Harley Says No to $25M Tax Credit

Back in September, the American motorcycle manufacturer announced it would stay in Wisconsin after unions at its Menomonee Falls and Tomahawk facilities voted in favor of a new labor agreement. At that time, the company was being offered a substantial incentive package.

Now, it appears that Harley-Davidson is turning down a $25 million tax credit from the state of Wisconsin because planned job cuts may mean it no longer qualifies for the incentive program.

The Wisconsin Department of Commerce offered Harley-Davidson the $25 million incentive package to encourage the Motor Company to remain in the state. The incentive package, to be paid out over a nine-year period, was contingent on Harley-Davidson providing jobs in Wisconsin and purchasing from local parts suppliers.

If it accepted the incentive however, Harley-Davidson would not be able to follow through on planned job cuts that could translate to savings of $50 million a year.

The tax credit is part of the state’s Enterprise Zone Program which Wisconsin Governor Jim Doyle introduced as a business recruiting and retention tool. The incentive package is linked to jobs and capital investment at Harley-Davidson as well as purchasing from Wisconsin-based suppliers.

“As previously announced, Harley-Davidson anticipates a reduction in the size of its Wisconsin production work force upon implementation of the new labor agreements in 2012,” a company statement reads.

“While 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,” Harley-Davidson says,

Harley-Davidson produces motorcycle powertrains (engines and transmissions) at its plant in Menomonee Falls near Milwaukee and motorcycle components such as saddlebags in Tomahawk.