Harley-Davidson CEO Keith Wandell Answers To Critics.

In an address last Thursday during a meeting at the Harley-Davidson Museum, CEO Keith Wandell said that through a succession of labor agreements over the years, Harley management had lost control of costs.

As an example, he mentioned that employees at the Harley Menomonee Falls Plant were making an average $32 per hour in wages and with all benefits added were costing the company $75 per hour.  Wandell made reference to the auto industry, and in particular to General Motors, a company unable to remain profitable under the burden of its payroll, pension and benefit costs. He also agreed that part of the blame is on the management for failing to innovate and produce attractive products at reasonable prices.

Regarding the new 7-year labor agreement recently agreed by Harley Wisconsin Unions and by which the number of  workers will be reduced by about 200 and replaced by “casual workers” with lower pay and without benefits, Keith Wandell explained that  his company did not ask for wage concessions, but  Instead asked for the ability to hire casual employees and to make changes in the medical plan, the same plan offered to management. He said that before his arrival as CEO, management would make its offer to the unions and they would vote no. The company would then offer more, the unions would vote no again, and the company would offer more until the unions agreed to a contract.The key to the labor contracts, Wandell said, is to gain production flexibility that the company needs to deliver bikes on demand. Harley’s business is seasonal, and the current contracts don’t provide the flexibility to address market downturns. He declared that in a tough economy where motorcycle sales have plummeted 40%, Harley had two choices: “Sit by and hope that things change or change whatever can be changed.”

Some union representants reacted angrily to Wandell’s statements. “Something is definitely wrong when the CEO of a troubled company makes more than $6 million a year and then whines about how out of control workers’ wages have become” said Frank Larkin, spokesman for the International Association of Machinists and Aerospace Workers, which represents some Harley workers in Milwaukee. “Once again the workers have stepped up and taken cuts in wages, benefits and working conditions in order to save this company. It’s not our fault that managers can’t manage. The remarks are a slap in the face” said Michael Bolton, United Steelworkers of America District 2 director, which represents most of the Harley plant workers. Maybe Wandell’s statements were a poor timing choice coming so soon after workers concessions.

37 Responses to “Harley-Davidson CEO Keith Wandell Answers To Critics.”

  1. 1 Gavin Sep 26th, 2010 at 1:03 pm

    I agree with Keith Wandell in the most part. As harsh as it may sound, if Harley_Davidson doesn’t adapt to the dificult economic conditions around the world, it will not survive, and that will be tragic. On the same subject, senior management should also lead the way, with “reasonable” salary packages.

  2. 2 Bob Sep 26th, 2010 at 1:09 pm

    I agree with Keith fully.

  3. 3 Michael Sep 26th, 2010 at 1:50 pm

    The blame lies firmly on BOTH sides. Between the unions (really just racketeers) that extort as much as possible from their employers and the management that keeps the lion share of profits for the executives, it’s a just a giant money grab booth stuffed with the cash of loyal consumers. Things like brand value and quality wind up laying discarded on the floor.

  4. 4 Sep 26th, 2010 at 4:01 pm

    Kieth’s statement could possibly be embraced better if folks could get past his salary. Nobody needs to get paid $6 million to be a hatchet man. Someone making a few $100k a year could easily have taken care of the situation and played take it or leave it (while holding all the cards) just as well. Highly overpaid folks running the company badly are just as harmful as overpaid hourly workers and don’t buy nearly as many bikes.

  5. 5 Sep 26th, 2010 at 4:44 pm

    The disparity between the workers and Wandell’s annual pot of gold does seem excessive, unfair and, let’s face it, greedy in the worst Gordon Gecko tradition. However, if you pay peanuts you really do get monkeys and as easy as Wandell’s job might seem to we onlookers, I’m certain there are complexities upon complexities inherent in the position, which makes a huge salary a necessity to attract someone with the brains, experience and appropriate qualifications. His huge (to us) salary is in line with other similar corporate positions whether we like it or not.
    And maybe, just maybe, his statement that “part of the blame is on the management for failing to innovate and produce attractive products at reasonable prices” heralds a sea change. Though I won’t be holding my breath on that one.

