The two unions representing a combined 2,300 employees at Milwaukee-based Harley-Davidson facilities in Wisconsin, Pennsylvania and Kansas City announced they will be withdrawing from a partnership agreement with the company dating back to the mid-1990s.
The partnership established a relationship for the unions – the International Association of Machinists and Aerospace Workers and the United Steelworkers – to work with Harley management on a national or international level to address issues.
Union leaders pointed to the use of temporary workers and opening of overseas factories as issues that have hurt their relationship with the company. But a Harley spokeswoman said the company has faced a number of challenges in recent years and is working to grow the business to provide more stability for employees.
Withdrawing from the agreement does not impact the collective bargaining agreements the company has at its factories and Harley spokeswoman Pat Sweeney said the company remains committed to working with local union leadership. The USW and IAM both represent workers at the company’s Pilgrim Road powertrain facility and have an agreement running through March 31, 2019.
In a letter to IAM members employed at Harley, IAM international president Robert Martinez, Jr. said the company “continues to systematically dismantle its hourly workforce” and pointed to three issues in particular. Those included using casual or temporary workers at the expense of full-time hourly employment, building factories in India, Thailand and Brazil and sourcing work to third-part providers.
“Our members continue to suffer as does the local communities they reside in with regard to layoffs,” Martinez Jr. wrote. “The partnership has been ineffective since 2010. There is no consensus decision making process for our local leadership to work with management. It is a sad day that our relationship has come to this point.”
Harley launched a restructuring program in 2009 that called for the elimination of 2,700 to 2,900 hourly positions. Over the course of the next three years the company also reached labor agreements that allowed for the introduction of flexible workforces at the company’s factories.
Coming out of the Great Recession, Harley was able to increase revenue and net income from 2009 to 2014, but over the last two years the company has seen those trends reverse. Weakness in the market for motorcycles combined with increased competition from Indian Motorcycle and others have led to a 11 and 8 percent drops in net income in 2015 and 2016 respectively.
“Over the past several years we’ve seen significant new challenges in our business but also in the U.S. motorcycle industry,” Sweeney said. “It has been especially tough on our union employees given the number of down days that we’ve had and the layoffs as a result of the challenging conditions we’ve had.”
Harley announced two rounds of layoffs in the second half of 2016, including one that included 200 casual and union jobs at production facilities. Harley announced in July another 180 jobs would be cut from the Menomonee Falls and Kansas City operations as the company continues to try to limit the supply of new motorcycles on the market.
At the same time, Harley is trying to grow its business internationally and is currently building an assembly facility in Thailand to access Asian markets. The company says the facility, which is similar to operations in Brazil and India, helps the company get around tariffs imposed on motorcycle imports.
But the union objected to the company’s plans calling it “a slap in the face to the American worker.”
Sweeney said the company is not shifting jobs overseas and growing internationally is part of Harley’s plans to grow its business.
“Growth here in the U.S. and growth internationally is going to benefit everyone and that is really the only path to security and prosperity for everyone,” she said.