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Harley-Davidson may leave Milwaukee

Rumbles of labor costs grow louder

- Associated Press - Wednesday, August 4, 2010

MILWAUKEE | It's the roar that made Milwaukee famous — the distinctive throaty rumble of a Harley-Davidson motorcycle. But that much-loved racket could be rumbling away to another state if the company cannot bring down its labor costs.

Harley-Davidson warned employees in April that it will move its Wisconsin manufacturing operations elsewhere if it cannot cut millions of dollars at the factories that build the bikes known as "Milwaukee Iron."

Harley's corporate headquarters would remain here, but that's small consolation to a community that already has endured repeated blows to its civic identity.

"When you think of Milwaukee you think of beer, brats and Harley-Davidson," said Steve Daily, a researcher at the Milwaukee County Historical Society. "Right or wrong, that's what it is."

But that's been changing. For example, the corporate parent of beer giant Miller moved its U.S. headquarters to Chicago in 2008 after joining its domestic operations with Molson Coors Brewing Co. Then there was Schlitz, which billed itself as "the beer that made Milwaukee famous" until financial and labor problems forced it to sell out to a Detroit company in the 1980s.

That leaves Harley-Davidson Inc. as the city's lone signature brand. It's also a magnet for tourists, many of whom want to visit the factories where Harley engines are made.

"We get asked frequently where the plants are," said Paul Upchurch, president of the Visit Milwaukee tourism bureau. "A lot of people around the world associate Milwaukee with the home of Harley."

Keith Wandell, Harley's chief executive, said the company will make its decision on whether to move in the next two months. Harley executives are scouting out other states, though Mr. Wandell would not say which ones.

The company, he said, also would be open to incentives to keep the 1,630 manufacturing jobs in Wisconsin. But the idea that it could move production elsewhere stuns many Harley loyalists.

"You can't describe it. They've got so much history here. They've just become the blood of the community," said Tom Steepy, a lifelong rider and director of the suburban Milwaukee chapter of the Harley Owners Group, or HOG. "If they moved their manufacturing, it would just create a void you can't fill."

Harley has been a local fixture for more than a century. It all started in 1903, when 23-year-old William S. Harley and 22-year-old Arthur Davidson began selling motorcycles built in a cramped wooden shed.

The company later built motorcycles for the U.S. military in both world wars, which helped introduce the bikes to a global audience that saw them as an American icon.

"They symbolize the classic American values of independence and hard work, freedom, all those values," said Kanti Prasad, a marketing professor in the business school of the University of Wisconsin at Milwaukee. "Harley-Davidson is a uniquely American phenomenon."

It's also a Milwaukee phenomenon. Mr. Prasad said that when he travels to Europe, China or Japan most people respond blankly when he says he's from Milwaukee. Then he points out it's Harley's hometown and their faces light up with recognition.

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