Harley-Davidson Forgoes $25 Million In Tax Incentives

This Thursday evening spokesperson Bob Klein announced that Harley-Davidson has advised the Wisconsin Department of Commerce that it will not pursue the Enterprisee Zone Tax Credit of $25 million that the company could have earned during the next 9 years for keeping operations in Wisconsin.

So, the immediate question is, why Harley would refuse the corporate welfare (free money at the expense of the taxpayer) sought after by so many companies to fatten their bottom lines?

Although the Wisconsin force reduction estimates made by Harley in September didn’t change, the Milwaukee manufacturer now considers that the anticipated employment level may not meet the technical requirements of the Wisconsin statute for job retention and growth… Now, Harley-Davidson is playing hardball with its Kansas City plant workers and everybody is expecting another shakedown. State of Missouri Officials are forewarned that Harley CEO Keith Wandell is ready to do whatever necessary to make the company profitable again and that to have his company qualify for tax incentives is not his priority and will not influence his reorganization decisions. Harley-Davidson.

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36 Responses to “Harley-Davidson Forgoes $25 Million In Tax Incentives”


  1. 1 bigitch Nov 11th, 2010 at 11:46 pm

    25 million …25 million… WE DON’T NEED YOUR STINKING 25 MILLION
    because i can start importing from india to america cuz the tariff to america is cheaper than the import to india.
    and soon the motor company will have to shut down its wisconsin plants and lay-off all those people cuz they can get my bike built cheaper here.
    and of course i don’t have to worry about those people who talk about patriotism cuz harley-davidson is bigger than america and soon it will be bigger than jesus.
    cuz i know that to some people the word god is short for harley davidson

  2. 2 Mike Nov 12th, 2010 at 12:27 am

    Cyril,

    I take issue with your mis characterization of the details of this story.

    The $25 million was NOT corporate welfare, it was in the form of tax credits, and it is not “at the expense of the taxpayer” because it doesn’t cost the taxpayer anything. If I don’t buy a $100 part from your store, I haven’t cost you $100 because you haven’t earned that money until it’s in your cash register. And if you decide to offer me a 10% discount to earn my business, you didn’t “lose 10%” either.

    That is a part of what’s wrong with this country today… people have gotten the perverted idea that all the money is the governments money, and any reduction in taxes taken from an individual or a business is the same thing as giving them money. It’s not. It’s not the state subsidizing Harley with “corporate welfare”, it’s an incentive to let Harley keep a small fraction more of their OWN money.

    Wandell did the right thing. Harley is a for-profit company that exists to earn money. And to that end, they employ thousands of workers. Giving away the farm for short term stability doesn’t work. GM did it time and time again and now they are screwed.

    Harley needs to be right-sized in today’s market. This ain’t 2006 anymore and they don’t need the same # of workers and facilities they did back then.

    Wisconsin is also smart to want to attract the business of buys like Harley and Mercury Marine. People are too quick to want to punish a company that doesn’t do what we want them to do. Well, they can always move overseas and kiss us goodbye once and for all! Just like a business needs to offer value if it wants customers to shop there, states and towns need to offer value if they want businesses to move there. To that end, Wisconsin did the right thing in making this offer.

  3. 3 pabstblueribbon Nov 12th, 2010 at 1:47 am

    bigitch…you show your ignorance with such eloquence….BRAVO!

    india plant = indian market. period. to facilitate distribution in a “new” market & circumvent costly tariffs & taxes.

    the Milwaukee Marvel is a “primarily American Icon,” sans a host of electrical & suspension components. they will maintain production stateside. are you aware HDMOCO has also had a Brazilian production facility in operation OVER A DECADE?

    members of the “hater brigade” need to “fact check” before spewing rhetoric & wasting precious oxygen & power…

    the Motor Company has some TOUGH decisions to make to avoid becoming a statistic like GM…and thus far they are adapting to the “new economy” as best as possible.

    perhaps a more prudent approach would be making sure we have people in office (at the local & national levels) who have our best interests in mind.

    now just shut ride, huh?