  6. 6 Richard Sep 26th, 2010 at 5:14 pm

    I’ve always been a middle class working guy (who in 45 years never made $35./hr (^$65,000./yr.) I think HD did what it had to do to survive. Insofar as his salary is concerned I think six million is too much for anyone to be paid. However, he apparently had the know how and the balls to get the fiftyfour million in concessions they needed. In that context, maybe he is worth the six mil? Hopefully, these concessions and expanded model offering will result in lower prices and an increased customer base.

  7. 7 X harley rider Sep 26th, 2010 at 5:31 pm

    I sit here and wounder what kind of bonus the ceo will take over the next 7 years

  8. 8 Ken Sep 26th, 2010 at 6:59 pm

    No company is forced to hire union labor. Let the contract run out and hire employees for salary. If union pay is out of hand, it’s the fault ultimately of Harley Davidson. The union bargained for more and Harley agreed to each contract. It’s also Harley’s option to bargain down with the union. Make your agreement and live by it, don’t badmouth the company that pays your salary and don’t badmouth the employees you made a deal with.

  9. 9 Union Steamfitter Sep 26th, 2010 at 8:24 pm

    I’m a Union man and I fully agree that there’s a need for concessions in these tough times. A few of the criticisms of Unions are well founded, however, I’m proud of these concessions which illustrate that they’ve goals in common with management. When, and if, Harley sends jobs overseas, all we’ll hear is that the Union ran ’em out with their high labor costs and refusal to concede anything. If the guy wasn’t worth 6 mil; he wouldn’t be getting it. It’d be interesting to see how Harley’s market share survives the exporting of jobs after all these years using the “Made in America” angle.

    Lets face it; Harley has been more marketing than substance. They’ve were waayyy behind in engineering for a long time. Having said that, I’ll be buying a Road King in the next year or so because I think they’ve finally come around after having ridden one.

  10. 10 bigitch Sep 26th, 2010 at 9:30 pm

    i’ll do his job for 1million a year and do a better job than he can, and i can ride a bike…

  11. 11 David Sep 26th, 2010 at 11:54 pm

    I think they should have just closed down the whole thing for a year. Then hired backed people who weren’t union and streamlined production. You’ll find out if you dont work for a year you get kind of hungry(but that would depend on the govt cutting back benefits to six months).
    I worked on multi-million dollar gas compressors out in the middle of no-where and was expected to keep them up and running and solve all problems day or night and in all kinds of weather. If the natural gas does move down the pipeline you dont have electricity or heat for your house or work place. Pipelines run all across the country (as wittnessed by the recent explosion in calif.).and poeple have to maintain all the equipment and you know when I quit the business becasue of a diease.,I was only making $19.00 an hour.and time and a half for over time.

    I sure would have liked to made $35 per hour benefits.but it just doesnt work that way in the private industries.
    People who stan in a factory thats heated and well lighted and then put on one or two little parts time after time surely deserves less than what I got paid.
    Good for harley davidson and the UNION WORKERS CAN BACK OFF AND quit exspecking just a handout for poop work will nolonger work. Get rid of the union manegement!!!!
    By the they I never work for a union and I got a better job down right !!!

  12. 12 martin Twofeather Sep 27th, 2010 at 7:51 am

    Why doesn’t Keith take a couple million dollar pay cut in good faith per year?

  13. 13 Fred Snyder, Boca Raton, FL Sep 27th, 2010 at 8:13 am

    For the most part I agree with Keith, however with bike prices hitting an all time high it doesn’t seem to be equal for management and labor. The 6 million dollar salary does weaken his point of view considerably. Personally I think they, the motor company, should shut down the northern plants and follow the example of Toyota, Honda and BMW and move south. Not to offend the union workers just don’t believe the unions perform the functions they were created to perform some 60 years ago.

  14. 14 BikerMarc Sep 27th, 2010 at 8:14 am

    Welcome to the reality of manufacturing in America with union labor. They have successfully built a travel plan to India and other 2nd and 3rd world countries for themselves. $75 bucks of cost per worker is simply ridiculous and clearly unsustainable. This said, I wish Harley-Davidson all the best as they try to survive what many are saying is the “new economy”. Consumers are in no position to pay for union-style costs nor will they ever choose to again.

