Unions and Management Team Up to Save Classic Company
February 10, 2014
You’ve heard the reasons why union manufacturing can’t make it in America anymore: Union workers get paid too much. American manufacturers can’t afford to build here. Unions just get in the way of management.
Well, one iconic American brand – Harley-Davidson – is turning conventional corporate wisdom on its head.
The company has assembled its famous “hogs” in York, Pa., since 1973, employing members of the United Steelworkers and Machinists union.
Things worked well until 2009, when the Great Recession pushed Harley-Davidson close to collapse. The closure of its York plant was seemingly inevitable. But instead of moving to Mexico or busting the union, management worked with labor to make the plant competitive again.
As Adam Davidson wrote on Feb. 2 in the New York Times magazine:
Keith Wandell, the chief executive, told me that even during the company’s worst days, management never considered busting its union. Frankly, it couldn’t. The company has an “American blue-collar, working man” brand, Magee said, and to get rid of its union or to make its motorcycles in Mexico would have been catastrophic. The company knew it had to keep employing members of the International Association of Machinists and United Steelworkers, who were paid far more than nonunion workers in the South and several multiples of the going rate in Mexico. The company could only compete by redesigning the production system so that each worker created more value than they cost.
Harley built a completely new plant, while labor and management worked together to find ways to reduce inefficiency and boost productivity. Davidson reports that the York plant employs 150 “problem-solvers” to find ways to build better motorcycles.
Harley’s very existence was in question in 2009. Today it is a manufacturing role model, and that has a lot to do with its workers… Magee said there was no question that the workers were earning their relatively higher wages. Costs have fallen by $100 million at the plant and quality has improved even more significantly. Customer demand is extremely high, especially now that people can get a bike within a couple weeks of ordering rather than waiting a year and a half.
Davidson concludes that Harley-Davidson is proof that experienced union members can be not a cost but an asset
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Photo used a Creative Commons license from flickr user Matthias Schack.