    “back to basics” is the new focus

  4. 4 Grayhawk Nov 12th, 2010 at 5:14 am

    IMO, Companies cut deals with states/local government and the feds to incentify their posture of coming or going/doing business in a given area if you will, so maybe its not such a mis-characterization, it, “Cyril”s lead- in, is much the excerpt of the news with a question.

    The smarter state does it, offer incentives, credits, etc. to keep revenue in the coffers, dollars flowing into a given area; keeping HD employees in the state with all the flowdown communities effects of their salaries and spending is far more to the plus side for the state than the loss of the tax value they the state is giving up in the incentive.

    It’s, this blog, like many of the better blogs you lead-in and ask the questions and let the commentors interprate- it, absorb-it, spin-it, mangle-it, all depending on who is hitting the keyboard with what perception or from what perspective or agenda.

    The turn down is just as the lead-in says imo, they HD does not think they will meet the critieria of the tax incentive and he Cyril is quoting the story. I would think the real questions or comments may be the why:

    Business indecision by business’s across the country still keeping their money in their pockets, less investment /less hiring/ concern of maintaining existing employment levels and forecasts still showing minimal and/or non-existant growth or even inflation and/or hyper-inflation and the probable continued decline in US unit sales of major units in this country in this market thus the projected lesser taxable revenue and shortfall of the tax criteria and more of us in the US not pulling any money out of their/our pockets either due to concern or less discretionary funds in our pockets to purchase new motorcycles in a sufficent quantity. Subsequently in HD’s case/viewpoint the numbers possibly forecasting the inability /shortfall of meeting that given criteria.

    One might think as a business trying to be viable you are better served to make adjustments in advance and not waiting till your treading water to realize its affects and the resultant much more important criterias and impacts than the tax incentive. The rough ride is not over and HD is not in the water by itself, at least its above water.

  5. 5 Cyril Huze Nov 12th, 2010 at 6:49 am

    Mike. I clearly qualify both in the headline and copy, the $25 million as a tax credit that Harley could have earned over 9 years. By offering a tax credit to a corporation to remain located in the State is a way to not lose taxes rolling to the State coming from the employees. We agree on this. But you can’t deny that the overall tax base gets lower. It’s a “less bad choice”. And what’s happening when/if a State runs out of money? One way or the other the taxpayer will have to pay the deficit. But it is not the main topic of my post. The main topic is that Harley, in the administrative process to get the $25 million tax credit realized that the company would not qualify because it can’t guarantee the jobs retention and growth required by the State of Wisconsin. There is a new round or reorganization starting at the Kansas City, MO plant. I suppose that the State Of Missouri took note that Harley will do whatever they think is right for the company despite the tax incentives that they may propose. In this article, I never made judgement on Harley strategy being right or wrong. I think that the main factual information of interest for the readers is that Harley doesn’t make anymore any promise of job retention and growth to a State just to get tax credits. My conclusion is that in the years to come Harley-Davidson wants to keep absolute freedom and flexibility to adjust its workforce to any market conditions.

  6. 6 Gas Man Nov 12th, 2010 at 7:30 am

    Thank you pabstblueribbon for calling out bigitch and putting things in the proper perspective. You were right on and pretty much stole the show on my points of input. Cheers!

