Remarks by Jeffrey Bleustein, Chairman and CEO Harley-Davidson Inc.
Summit on the 21st Century Workforce, June 20, 2001 MCI
Center, Washington, DC

MR. BLEUSTEIN: Wow, I wished my mother-in-law were here to hear that.

I think we're going to take just a moment to hear the sound of a Harley. [Harley motorcycle revs up]

Thank you, Madam Secretary, Senator Campbell, ladies and gentlemen. It's a privilege to be here with all of you today to take part in this important event, to explore the issues confronting all of us in the 21st century. Harley-Davidson was founded in 1903, along with two other major events in transportation, one of which was noted by Senator Campbell. First of all, there was the birth of the Ford Motor Company, and there also was the first powered aircraft flight, by Wilbur and Orville Wright.

Our founding fathers, three Davidsons and a Harley, gave us the first lessons on how to survive. And through the 98 years we've been in business we've managed to get through a couple of world wars, the Great Depression, nose-to-nose competition with the Japanese motorcycle industry, a near bankruptcy in 1985, and ultimately the public offering in 1986 that began the road to recovery. Believe me, we are gratified to be included in a summit focusing on the future of the workplace and the work force, because we have every intention of sticking around for another 100 years. (Applause)

We're an old economy company, and we hope when people look back on us a hundred years from now there's still a thing called the old economy. We're going to make it that way. We also think that we have something to offer in the way of an approach to labor relations that has been a significant enabler of Harley-Davidson's 15-year record of financial performance.

Like many other unionized manufacturers, Harley-Davidson's prior labor-management relations can be characterized as usually cordial, but generally adversarial. We made several attempts in the late 1970s and throughout the '80s to turn this around. But the normal stress of business, coupled with wariness on both sides, always seemed to conspire to upset our initiatives. In the mid-1990s, however, the senior management of Harley-Davidson and the presidents of the two internationals, the IAM and PACE, go together for discussions on how to make a sea change in our relations. The outcome of these important discussions was a formal partnering agreement between Harley-Davidson management and our union leaders, which outlined a way of working together that is mutually beneficial. Partnering has fundamentally changed the way we do business. It's made Harley-Davidson a better place to work and, in the process, it's made our business more successful than ever.

As the name implies, partnering is an effort to improve how the company and our unions work together. It's rooted in a number of key principles. The first is that unions are recognized as a valued institution. They're not to be run out of our factories - (Applause) -- we're not going to run away from them. They are the legitimate representatives of large numbers of our employees, and we respect their leadership.

Leadership is shared. Decisions are made jointly. Employees are empowered. They are empowered to make decisions at their work place, because they are the closest to the work and they know what they need in order to get the job done. But also, they are empowered to make decisions and are involved in decisions about other things, such as strategy, new products, and so forth. We are really trying to encourage the best that each of our employees has to give.

And finally, financial rewards are shared with all employees. Every person at Harley-Davidson is on an incentive program, and the key thing is, it's the same incentive program from everyone -- from the factory floor to the executive office, we're all working to the same formula. So when I get a good pay day, so does the people in the factories, so do the people in the accounting department -- we all share in it alike.

Under partnering, we've moved from a traditional labor-management relationship or a hierarchy, to real shared leadership. Many decisions that used to be the exclusive domain of Harley-Davidson management are now open to influence or, in fact, determined jointly with the full participation of our union leaders and the represented employees.

The first major application of this partnering relationship took place soon after the ink was dry on our agreement. In the mid-1990s Harley-Davidson was faced with a big problem, but it was a high-class problem. We had insufficient production capacity to meet the needs of customers who were waiting for our motorcycles. We not only needed to increase the motorcycle output of our existing U.S. factories, but we also had to build a new factory in order to get the job done. But instead of running off to a right-to-work state and setting up a non-union plant, we decided to take our two unions, IAM and PACE, with us. We wanted to try a whole different way of working together, and set an example for all of our operations. The responsibility for selecting the location was placed in the hands of a committee of three people, a manufacturing executive, and two union representatives. Ultimately, that group made the decision to build our new plant in Kansas City. That plant opened for business in 1999, just six - 18 months after it was started. The groundbreaking took place.

And that plant was founded on the concept that work groups of hourly employees are expected to take the initiative to identify problems and solve them, calling on engineers or other specialists as they feel they need them. No one is allowed to check their brain at the door or to avoid responsibility or accountability for their actions. In planning the factories, these groups of hourly employees, working without supervisors, teamed with engineers to design the entire assembly process and all of the fixtures. And some of the breakthrough concepts they developed are now being reintroduced into our other factories in Pennsylvania and Wisconsin. Hourly employees are also involved in the hiring process. They interview all prospective candidates, make sure they have the requisite skills, and also assure themselves that they are getting real team players.

The executive office for our operations in Kansas City is an example of the mutual respect that exists in that organization. The Harley-Davidson vice president and general manager shares an office with the presidents of the two local unions. In this environment, there are no walls, no partitions, no secrets. The way things are working at our Kansas City operation is just one example of how our people are truly contributing to our success. Our common vision with partnering has become the basis for other collaborative activities including joint visits to our manufacturing suppliers and our retail dealerships. Union members get involved in equipment purchase decisions and there is shared decision-making on difficult issues, such as outsourcing.

In May of last year, at our annual shareholder meeting, partnering achieved another milestone when Tom Buffenbarger, the international president of the IAM, and Boyd Young, the international president of PACE, shared the podium with me, to discuss the power of partnering at Harley-Davidson. Let's take a look.

Incidentally, Tom Buffenbarger confided in me afterwards that it was not the first shareholders meeting that he had been at, he'd been at several where he was out in the audience and raising hell with management, but this is the first time he was on the podium in support of what the company was trying to do.

In the 1980s, when Harley-Davidson was fighting for its life, the cynics were saying that American industry was finished. Naysayers said that we couldn't compete in the global economy. Some even said America's time in the sun was over, and the next century would belong to others, but not to us. But I am pleased to say that the cynics were wrong. Harley-Davidson isn't just surviving, we are flourishing. Through partnering, we've created an environment where all employees are valued and expected to make good decisions to benefit the enterprise. And people who feel they are making a contribution to the business are happier people, and they are committed to helping the company succeed. With 8,000 people showing up each day, determined to find ways to improve our business, I'm confident we'll be able to continue our successful growth.

The transformation we've put ourselves through is quite remarkable, but it didn't happen easily and it didn't happen overnight. Ours isn't the only model, but it is a model that has worked both for the company and for our employees. And we believe it is a model with great promise for the 21st century. Thank you.