Harley-Davidson workers stunned by plant closure after tax cut
The iconic company announced that it was slashing hundreds of jobs despite expecting to reap huge benefits from the new tax law.
Tim Primeaux has worked at the Harley-Davidson plant in Kansas City, Missouri, for 17 years. He was sure he was going to retire from the company.
That all changed when Harley-Davidson told its 800 employees in January that the plant will be closing next year. Operations will be shifted to the motorcycle manufacturer's facility in York, Pennsylvania.
“We did everything Harley-Davidson asked us to do,” said Primeaux, a welder. “To have it all blow up in your face is kind of disappointing.”
Days later, Harley-Davidson announced a dividend increase and a stock buyback plan to reward shareholders, repurchasing 15 million of its shares, valued at nearly $700 million.
Like other corporations, Harley-Davidson is benefiting this year from the tax cut law passed in 2017, which slashed the corporate rate from 35 percent to 21 percent. The company maintains that the dividend increase and stock buyback is unrelated to the tax savings.
House Speaker Paul Ryan visited a Harley plant in Wisconsin in September and said, “Tax reform can put American manufacturers and American companies like Harley-Davidson on a much better footing to compete in the global economy and keep jobs in America.”
Many Harley-Davidson workers wondered if the tax cut would trickle down to help employees. But a recent CNBC survey found that only 10 companies in the S&P 100 say they have specific plans to use the savings to boost worker pay.
Workers were taken aback by the decision to close the plant. “You could see it on everybody’s faces, just shock and awe,” recalls Primeaux. “It was like I was in a bad dream, just stuck in it.”
Harley is also building a new plant in Thailand. However the company maintains that the Bangkok plant is “separate and unrelated” to the decision to close the Kansas City plant, according to Michael Pflughoeft, a spokesman for Harley-Davidson.
The company calls the closing of the Kansas City plant a tough decision but says domestic sales are down and it needed to “address the excess capacity in the U.S.”
But some Harley employees in Kansas City believe that their plant was closed to make money for the Bangkok one.
“They are sending our jobs overseas. Absolutely,” said Rick Pence, a machine repairman in the maintenance department.
Kevin Amos, a union president at Harley who has worked there for 17 years, said he asked company executives multiple times what it would take to keep the company in Missouri and was under the impression that workers were doing everything to ensure that the company stayed.
“We thought we had met the mark. Clearly we didn’t,” said Amos.
Rick Pence, who started working for Harley-Davidson more than 21 years ago, recalls his elation at landing the job. “When I got hired, I felt like I won the lottery,” said Pence.
Primeaux said that if he could deliver a message to Harley CEO Matthew Levatich, it would be to keep the factory in Kansas City not for him but for his three girls.
“If my girls want to work there it’s a good place to work,” said Primeaux, adding that the plant closure has not affected his support for President Donald Trump. “I blame the company more than I blame the president.”
“We gotta accept it," said Pence, who turns 60 next year. “It’s truly hard.”