YORK, Pa. — For a look at what’s to come for Harley-Davidson Inc., the best place to start is the company’s largest motorcycle factory, where change has been described as “leaning into a hurricane.”
Where 41 buildings once stood on 232 acres, there’s now an enormous vacant lot.
Gone are about half of the 2,300 jobs that, for decades, supported families in this blue-collar town.
The old buildings, some of them dating back to World War II, were demolished as Harley-Davidson wiped the slate clean and developed a new manufacturing system that’s the template for changes coming to Harley plants in Wisconsin and Kansas City, Mo.
“It’s like Cortez burning the ships when he reached the New World. There’s no going back to what this factory used to represent,” said York General Manager Ed Magee, who once managed the now-closed Capitol Drive plant in Milwaukee.
York’s new factory, housed in one building, is much smaller than the old sprawling campus patched together over decades. But this year it will assemble more bikes than were built in the old system two years ago.
One motorcycle rolls off the assembly line here every 89 seconds.
York is a model of efficiency that Harley wants to replicate at all of its factories, including Menomonee Falls, Wis., and Tomahawk, Wis., where the new manufacturing system will eliminate several hundred jobs but will lower costs and make the plants more responsive to changes in the motorcycle marketplace.
The York transformation is the most tangible manifestation so far of Chief Executive Officer Keith Wandell’s strategy for putting Milwaukee-based Harley-Davidson on a path to sustained profitability. Hired from Johnson Controls Inc. in 2009, Wandell has said that over time Harley management gave away the keys to the company, leading to runaway costs and York’s patchwork 41-building campus.
The “New Factory York” is now about two years ahead of the Wisconsin plants in implementing Harley’s new manufacturing system. Changes are coming to Wisconsin this spring with labor contracts that went into effect April 1, giving the company more flexibility with the workforce.
The Milwaukee contracts — similar to York’s — include higher health care contributions from workers and a seven-year wage freeze, although there is the possibility of pay raises. They also call for the use of seasonal, or “casual,” employees who are not entitled to medical or retirement benefits and receive less pay for the same work done by regular employees.
Casual employees in Milwaukee, while still unionized, are paid about $16.80 to $26 per hour, depending on their job description. Pay for full-time workers ranges from about $30.50 to $38 per hour; workers recalled from layoff sometimes come back at a second-tier, lower wage.
Currently, all union employees are paid at or above their wage scale, according to Harley, which says the jobs are among the best-paying positions in manufacturing in York and Milwaukee.
The York factory now has about 270 casual employees supplementing the reduced full-time workforce.
“We get to be the poster child for change,” Magee said. “I didn’t want my resume to say I impacted 1,000 families. That is tough to go home with. But this factory now has a future, along with the rest of its suppliers, and it didn’t have that before.”
The changes are especially evident because of the demolished buildings where Harley once made motorcycle parts that now are outsourced to other companies. But they’re also dramatic inside the newer 650,000-square-foot factory that was formerly used just to assemble Harley’s Softail motorcycles.
Where partially assembled bikes once crawled along a conveyor belt with overhead hooks, and parts were stacked to the ceiling, there’s now a production line with more than 100 robotic smart carts traveling on five rows of thin magnetic tape.
The factory’s 62 job classifications have been slashed to five, and the number of salaried positions has been cut in half to 150 people.
Blue-collar employees now work in teams of six to 14 people and have more responsibility for making their own decisions. One team, led by an hourly wage worker, implemented 124 changes that saved the company $100,000 a year and made the work area safer.
“All of those ideas were there before. We just did not have a mechanism to capture and implement them,” Magee said.
The team leader, 17-year employee Kim Avila, eliminated her own job as a result of the changes.
“It was very bittersweet, but it had to be done,” Avila said.
She was given a leadership position in another area of the plant and is making changes there.
Teams have to look at the business aspect of their decisions rather than the personal aspect, Avila said.