  7. 7 JimC Nov 12th, 2010 at 8:29 am

    “back to basics” is a term that I have been using for the past couple of years. Do what you know not what you think you know. Either way,the HD decision is a cause for concern or at least should be for those who are affected by what happens at that plant in Wis,not to mention the Kansas City plant. It seems to me that if this new guy decides that what is best is to move operations to India,then that is what he is going to do,ect. My concern with that type of decision making is that it tends to be short sighted in the long run. HD has been around for a long time and should be celebrating that along with it’s reputation as a quality product. Just the thought of having a plant in India cheapens the perception of quality of the brand. Brazil does not. In fact,my understanding of Brazil is that there are alot of German people who live in Brazil. The German people have a rep of producing quality products. India does not,not even close. This point may seem minscule but I believe it may be a huge problem for HD. They would have been better off building a plant in Korea,rather than India. The heavy duty trucks in India have cabs made from wood-for example.
    Bottom line,in the long run,this new guy at HD will be shown as being short sighted and known for achieving a few short term goals. Just my opinion

  8. 8 WT Nov 12th, 2010 at 9:04 am

    This probably has something to do with the current democratic governor being ousted last week and being replaced by an all new Republican elected officials the beginning of next year……….the current governor of Wisconsin is as corrupt as a Chicago politician.

  9. 9 Jack Nov 12th, 2010 at 9:32 am

    Why can’t I find anything made in America when I shop the parts displays at HD Dealers?

    How much foreign content is in a softail that is assembled in the US?

  10. 10 bajerry Nov 12th, 2010 at 9:40 am

    GM just reported a $2 Billion profit in the 3rd quarter.. I know what you will say, that they have plants in Mexico, but they still assemble the final product here.

  11. 11 Knucklehead Nov 12th, 2010 at 10:01 am

    Harley has to what it needs to do to survive. And be independent of state government. Where I live was once the great Buick City. They employed near 27,000 workers at one time. The last of all those jobs ends this December. Buick had those incentives and now wtf. I say buy American. Had all you Honda Toyota BMW driving people been buying American the last 3 decades we would not be in these fix. And don’t tell me they make better cars. That’s been proven with the Toyota thing and Honda in the 70’s and many others in between. Just be a patriot, buy from American company’s and this will turn around.

  12. 12 Grayhawk Nov 12th, 2010 at 10:02 am

    JIMC food for thought or the hard truth

    India one of the few democracies of size of the emerging industralizing nations of the world and as such maybe the safer place to invest than China say some. Although their castings, etc. may be inept as some have noted so was the Japanese steel industry when it first starting dropping steel factories in the US to their knees a couple decades back, 20 years or less after the fact they were making some of the best steel in the world, some say same for auto’s, etc. A world of evolution/transition, cost to manufacture, business flight, emerging markets. Its tough out there and going to get tougher to compete.

    http://www.engadget.com/2010/03/24/dell-looking-outside-of-china-for-safer-environments-accordin/

    India also offers incentives to relocate

    Excerpt:

    India’s Technological Targets

    Indian’s new high-tech initiative is offering subsidies to a broad range of ventures that equal 20 to 25 percent of projects’ total capital expenditures. Here’s a quick look at the program’s particulars:

    Payout Period: 10 years from “the start of the project.”
    20 or 25 Percent? Companies that locate in one of the nation’s special economic zones (SEZs) can receive subsidies equaling 20 percent of projects’ capital investment. Incentives for companies that locate outside SEZs increase to 25 percent of investment, and those firms also receive a 10-year capital goods duty exemption.
    Maximum Government Equity Interest: 26 percent of an approved project’s investment.
    Required Minimum Investment of $550 Million: Semiconductor manufacturing operations.
    Required Minimum Investment of $220 Million: Operations that manufacture, assemble or test liquid crystal displays, organic light-emitting diodes, plasma-display panels, photovoltaic cells, storage devices, solar cells, and micro- and nano-technology products.
    What’s Included in Investment Percentages: Land, plant(s), accompanying building(s) and technology. Land costs that exceed 2 percent of a project’s total investment can’t be considered in the government’s percentage award.

    http://www.siteselection.com/ssinsider/incentive/ti0704.htm

    If the USFDA is approving India’s drug manufacturing/exportation and same for the computer/technology areas of growth few could argue the antiquated concept they are still in the wooden cab era of trucking as a whole.

    http://www.indiainbusiness.nic.in/industry-infrastructure/industrial-sectors/drug-pharma.htm

