $9.4 million, will be paid out in 2018. Based on performance measures he is targeted to earn 80,146 shares, worth almost $3.2 million when granted.
With regards to the plant’s move to Thailand, the response from the United Steelworkers President Leo Gerard was expectedly reactionary. “Management’s decision to offshore production is a slap in the face to the American worker and hundreds of thousands of Harley riders across the country,” said Gerard, who earlier this year stood by Trump’s side as he signed anti-Asian trade measures on behalf of the steel bosses.
The economic nationalism of the USW, IAM, the UAW and other unions has always gone hand-in-hand with corporatist labor-management “partnership” and the most savage concessions on workers imposed by the unions in the name of boosting the international competitiveness and profitability of US-based corporations. Decades of givebacks have not saved a single job, but they have boosted the fortunes of the CEOs, wealthy investors and the union executives themselves.
The unions at Harley-Davidson signed a contract in 2010 that included a seven-year wage freeze, sharp increases in employee contributions to health care and the creation of a “sub-tier” of seasonal hourly workers without benefits and starting pay of $16.80, or half of what the current workers were making.
The move to Thailand allows Harley to avoid the 60 percent tariff on imported motorcycles and gives them considerable tax breaks when dealing with Thailand’s neighbors. This is part of the trade agreement between the Association of Southeast Asian Nation (ASEAN). It will also serve as a launching pad to market motorcycles to mainland China. Reportedly, the plant will open in 2018 with approximately 100 employees to assemble motorcycles from kits shipped from the US.
While these incentives have drawn corporations like Harley Davidson to Thailand there is growing dissatisfaction among Thai workers with poverty wages and sweatshop conditions. Labor costs are climbing and now average $10 per day, making the country less attractive than Indonesia, Myanmar, Vietnam and Cambodia where daily wages are at $2 to $3 per day.
The Rayong province south of Bangkok, with its focus on automotive industries, is developing into an industrialized zone where foreign manufacturers such as Ford, Ducati, General Motors, and Suzuki are camping for the time being. The existing corporate tax scheme in Thailand can offer companies up to eight years in corporate tax exemptions, with a 50 percent reduction for another five years.
The struggles of workers in Thailand and other countries, including in India where 13 autoworkers at Maruti Suzuki were framed up four months ago trumped up charges after a series of militant industrial battles in 2011-12, are creating the conditions for the unity of US and Asian workers to defend the jobs and living standards of all workers. To do so, however, Harley workers must reject the nationalist poison peddled by the USW and IAM.