Harley Davidson Passes on $25 million in tax credits, might India be offering a better deal?

The Business Journal - by Rich Rovito
11/11/10

Harley Davidson announced late Thursday afternoon that it has advised the Wisconsin Department of Commerce that it will not pursue the finalization of an agreement under which the state would provide Enterprise Zone tax credits to the company.

The agreement was tied to Milwaukee-based Harley-Davidson’s decision in September to keep production operations in Wisconsin following the ratification of new labor agreements. The $25 million in tax credits could have been earned over nine years.

Harley-Davidson spokesman Bob Klein said the announcement doesn’t affect the company’s decision to keep production in Wisconsin.

Harley-Davidson management said that it anticipates a reduction in the size of its Wisconsin production work force upon implementation of the new labor agreements in 2012. Although the work force reduction estimates provided at the time of contract ratification have not changed, the anticipated employment level may not meet the technical requirements of the Wisconsin statute for job retention or growth, Klein said.

“Because Harley-Davidson does not view the planned reduction in the size of its Wisconsin production work force as consistent with the technical requirements of the statute, the company is withdrawing from consideration to receive the tax credits,” the company said in a statement.

The company’s concern over the application of statutory requirements with its anticipated reduction in production operations emerged in the course of finalizing details related to the Enterprise Zone tax credits agreement, according to Harley-Davidson management.


By Rick Barrett of the Journal Sentinel
11/11/10
Harley-Davidson Inc. has declined up to $25 million in tax credits for keeping its factories in Wisconsin, the company said Thursday.

The incentives, announced in September by Gov. Jim Doyle, came four days after Harley workers ratified seven-year labor contracts that included a wage freeze and job losses.

Harley had threatened to pull production out of the state if it could not get favorable union contracts meant to save millions of dollars in labor costs.

It also initially favored the state's incentive package for up to $25 million in Enterprise Zone tax credits over a nine-year period, in exchange for keeping work here and making capital investments.

The tax credits would have been linked to Harley's employment levels, capital investments and purchases from more than 100 in-state suppliers. The company would only have received the full amount if it met certain requirements, according to Doyle.

In a written statement, Harley-Davidson said it has not changed its plans to keep manufacturing in Wisconsin.

But the company has declined the tax credits because of the state's terms that might not mesh with Harley's employment plans.

In a written statement, the company said:

"As previously announced, Harley-Davidson anticipates a reduction in the size of its Wisconsin production workforce upon implementation of the new labor agreements in 2012. While the workforce reduction estimates provided at the time of contract ratification have not changed, the anticipated employment level may not meet the technical requirements of the Wisconsin statute for job retention or growth. Because Harley-Davidson does not view the planned reduction in the size of its Wisconsin production workforce as consistent with the technical requirements of the statute, the company is withdrawing from consideration to receive the tax credits."