Before you read and formulate comments, let me mention that this post is not to criticize or to take side with Harley-Davidson unions. As a matter of fact I think that they can make very fair or very unfair requests. The following is an observation that all of you can make just by watching TV. Since our economy went down the tube, almost each time a major public corporation announces a reduction of labor its stock price goes up, for some of them even reaching a 52-week new high. Shareholders applaud a leaner company because lower labor costs make it more profitable. And in a recession like this one, there is no foreseeable risk that the company is going soon to suffer from being under staffed and consequently miss sales and market shares.
This explains these last months exceptional stock price gains we saw day after day in Wall Street. The scaling down is possible only because organized labor has never been in such a weak position. Many large corporations consider that unions are a thorn in their side. A feeling extremely strong in the automotive industry. High wages, concessions for more benefits are very often negotiated using the constant threat of a strike. Look at what’s happening in York, PA the largest Harley-Davidson plant. Union’s current labor contracts are about to expire and Harley needs labor flexibility to ride the recession and prepare for better days. Harley threatens to close the plant, publicizes its multi-state search for another location where the company can start fresh, building the exact infrastructure they need for today’s market and hiring a new labor force starving for work to which the management will very easily impose its working conditions.
No more of “I am a welder, I will not do any assembly work”, etc. As I reported last week, Harley proposed to the York plant unions a last chance tentative agreement. They must agree on December 2nd. I didn’t read it but 2 people I know did. In substance, here the York proposed deal “shut up or we close up”. Any room for negotiations? Not much. Don’t forget that Harley-Davidson has for priority to support its stock price. If the Milwaukee company needs more investment money its stock value will be the key factor in getting what is perceived as needed. Unemployment is such that large corporations can now strike back at their unions. Since my opinion is that the economy just began its very slow recovery and that I see an expansion at this very slow pace during the next few years, I really wonder if unions are not already and for a long time just ghost labor organizations. For the best or the worst. Belonging or not to an union, what do you think?