    Why India, the excerpt below could be if one looked back at a snapshot in time the early days of the US Industralization era but with (x) fold the capacity;

    India

    World’s largest democracy
    Stable political environment and responsive administrative set up
    Land of abundant natural resources and diverse climatic conditions
    Second most attractive FDI location in the world
    Healthy macro-economic fundamentals
    Cost competitiveness; low labour costs
    Large pool of skilled manpower reforms; strong knowledge base with significant English speaking population
    Young country with a median age of 30 years by 2025
    Huge untapped market potential
    Investor friendly policies and incentive based schemes
    Progressive simplification and rationalization of direct and indirect tax structures
    Reduction in import tariffs
    Full current account convertibility
    Compliance with WTO norms
    Well established judiciary
    Robust banks and financial institutions

    Again we need to get our act together to keep a slice or two of the pie here and abroad

  13. 13 bajerry Nov 12th, 2010 at 10:07 am

    WT, you should know that the present finantial situation we are in was caused by the Past Administration, two unpaid for wars, tax cuts that only benifited the ultra rich, when are you the workers of this country going to understand that when you vote for a republican you are voiting aginst your best intrest, they could care less about the American worker or the country. You can talk all you want about being a “Real American” but you should be smart enough to see what has really happened. Keeping the country from going into a full blown depression, that should be an accomplishment we all should be proud of, but then again the resale housing market is still depressed, so is the used bike market. When you can buy a two year old H-D for a hell of lot less then a new one, with no trade in value why would you buy new.

  14. 14 Rich Nov 12th, 2010 at 10:18 am

    Agree with Bajerry. The Republicans destroyed our country. They just care about being re-elected and get richer supported by the richest corporations and banks. For this they use fear. What do they propose? Nothing! Support Obama. Reelect him. He needs time to fix the mess created before he arrived in office.

  15. 15 LeftTenant Nov 12th, 2010 at 10:30 am

    The Wal-Mart Solution

    Our god is stock value and profits for shareholders. Amen.

  16. 16 LeftTenant Nov 12th, 2010 at 10:34 am

    It occurs to me we are now “outsourcing” the ownership and leadership of our country as well. Leave the rent check off with China. My bike payment goes to India. Ask the corporate board(s) if I have a question–oh wait, even as a shareholder I may not have access to the board.

  17. 17 burnout Nov 12th, 2010 at 11:09 am

    I think the Company made a wise choice. Many times I say this: There ain’t no love in business!…………….. And, ALL government has screwed the pooch. Government spending is so out of hand that we will NEVER recover. peace

  18. 18 Harley4Ever Nov 12th, 2010 at 11:30 am

    Harley doing the right thing. Should have done it sooner. It’s a new global world with everybody belt tightening. Dead or alive. Harley wants to stay alive. At this point there is no point for Harley to listen to grumpy baby boomers with obsolete views of the past and absolutely no economic understanding of how business works.

  19. 19 bigitch Nov 12th, 2010 at 12:02 pm

    pabstblueribbon dude

    bigitch…you show your ignorance with such eloquence….BRAVO!

    glad you could see the humor intended

    india plant = indian market. period. to facilitate distribution in a “new” market

    only time will tell

    the Motor Company has some TOUGH decisions … and thus far they are adapting to the “new economy” as best as possible.

    maybe you believe the spin doctoring from them but when the top brass are clearing millions every year and they continue to add new models by just adding a few new parts and giving it a new name does not prove adaption in my book.
    when times get lean you trim out the excess, reduce the management and curtail their income and direct that towards the business.

    “back to basics” is the new focus

    this would be true if you took away their beer googles and point out that pabsts is really shitty beer!

