FRANKFORT, Ky. —“Because of the successful conclusion of their recent union negotiations, Harley-Davidson has made the decision to keep its operation in York, Pa. This was not unexpected. While we are disappointed by their decision, we are proud of the efforts of our economic development officials, as well our local partners in Shelby County.
The fact that Kentucky was Harley-Davidson’s number one choice if the company had decided to move bodes well for our future success.” The sites that had been considered are located in Shelbyville, Kentucky; Kansas City, Missouri; Shelbyville, Indiana; and Murfreesboro, Tennessee. Harley-Davidson hasd now narrowed the focus of its alternate site analysis to Kentucky, and expects to make a final decision on whether to relocate or remain in York by the end of the year.
Harley-Davidson's announcement follows the ratification of a new seven-year labor agreement by company employees at York, represented by International Association of Machinists and Aerospace Workers (IAM) Local Lodge 175, and a decision by the Harley-Davidson Board of Directors to approve the restructuring plan and related funding.
“A restructured York operation will enable the plant to be competitive and sustainable for the future, and the new labor agreement is critical to making that happen,” said Keith Wandell, President and Chief Executive Officer of Harley-Davidson, Inc. “On behalf of the Company, I want to thank the employees at York for their vote to make the changes necessary to create a more flexible and efficient operation, and we look forward to moving ahead together to achieve that goal,” Wandell said.
The new York operation will be consolidated under one roof and focused on the core areas of motorcycle assembly, metal fabrication and paint.
The operation will have a smaller, more flexible workforce, corresponding to the scale and scope of the operations, with about 1,000 hourly employees compared to about 1,950 today. The workforce will consist of about 700 to 800 full-time unionized production and maintenance employees and, on an annualized basis, approximately 200 to 300 unionized “casual” employees. Casual employees work as needed, depending on seasonal production and volume needs and to provide coverage for vacations and other absences. The operation will also employ about 150 salaried employees, compared to about 270 today.
When fully operational in 2012, the restructuring is expected to generate about $100 million in annual operating savings compared to the current structure.
The Company expects to incur approximately $200 million in restructuring charges related to York into 2012, of which about $100 million will be cash charges. The Company also expects to make capital expenditures in connection with the York restructuring of about $90 million into 2012.
On a combined basis, the Company expects previously announced restructuring activities, together with the additional restructuring of the York operations approved today, to result in one-time charges of $415 million to $445 million into 2012, and to produce annual ongoing savings of $240 million to $260 million upon completion of all announced company-wide restructuring activities. In 2010 on a combined basis, Harley-Davidson expects to incur restructuring charges of $175 million to $195 million and related savings of approximately $135 million to $155 million.
The financial impact of the York restructuring reflects approximately $15 million in incentives that the Commonwealth of Pennsylvania has committed for capital improvements and training.
http://www.harley-davidson.com
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