  15. 15 Sep 27th, 2010 at 8:26 am

    SOLUTION: Cut everyone’s pay by 40% and give them 100 shares of stock.
    Everyone becomes profitable when the company becomes profitable.

  16. 16 Buck Private Sep 27th, 2010 at 8:32 am

    Unions are the DEATH of America!! Richard what expanded Model line are you talking about? Some Sportster blacked out with a couple of extra letters XLBO……The mini-bike pipeline (Sportster) and crotch rocket pipeline (V-Rods) is full in America. Only X amount of new and used bikes are ever going to be sold every year. It’s not like 300,000 bikes are totaled every year. The pipeline is full and the only way to increase #’s is to take market share from your competitors. And the only way to do that is with innovative new products. The marketplace is flooded with low-cost Yamahas, Kaws, Suzukis, Victorys, Triumphs etc. If you do like the Buell and Sporster line every year and slap on a new paint scheme
    guess what eventually happens….

  17. 17 Sep 27th, 2010 at 8:44 am

    Just a few points and understand it has been a long time since I was anywhere near a company with a union in it or wanting to vote a union in but I beleive that a company cannot layoff union employess and then try and hire non union. Even if they shut doors for a year, as long as they are in the same location or close and the same company they are still unionized. The only way would be to move operations out of state. Also once a new hire comes in that is non union, after a period of time (my old job at ALTEC was I think 6 months) you then could choose to be union or not. Now states laws are different but I beleive that federal law is that once a majority of employees vote the union in then it has to be a mojority to vote them out.

    The rest is opinion and if you have always worked for people where you got paid what you were worth or more then you may not agree with me but unions are needed in some companies. Some out there would take advantage of employees if they didn’t have to deal with a collective bargaining unit (union). I have seen many times where a person was paid more than someone else just because the boss liked them more even though the two did the same amount of work and the same job and were there for about the same amount of time. Some unions are corrupt but it is up to the members to keep them straight and vote in good leadership.

  18. 18 gravey158 Sep 27th, 2010 at 9:12 am

    its amazing how people blame the men and woman on the floor, for the problems of Harley Davidson. just how many management is there. we have yet to hear from Harley, in what they are doing to streamline their management team. surely there is some poeple that aren’t preforming to their best. So quit blaming the hourly wage worker.

  19. 19 Taco Sep 27th, 2010 at 9:14 am

    He had to be taught to ride a motorcycle when he joined HD. “My brother rides, and I am looking forward to learning” is what he said. HaHa…Fake leader for washed up brand. HD = I had good enough credit to be a bad ass…

    go out and build your own = real rider…

  20. 20 Bill Faris Sep 27th, 2010 at 9:17 am

    No wonder their prices are outrageous

  21. 21 Unkl Ian Sep 27th, 2010 at 12:07 pm

    “… part of the blame is on the management for failing to
    innovate and produce attractive products at reasonable prices.”

    Buell and MV could have come up with innovative and attractive products,
    but it was easier to pull the plug. And how much did THAT cost ?

  22. 22 Chopperfugger Sep 27th, 2010 at 1:20 pm

    How much are the workers paid that make the T-shirts?

  23. 23 Sep 27th, 2010 at 1:55 pm

    The very fact that the union reps comment was that “the managers couldnt manage” shows the depth that the union fails to go to look at the root of a problem. If your mom only s you cake, at some point even a kid knows that they are getting fat. Meanwhile, the worker sits back and lets the Union do his (or her) bidding for them and then bitches about it to everyone else. When is the American factory worker going to stand up for him (or her) self and accept that which they cannot change! I dont think that anyone should have to work in an unhealthy environment against their own free will, but I also understand that if all of the money is going to legacy costs and health benefits…there wont be enough money to keep the assembly lines running! The problem is the unions and their unwillingness to lobby on behalf of the overall situation rather than being so obtuse all the damn time. The relationship between the American worker and the American corporation is failiing because the union has its own agenda to support…like its officers. Pigs get fat…hogs get slaughtered…it is time to reduce the union influence!

  24. 24 Greg Turley Sep 27th, 2010 at 1:59 pm

    Sorry guys. Keith Wandell is right.

  25. 25 golfish Sep 27th, 2010 at 2:26 pm

    35 bucks an hour. I wonder what any of the other great bike builders charge per hour?

