Harley-Davidson CEO Keith Wandell Answers To Critics

Harley-Davidson CEO Keith Wandell Answers To Critics.

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Got this from the Cyril Huze blog and thought I would share it with everyone.



Harley-Davidson CEO Keith Wandell Answers To Critics.
Published by Cyril Huze September 26th, 2010 in Builders, Editorial and Events.

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.

I'd like to see how they come up with 75 dollars per hour. I won't get into the exec's compensation package

I'm asking how the 75 dollars per hour is calculated. I'm not worried about what the CEO makes. Ford's CEO is worth every dime. I worked out my cost to my employer based on their data. My hourly rate isn't all that different, I have a defined benefit PP and supplementary medical and insurance and I am nowhere near that amount. I have to assume that health insurance is prohibitively expensive in Wisconsin and that the employer bears full financial responsibility. There may be state and federal payroll taxes the employer pays, employment insurance contributions and social security..this is what you call your government retirement program? If the employer's pp is underfunded and they have to put in make up amounts to keep the plan solvent and that amount is broken down and factored in the rate then perhaps that employee's expense for that given period of time is XX.xx per hour. But when the markets improve the costs for the pp's will be lower and it is possible where they will improve to the point where they will become self sufficient again and in fact generate revenue like they have in the past. This will lower the cost to the employer. So from what I see this isn't a wage issue at all, it's a cost issue. Before the line worker is given a dime to do any work he or she is costing the employer 43 dollars per hour. It just sounds a little high to me, it may be legitimate but I don't know all the facts.
To answer your question on what I think is fair compensation ,I think it's what the market will bear for that particular person and like for most other positions the better the resume the better the compensation. If the person is a winner that person is highly desireable..being merely qualified is not enough.

My next question is this: how can anyone justify a $6 mil. annual salary (regardless of how it's paid) when the company is struggling or about to go under? Reminds me of all the rats running Goldman-Sachs and Lehman Bros. Thieves by anyone's definition.

Do you ever see these guys (CEO's) giving concessions to keep their job? I don't think $32/hr is outrageous. What's outrageous is the cost of the insurance and comp. package to the company.