“Sometimes that gets very hard. But decisions affect everybody corporate-wide,” she said.
The first few months of the York transformation were filled with angst as people lost their jobs, casual employees were brought in, and the plant scrapped old ways of doing things.
“I called it ‘leaning into the hurricane,’ ” said Magee, who spent 15 years in the U.S. Marine Corps, leaving as a lieutenant colonel before getting a master’s degree in business from Duke University and coming to Harley-Davidson in 2004.
Harley shut down the old York operations, razed the buildings, opened the new factory, and made motorcycles at the same time — all in about a two-year period starting in 2009.
Employees were building bikes while construction was going on around them.
“We were about five feet ahead of the runaway train,” Magee said.
The thousands of changes are centered on advanced manufacturing methods used at Toyota Motor Co., Caterpillar Inc., and other companies held in high regard for their quality and efficiencies.
Harley’s bikes are now designed with the assembly process in mind so that different models can be built on the same line. Changes in York will be replicated in Menomonee Falls and Tomahawk, although they won’t involve building demolition.
The company wants one system for all of its plants, where production can quickly be ramped up or throttled back as needed. Altogether, it expects to save hundreds of millions of dollars as a result of the changes.
Harley tried making changes before, in fits and starts, but nothing lasted.
“People said it was just another ‘flavor of the day.’ But we had to get it right this time because it was getting replicated through our entire system,” Magee said. “This is not just a York story. It’s about all of Harley-Davidson’s manufacturing.”
The company was prepared to close its factories in York, Menomonee Falls and Tomahawk if the labor unions had not agreed to contract concessions that resulted in job losses, the wage freeze and reduced benefits. It was ready to build a new factory in Kentucky if the York workforce had not agreed to a seven-year deal that saved 1,000 jobs but cut just as many.
Without pressure, you don’t get change, Magee said.
The York plant was once known as the “angry factory” because people were ticked off about the labor contract and the loss of jobs. There was a strike in 2007, and two years later employees grudgingly accepted concessions to save the plant.
Not everyone agrees the transformation has resulted in a better workplace, including some union members and union leadership in York, Menomonee Falls and Tomahawk.
They say the company has taken a “cookie cutter” approach to manufacturing, and that hourly paid workers are empowered to make changes only when it’s convenient for management.
“I think the partnership days are gone,” said Scott Parr, an assistant district director for the International Association of Machinists and Aerospace Workers in Milwaukee. “I can’t see it helping the company’s efficiency and productivity when morale is going to be down the toilet.”
Some workers say they miss the old days when there was a sense of rugged individualism in the plants and the company cared more about keeping people employed in tough times.
“This whole company used to be family. It’s not that way anymore,” said Brian Zarilla, a 23-year York employee.
Some say they remain worried about losing their jobs before they can retire in a few years.
“The biggest problem is the fear,” said Tom Santone, directing business representative for the International Association of Machinists and Aerospace Workers in York. “It’s hard to go to work, being afraid to say anything to management, because they’re going to come after you.”
Some employees even say they’re afraid to report injuries because they could get reprimanded or fired.
And small things bug them _ such as the reading of the company vision statement, aloud, at meetings. It’s just too corporate for their way of thinking.
“The feeling of pride is gone. The men and women who work in that plant now, for the most part, can’t wait until they get the hell out of there. They just don’t treat people like adults,” Santone said.
Change is messy, but the overhaul of the manufacturing system is necessary, according to Harley.
“If we had not made adjustments, a lot more people would lose their jobs because the company would not be strong enough for the long haul,” said spokeswoman Maripat Blankenheim.
A certain amount of anxiety is to be expected as changes are rolled out in Wisconsin, said Magee, who was in Milwaukee when the company announced it was closing the Capitol Drive plant in 2010.
But from the top down, he said, management is committed to following through with the new system.
“There’s no ‘mission accomplished’ banner in this factory,” Magee said, because the work is never finished. “We are just a little further down the road than anybody else.”