  20. 20 Sammy Nov 12th, 2010 at 12:03 pm
  21. 21 fuji Nov 12th, 2010 at 1:22 pm

    The motorcycle maker has decided to stay in Wisconsin and has reached agreement with its unions.
    The question is. AS long as …….. ? LOL

  22. 22 J Nov 12th, 2010 at 3:37 pm

    Bottom line is that Wandell is just a chop guy, and never in the history of business has a company grown by cutting expenses……

    At some point, top-line growth has to be addressed (“Oh yeah, that’s right- we build bikes……”)- Thus far, all that Wandell has done is follow the SAME path that sent GM into bankruptcy, which NOW gives GM the luxury of focusing on actual PRODUCT;

    Maybe this is Keith’s master plan- seems like Warren Buffet thinks so, anyway……

    Balance sheet tricks don’t save companies- building quality products at fair prices does.

  23. 23 Jeff Nicklus Nov 12th, 2010 at 5:11 pm

    bajerry & Rich et al,

    It seems that both of you have finally come out of your comas, therefore please allow me to be the first to share this tidbit of news with you …… on Tuesday, November 2, 2010, AKA: The Mid Term Elections, the people of this country overwhelmingly voted to neuter the almighty Messiah Osama Obama and his gang of cronies, at least those that were fortunate enough to survive the massacre. Due to the “shellacking”, (as the “Great One” himself called the ass whipping the Democrats suffered in the election) the Messiah and Mrs. Messiah escaped out of the country so that he might perform his “magic” in other parts of the world … it seems his magic hasn’t worked so well here in this country.

    At any rate, I hope this information helps both of you come out of your artificially induced state of Obama euphoria and face reality.

    Now this is “change” I can get into!

    Over & Out,

    Jeff

    PS: It is Bush’s’ fault!

  24. 24 deadwood1783 Nov 12th, 2010 at 5:20 pm

    Wandell is an Operations guy. He’s not an Accountant or a Marketing guy. In another year or two, once he gets operations in order, another Marketing guy will take over the helm. What he is doing is trying to make sure HD doesn’t go the way of GM. His decisions are tough and unpopoular, but they are nessasary. We will know in a couple years if he made the right decisions or not.

  25. 25 nicker Nov 12th, 2010 at 10:04 pm

    Jeff,

    RE:
    “…. Messiah escaped out of the country so that he might perform his “magic” in other parts of
    the world …”

    Looks like the rest of the world is now wise to his “magic.”
    Most of em are telling him to go-pound-sand………… 🙂

    I think they finally come to the realization that the great Utopian Socialist dream is just that, a dream.
    Unfortunately, the only one who missed the boat is Obama.

    -nicker-

  26. 26 MGW Nov 13th, 2010 at 9:21 am

    Cutting costs to save money is like cutting your arms off to lose weight!

  27. 27 Knucklehead Nov 13th, 2010 at 10:05 am

    bajerry……Democrats and the American worker my but. Read my earlier post. Buick was one plant. We here at one time had 84,000 GM jobs. The Dems were and still are in control in my area. And all they have done is get re-elected, collect their legal welfare check and lose jobs here in Flint. There are less than 5000 now. Democrats for the working man my a**.

  28. 28 Grayhawk Nov 13th, 2010 at 11:03 am

    MGW, save the arms, one does not need to shovel or x-spend the cost for 5000 calories a day into a body machine of the size that can run efficently, leaner, longer at say 2500 calories a day, the weight/body/business burden will come off if you will and maybe not everyone at a given table will be completely wanton to eat a sustainable meal everyday or possibly even more suffer the alternative of standing in one of those 99 week lines.

    Its a sad day when the rest of the world is saying lean down/real-in and no more lonestar cards and we lose complete leverage in attempted trade dealings trying to hang on to trade embalance levels, half as much hoping to realise any trade/export gains which we did not which the recent trade trip so showed our weaker standings. Lip service at best.

