Harley-Davidson Inc. could eliminate hundreds of jobs at its engine factory in Menomonee Falls, Wis., even if union workers ratify a seven-year labor agreement meant to keep the work in the Milwaukee area.

The company anticipates cutting 200 positions by the end of 2012, according to the proposed contract with United Steelworkers of America Local 2-209. That’s in addition to hundreds of jobs the company has eliminated in the Milwaukee area in the last two years.
But employees said Tuesday that the number of lost jobs could be far greater — even if they accept the contract in a Sept. 13 vote. At a contract information meeting at the Waukesha Expo Center, employees said union leaders told them that roughly half of the 1,100 local production jobs could be eliminated.

There would be no minimum or maximum number of job reductions, according to the contract language.

“We always assess the market and staff the business appropriately. But based on what we see at this point, we anticipate there could be a reduction of about 200 full-time positions,” said company spokesman Bob Klein.

“We will take that number of volunteers in separations even if the business doesn’t require it. But from what we know today, that is what we are looking at,” Klein said.

The contract calls for the use of seasonal, “casual” employees that could be used to cover periods of higher production.

Some casual employees would be paid $16.80 per hour, with no benefits, compared with $30.50 plus benefits for other employees doing a similar job.

There would be no limit on the number of casual, temporary employees Harley-Davidson could use at any given time.

But they would be limited to no more than 30 percent of the total, regular bargaining-unit hours worked in a year, according to the proposed contract.

Casual employees would not be entitled to benefits, including medical insurance or retirement benefits. Their employment could be terminated without cause, and they would not be guaranteed shifts, jobs or a minimum number of work hours.

“It’s a way to replace some senior employees with people who have no bargaining rights and are paid a lot less,” said Cheryl Maranto, a Marquette University associate professor of management in the College of Business Administration. “Rather than recall people on layoff, the company can go to this pool of casual workers.”

The proposed contract, negotiated jointly by the Steelworkers and the International Association of Machinists and Aerospace Workers, calls for a two-tier wage system, which the company already has, in addition to the casual workforce.

Tier-two employees are those who are new, rehired or recalled from an indefinite layoff that extends longer than six months.

Tier-one employees, many with decades of experience, would be subject to a wage freeze but could receive a pay raise in the sixth and seventh years of the contract depending on prevailing wages in the Milwaukee area.

They also would receive a $1,000 bonus in 2016. The contract calls for a $1,000 ratification bonus.

Full-time, active employees now would receive a $12,000 payment in 2013.

Employees on layoff, with recall rights (including casual employees on layoff from fulltime employment with recall rights) could receive a $12,000 severance payment.

Employees could be eligible for a pay raise based on plant performance.

The goal “is to motivate employees to improve plant performance,” according to the contract.

Should there be a plant closing, employees with less than three years of seniority would receive one week severance pay for every year of service. Employees with three years and more seniority would receive two weeks of severance for every year of service.

Steelworkers officials did not return Milwaukee Journal Sentinel calls asking about the contract.

A spokesman for the Machinists union returned a call but declined to comment.

Harley-Davidson says the union vote will determine whether engine production remains at the Menomonee Falls plant or is  moved elsewhere. The company says it must cut millions of dollars in production costs in order to remain flexible in an industry where sales have sagged.

Workers in other industries have become very familiar with the terms that Harley-Davidson wants, according to John Heywood, director of the graduate program for human resources and labor relations at University of Wisconsin-Milwaukee.

“In the automotive industry, it was very clear that the alternative was to keep losing jobs to Southern, nonunion plants,” Heywood said. “I am not trying to make light of the workers’ concerns, but I would emphasize that the alternative of keeping things the way they are is really not in the cards. It’s always a question of what is realistic.”

Under the proposed contract, employees would have higher health-care expenses, and their maximum vacation time would be capped at 200 hours per year until the end of 2016. After that, they would only be entitled to a maximum of 160 hours of vacation per year.

Currently, production employees don’t pay health-care premiums, according to Klein.

“It has been what we call a very rich plan for many years,” he said. “Like businesses everywhere, however, we are facing the costs of managing higher health-care costs, so going forward there is a greater level of cost sharing.”

Under the new contract, employees would pay about $1,020 a year in health-care premiums, the same as salaried employees. They also could choose another plan without premiums in 2012, according to Klein.

“It’s still a very competitive health-care package,” he said.

Harley-Davidson says it will quit looking for alternate sites for its Milwaukee production if the unions accept the company’s “last, best and final offer” on Sept. 13, and it is approved by the company board of directors Sept. 14.

Wednesday, Harley workers in Tomahawk will get the details of their proposed contract, also to be voted on Sept. 13.

“The contracts provide a very competitive compensation package,” Klein said, noting that wages in Milwaukee would still be “well above” the pay for similar work in the area even after a wage freeze.

Still, employees say a casual workforce undermines job security, threatens the strength of the unions, and would result in employees having less spending power in their communities.

“The workers are between a rock and a hard place,” said Michael Rosen, an economist at Milwaukee Area Technical College. “If they say no to the contract, they get blamed for Harley-Davidson leaving. And if they say ‘yes,’ they are essentially participating in undermining family-supporting jobs in the community.”