Harley workers OK deal for investment

November 16, 2006|By Bloomberg News

MILWAUKEE -- Harley-Davidson Inc. workers at a plant here have agreed to lower wages for new hires in exchange for the motorcycle maker investing $120 million to expand the factory.

The workers voted 943 to 536 for contract changes including starting pay of as low as $18.25 an hour for new employees, compared with $28.83 for those now in the jobs, the United Steelworkers union said yesterday. The accord will create more than 100 new jobs and protect 1,600 positions, the union said.

Harley, the largest U.S. motorcycle maker, planned to expand production elsewhere if the Milwaukee workers rejected the changes. The plant builds Big Twin and XL powertrains. The company is trying to hold down costs as prices for materials such as steel rise and as its sales growth slows.

"Now we can look forward to expanding here, rather than worry about a rival plant that would produce the same product with newer, state-of-the-art equipment," Jim Wheiland, president of the factory's union local, said in a statement.

Harley said it must "manage costs across the entire organization that could be detrimental to our business in the long run if we don't start to control them now."

The union said workers at the plant, who voted Tuesday, also agreed to suspend cost-of-living-adjustment payments until 2012 and to health care changes that include three options, two of which don't require employee contributions.

"The health care plan will remain in effect until 2012," Wheiland said. "The company cannot change it, no matter how much health care costs increase."

The current labor contract expires April 1, 2008. The union said items in yesterday's agreement won't be part of bargaining for a new contract then.

Harley shares rose 87 cents to close at $71.85 yesterday on the New York Stock Exchange. They have gained 40 percent this year.

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