State raised Harley aid offer Company to get $1 million more

[totalmotorcycle]

State raised Harley aid offer Company to get $1 million more to help retain jobs
Monday, December 4, 2006 - By AVRUM D. LANK - Milwaukee Journal Online - jsonline.com



Wisconsin raised its offer of aid to Harley-Davidson Inc. by about $1 million after Milwaukee-area union workers in October rejected concessions the company said it needed to expand in the state, Commerce Secretary Mary Burke said Friday.

Last month, in a second vote, the workers agreed to accepted smaller cuts in exchange for the expansion. As a result, the motorcycle company will get $4.5 million in state income tax credits if it invests at least $300 million and creates at least 200 additional full-time jobs in the state by 2010, Burke and company officials said Friday. Before the first vote, the offer had been for about $3.5 million, Burke said.

The credits will be available as part of the state's enterprise development zone program. Of them, $1 million will be used to defer training costs for up to 200 new workers, at $5,000 each. The rest, $3.5 million, will be used "to support training and the retention of the number of full-time positions existing at all Wisconsin Harley-Davidson facilities as of Oct. 31, 2006," according to an offer letter from Burke to the company.

The company has agreed to notify the Wisconsin Department of Workforce Development, Job Service offices and area Private Industry Councils of job openings. However, it is not required to hire from pools presented by those organizations, said Tony Hozeny, spokesman for the Department of Commerce.

In Wisconsin, Harley has operations in Tomahawk, Menomonee Falls, Wauwatosa, Franklin and Milwaukee. Together, they employ about 4,100 people. The company also has plants in York, Pa., and Kansas City, Mo. Had the union not accepted cuts, the company said it would have expanded in another state. Burke said that aid from Madison was needed to avoid that outcome.

The union, Local 2-209 of the United Steelworkers, represents about 1,600 production workers in the Milwaukee area. After rejecting cuts in October, members last month agreed to lower wages for new employees and cuts in health insurance and cost of living payments in exchange for the company's promise to invest about $120 million and create about 120 new jobs at the Menomonee Falls facility. That plant makes powertrains. Many production workers in the union make more than $27 an hour under the existing scale. In the proposal accepted last month, most workers in the lower scale would make more than $20. Both are well above average wages in the area.

The rest of the investment needed to gain the credits will be made at other state operations, Burke said. That includes the Harley museum planned for Milwaukee.

The credits will partially offset Harley's state income tax.

Last year, the company paid about $528 million in income taxes to all jurisdictions on profits of about $959 million. Spokesman Bob Klein said the company "pays significant taxes" to Wisconsin, but would not provide an exact number. Wisconsin's corporate income tax rate is 7.9%, but most large companies organize their affairs so that much of their profit is not taxed by the state.

The credits are earned starting Jan. 1 and can only be used to offset taxes due. They expire in 2014, according to the agreement. However, any "unused balance may be carried forwarded . . . for the following 15 years," according to the agreement. Klein said Harley understands this to mean they must be used by 15 years from Jan. 1, 2007, while Hozeny said he believed that means they are available for 15 years after 2014. However, Klein said he expected the credits to be used well before either deadline.

Details of the $4.5 million offer were first reported Friday by The Business Journal.