Harley's Pa. plant thought likelier to stay now

AP News
Posted: Nov 20, 2009 2:52 PM

A tentative labor agreement distributed Friday to workers at Harley-Davidson's plant in south-central Pennsylvania makes it appear likely that the motorcycle maker will keep its operations there, instead of leaving the state to cut costs.

A passage in the 58-page document distributed to union members and posted on the Web site of the York Daily Record includes a pledge to "discontinue current work" to relocate its largest motorcycle assembly plant to an alternate site in Kentucky.

A union vote on the proposed agreement was scheduled for Dec. 2. Harley-Davidson spokesman Bob Klein said the company will decide after that vote whether it will stay in York.

Scrambling to adjust to steep sales declines, the Milwaukee-based company said in May it would look to relocate a plant that is too inefficient and costly.

Already this year, it has laid off more than 600 workers there. A statement from the company Friday indicated it plans to further reduce the hourly work force at the York plant, currently 1,950 people.

"A restructured York operation would be leaner and focused on assembly, metal fabrication and paint, with an hourly unionized work force expected to be about 1,000 employees," the company's statement said.

The York plant consists of two motorcycle factories that assemble its Touring and Softail motorcycles.

Union negotiator Tom Santone told The York Dispatch that he believes the contract contains enough cost savings to compel the company to keep the plant in York.

Klein declined to comment on details of the contract proposal, but said Harley-Davidson is seeking to cut $120 million to $150 million companywide through 2014.

Company officials visited sites in Kentucky, Tennessee and a couple of other states in recent months to scout other potential locations. To encourage Harley-Davidson to stay, Gov. Ed Rendell offered about $15 million in incentives.

Earlier this month, Harley-Davidson said a site in Shelbyville, Ky., was the only other location it was considering. On Thursday, Kentucky Gov. Steve Beshear reacted to news of the tentative labor agreement by saying the likelihood of his state's landing the plant was "significantly diminished."