Harley choice hinges on states, factory workers

As Harley-Davidson Inc. weighs whether to move its York County factory to Kentucky, some observers question which is more important: the contract with its work force or economic development deals from Kentucky and Pennsylvania?

Milwaukee-based Harley on Nov. 4 narrowed its choice for an alternate manufacturing site to Kentucky. The company would build a factory in Shelbyville if it moved there, Harley spokesman Bob Klein said.

Harley is negotiating a labor agreement with its York County union, International Association of Machinists and Aerospace Workers Local 175. It's also trying to make the company and factory in Springettsbury Township more efficient through outsourcing of non-core jobs such as chrome plating, subassembly, small-parts stamping and machining operations. That process could cut 400 jobs from the plant, according to union officials.

The contract with its union workers and efficiency of the existing plant likely are the most important aspect in the decision, said Michael Smeltzer, executive director of the Manufacturers' Association of South Central Pennsylvania.

At least one of the states Harley was considering for an alternate site, Tennessee, is a right-to-work state, according to the National Right to Work Legal Defense Foundation, a Virginia-based advocacy group. The state has laws that bar compulsory union membership and dues at private employers. Kentucky and Pennsylvania do not have right-to-work laws. Harley also was considering sites in Indiana and Missouri, which do not have right-to-work laws.

That could mean that if the company moves South, it's not to get away from its union in Pennsylvania, Smeltzer said.

"It just illustrates what I've thought all along, and that is that the company is not trying to pick a fight with the union," he said.

Union officials did not respond to repeated phone and e-mail messages to comment on the Kentucky announcement by deadline.

The economic development packages from the states will be less of a deciding factor for Harley, unlike companies in the past, Smeltzer said.

Carlisle Tire & Wheel Co., decided in July to move its operations by next September from Carlisle to Jackson, Tenn., to consolidate operations, according to the company. The Cumberland County-based company makes tires and rims for lawn tractors, all-terrain vehicles and trailers.

Pennsylvania's offer to Tire & Wheel was $6.9 million, including $3 million in capital assistance, $2.5 million to purchase new equipment, $630,000 in tax credits, $240,000 in job training initiatives and about $500,000 in research and development tax credits and grants, according to documents from the state Department of Community and Economic Development.

The department and Cumberland County officials said Tennessee's offer was about three times as much as Pennsylvania's. Tennessee could not give a total package estimate because state law makes offers to companies confidential until they enter a contract with a state for incentives, said Mark Drury, a spokesman for the state's Department of Economic and Community Development.

Economic development packages are nothing new, but once again Pennsylvania finds itself competing with a Southern state for manufacturing jobs, Smeltzer said. It's a fight Pennsylvania needs to win.

"I think the state ... should demonstrate its moral support for the workers and for Harley-Davidson," he said. "And I think the governor is the only person that can do that without having it viewed as favoring one side or other."

Gov. Ed Rendell has offered Harley $15 million in capital assistance to upgrade the York County facility. Work force and tax incentives also are possibilities, said Michael Smith, the governor's spokesman. However, nothing has changed significantly since Harley narrowed its search for an alternate site location, he said.

"We continue to maintain a regular dialog with (Harley) to put together an aggressive economic development package with them to ensure the company remains in York (County) and remains viable over the long term," Smith said.