  26. 26 Sep 27th, 2010 at 5:02 pm

    i find it hard to believe any ceo , harley , ford , bank of america etc. are worth the money & bonuses they’re paid . why don’t they take big paycuts !!!! lead the way . what is it they do anyways ? they sure never get their hands dirty .

  27. 27 Sep 27th, 2010 at 6:23 pm

    Of course Kieth is right, he just isn’t worth 6 million dollars to wear a “Captain Obvious” costume.
    If there was truly such a vacuum below him then they need to be let go (relatives of the family or not) and their salaries used to pay his. The workers got huge pay when time were good and it’s no biggie brain shot to go the other way when times are bad. That said, Kieth needs a big time cut in pay also, as a few drunks on stools could’ve figured this one out for a lot less than $6 million.

  28. 28 bob Sep 27th, 2010 at 7:05 pm

    HD CEO, Bank CEO’s, Big Corporation of any type CEO’s all make a crap load more than they are worth. Sure, they take the blame if the economy slides, then they are removed and given a huge benefit package to carry them through for life ( wher did all that money come from?). The worker always sacrifces dollar for dollar, way, way more percentage of what they make than the
    CEO’s. Those workers, make the big money for Wandell. He should be kissing their asses. He, his family and all of his over paid, over staffed executive sidekicks should all be kissing their employees’ asses. Whatever they are being paid, is still not enough to keep up with the cost of living. Screw Wandell, let him take the hit to the wallet. If he can’t survive on 30% less dinero what makes him think a working man/woman can. I am not a union worker, but the unions have come to the defense of many abused workers over the decades, making the playing field much fairer then it once was .

  29. 29 baddad Sep 28th, 2010 at 3:28 am

    I agree with Frank Larkin, spokesman for the International Association of Machinists and Aerospace Workers. Greedy managers, banksters…. are death for economy. Lets wait for Harley made in India:)

  30. 30 stagolee Sep 28th, 2010 at 10:26 am

    Keith could certainly get by on only $1M per year. Yes?

  31. 31 stagolee Sep 28th, 2010 at 10:30 am

    $32/hour x 40 hours/week x 52 weeks = $67K (pre-tax). After the bikes are built then it’s up to the business people to get them to market and to get them to sell. At the current average Harley price, that’s roughly 3 bikes per worker. The answer, Keith. Sell more bikes.

  32. 32 fuji Sep 28th, 2010 at 12:20 pm

  33. 33 Alan Sep 28th, 2010 at 3:36 pm

    I am a white collar worker by choice. I would not consider working under the Union system but don’t fault those that choose Union. I appreciate all working men and women. I don’t care if you are Union workers, non Union or white collar or any other description. I chose a Harley because of the company history, because of what friends told me. I liked what I saw with a HD and how it rode. I would hate to see HD Management and Union not come to realize that it is better to keep the jobs and the manufacturing in the US. Our society, specifically driven by Government, and tax policy attacks success no matter if it is people or industries. We are our own worst enemy!

  34. 34 Bill Sep 28th, 2010 at 3:39 pm

    Put everyone on 100% commission. Problem solved.

  35. 35 Sep 29th, 2010 at 5:21 pm

    Keith stated $75 hr after you factor is all benefits that’s a lot more than $35.00 an hour. $75/hr is what it costs to pay someone to work the line.

    I would like to see the actual document which shows Keith is making 6 Million! This is the figure the Union Rep stated not H-D so lets no assume Keith is making 6 million not untill we see the real paper work documenting this stated figure.

    Lets keep facts, facts.

  36. 36 Grayhawk Sep 29th, 2010 at 8:04 pm

    Maybe we are all confusing Keith with Lee Majors, not sure but maybe this will shed some light Steve. What would we work for if we managed a major corporation and all that goes with it, what do they have 7900 personnel give or take.

    Keith – others base pay as posted

    Keith Shares/Holdings

  37. 37 David Sep 30th, 2010 at 12:45 am

    Wow I think Lightfoot is right….Maybe we should implement this ideal on a govt level……Cut the pay 40% and give some stock in the federal reserve and Sit back and see if they can make the Defecit go away!!!!

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