The state’s recent decision to give $25 million in tax credits to Harley Davidson in exchange for keeping more than 1000 jobs in Wisconsin, while a temporary boon to the state’s still ailing economy, indicates a dangerous trend for big business in Wisconsin.
The nine-year agreement announced last week gives Harley a hefty incentive package contingent on an agreement that Harley will maintain a certain number of jobs in Wisconsin and continue to make capital investments and purchases from more than 100 in-state suppliers.
Nonetheless, I cannot avoid the feeling that Harley has somehow pulled one over on taxpayers here.
The agreement was announced after unionized Harley workers made serious concessions in a new 7-year contract with the motorcycle giant in order to cut labor costs and keep their own jobs form moving to another state.
Harley had previously threatened to move manufacturing operations at several plants to Kansas City if they could not cut labor costs. This would have meant approximately 1350 more jobs would have been lost in the state immediately, along with hundreds of thousands of dollars in in-state revenue produced by Harley purchases of local materials.
While the tax credit agreement will save a significant number of jobs, the new labor contract still cuts more than 300 jobs from two factories in Milwaukee and Tomahawk and assigns a large volume of currently unionized full-time work to seasonal part-time positions that will be paid about half the regular union wage.
While union jobs are being slashed to save the company money, Harley executives have made no effort to show they are willing to take cuts alongside their workers. Harley CEOs have given themselves $15 million in bonuses over the last 2 years, on top of a $1.1 million base salary.
Furthermore, it remains unclear whether Harley truly needed the stimulus in the first place.
The company reported making $104 million dollars in the first six months of 2010, and though strategic re-organizations led to an expected $55 million loss in 2009, the company has enjoyed $100 million profits for the last 15 years, including a $1 billion year in 2006.
Harley is not the first company to take advantage of the Enterprise Zone tax credit, which Doyle signed into law in 2006. Since its creation, 12 companies have received similar incentive packages to secure jobs and business in Wisconsin. Most recently, Mercury Marine Inc. got a $70 million boost last year when they threatened to move jobs out of the state.
It seems that whenever a major Wisconsin company begins to feel the economic strain affecting the entire country, all they need to do is threaten to move their business elsewhere, and the state will cut them a nice big check to keep them around.
The decision to bribe Harley into sticking around may very well be setting a dangerous precedent for big business in Wisconsin. The governor and the state need to be more scrutinous when deciding to dole out millions of dollars in Enterprise Zone tax credits.
Kyle Mianulli ([email protected]) is a senior majoring in journalism, philosophy and political science.
