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Stripped-down Harley is looking up; Manufacturing, labor changes boost hopes

For a look at what's to come for Harley-Davidson Inc., the best place to start is the company's largest motorcycle factory, where change has been described as "leaning into a hurricane."

Where 41 buildings once stood on 232 acres, there's now an enormous vacant lot.

Gone are about half of the 2,300 jobs that, for decades, supported families in this blue-collar town.

The old buildings, some of them dating back to World War II, were demolished as Harley-Davidson wiped the slate clean and developed a manufacturing system that's the template for changes coming to Harley plants in Wisconsin and Kansas City, Mo.

"It's like Cortez burning the ships when he reached the New World. There's no going back to what this factory used to represent," said York General Manager Ed Magee, who once managed the now-closed Capitol Drive plant in Milwaukee.

York's new factory, housed in one building, is much smaller than the old sprawling campus patched together over decades. But it will assemble more bikes this year than were built in the old system two years ago.

One motorcycle rolls off the assembly line here every 89 seconds.

York is a model of efficiency that Harley wants to replicate at all of its factories, including Menomonee Falls, Wis., and Tomahawk, Wis., where the new manufacturing system will eliminate several hundred jobs while lowering costs and making the plants more responsive to changes in the motorcycle marketplace.

The York transformation is the most tangible manifestation so far of Chief Executive Officer Keith Wandell's strategy for putting Milwaukee-based Harley-Davidson on a path to sustained profitability. Hired from Johnson Controls Inc. in 2009, Wandell has said that over time, Harley management gave away the keys to the company, leading to runaway costs and York's patchwork 41-building campus.

The "New Factory York' is about two years ahead of the Wisconsin plants in implementing Harley's new manufacturing system. Changes are coming to Wisconsin this spring with labor contracts that went into effect April 1, giving the company more flexibility with the workforce.

The Milwaukee contracts -- similar to York's -- include higher health care contributions from workers and a seven-year wage freeze, though there is the possibility of pay raises. They also call for the use of seasonal, or "casual," employees who are not entitled to medical or retirement benefits and receive less pay for the same work done by regular employees.

Casual employees in Milwaukee, while still unionized, are paid $16.80 to $26 per hour, depending on their job descriptions. Pay for full-time workers ranges from $30.50 to $38 per hour; workers recalled from layoff sometimes come back at a second-tier, lower wage.

Currently, all union employees are paid at or above their wage scale, according to Harley, which says the jobs are among the best-paying positions in manufacturing in York and Milwaukee.

The York factory now has about 270 casual employees supplementing the reduced full-time workforce.

The factory's 62 job classifications have been slashed to five, and the number of salaried positions has been cut in half to 150 people.

Blue-collar employees now work in teams of six to 14 people and have more responsibility for making their own decisions. One team, led by an hourly wage worker, implemented 124 changes that saved the company $100,000 a year and made the work area safer.

"All of those ideas were there before. We just did not have a mechanism to capture and implement them," Magee said.

The team leader, 17-year employee Kim Avila, eliminated her own job as a result of the changes. She was given a leadership position in another area of the plant and is making changes there.

"It was very bittersweet, but it had to be done," Avila said.