  29. 29 David Nov 13th, 2010 at 10:20 pm

    Where do you want your parts made ….. China or India ? Do you want to keep building a nation that is communist or one that is more an allies than the other. Do you want to support a country that is buying up America and all the rest of the resources in the world (for what reasons). Who doesn’t seem to want to help with our enemies in the middle east (to keep us busy using our resources and money fighting someone else). Heard of any terror threats in or against China lately?No they would slap them down in a minute but not the poor bleeding heart liberals here in America, we’ll just keep sending our young men and our dollars there to fight and not to win.
    Have you seen the roads and infrastrucsure in India …I dont really think Harleys could navigate much of it.
    And why does this seem to come on the coat tails of Obama and his just finished tour to India an dthe east , along which the H-D corporate attended.
    Wake up boys…and listen to Uncle Jeff Nicklus…..you all have been drinking Obama’s koolaid way to long !!! You probably believe unions are still a good and worthy enterprise also !!!
    Oh and dont forget the Toothfairie and Santa Claus !!!

    SSDD; David

  30. 30 tom pauly, Oceanside, CA Nov 14th, 2010 at 6:11 pm

    @bigitch “pabst blue ribbon is really shitty beer”, PBR is still the favorite of the college crowd; perhaps you’re a little out of date? Or you enjoy buying foreign crap

  31. 31 BCC Nov 15th, 2010 at 9:52 am

    Screw the Unions………..they’ve become an abuser of power, just as politicians (left or right). Fire ’em all…there are millions of unemployed Americans that would die to have those jobs, at a fraction of the cost. Hell, I’d build motorcycles all for $15 or $20 an hour.

    As for MGWs, “Cutting costs to save $$ is like cutting your arms off to loose weight”………I think this was directed at Harley cutting the cost of production by moving jobs to India. Great for them and all…..but if American’s are out of work, it doesn’t matter how much the price of a new Harley goes down because no one has any money to buy one. Just think……..if HD cuts say 10,000 jobs in the US, I bet we can find 10,000 new folks that aint buyin new harleys .

  32. 32 Bigwoody Nov 15th, 2010 at 11:03 am

    My 2000 is more american than harley made it. Baisley,revolution,zippers,daytona twin -tec ,Pm brakes and wheels.fueling oil system,weisco pistons.
    Have 40,000invested and couldn’t be happier.
    Retired G.Motors worker who is appalled at American Corporations sellling jobs to overseas
    manufacturing interests.

    Blame the government with Their free-trade and corporate greed.

    Would hate to be young in America

  33. 33 Erik Nov 15th, 2010 at 12:40 pm

    Interesting discussion… So many warped ideas and bass-awards thoughts about what is wrong with America.
    As long as we are unwilling to put our money where our mouth is (choosing to save a few bucks at Walmart instead of supporting locally-owned businesses) and continue to confuse the true nature of one political party over the other (which party chooses the interests of business over people?), we will continue down our current path to becoming a world also-ran.
    Wake up. Stop waving the flag and thumping your chests long enough to see the writing on the wall.
    And PS: the country is not run by one person. Read the Constitution.

  34. 34 Woody Nov 22nd, 2010 at 12:44 am

    Mike said, “The $25 million was NOT corporate welfare, it was in the form of tax credits, and it is not “at the expense of the taxpayer” because it doesn’t cost the taxpayer anything.”
    I assume he was kidding. Telling Harley they can pay $25 million or $25 less taxes does indeed cost the taxpayers more by that exact amount. That unpaid tax doesn’t reduce the amount the State spends, so it means everyone else in the State has to dig a little deeper to cough it up instead of the MOCO. I live in WI. I’d be digging a little bit deeper, as that $25 million would have been added to the approx. $3.1 billion deficit WI is facing for the 2011 budget. If I don’t lose 10% by offering you a 10% discount, it would stand to reason I wouldn’t really lose 100% if I simply gave it to you for free.

  1. 1 Tweets that mention Harley-Davidson Forgoes $25 Million In Tax Incentives at Cyril Huze Blog – Custom Motorcycle News -- Topsy.com Pingback on Nov 11th, 2010 at 11:45 pm
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