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Harley may zoom out of Milwaukee
The Harley-Davidson sign at the company's plant in York, Pa.
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STACEY VANEK-SMITH: President Obama is in Milwaukee today to talk about the U.S. economy. But, of course, like politics all economics are local. In Milwaukee, residents are worried about local company Harley-Davidson. The motorcycle giant says it's leaving town if it can't drive down labor costs.
From WUWM in Milwaukee, LaToya Dennis has more.
LaToya Dennis: After spending more than a year in the red, Harley-Davidson finally returned to profitability last quarter. But Harley is still looking to reduce its manufacturing costs by more than $50 million. So it's counting on union members to take concessions.
Brian Jacobsen is an economics professor at Wisconsin Lutheran College.
Brian Jacobsen: Most of the profitability came from their financing unit, and not necessarily from building and selling their bikes. They need to find a way to make better profit margins off of their core operations.
Last year, workers at a Harley plant in Pennsylvania agreed to reduce its workforce by 1,000 people.
Milwaukee Mayor Tom Barrett expects to lose manufacturing jobs here as well.
Mayor Tom Barrett: This is not a situation where I think that we can go through this unscathed in terms of the impact on workers. The question is, at the end of the day, will there be enough jobs and will there be enough family supporting jobs? And I certainly hope there will be.
Harley-Davidson will make a decision on whether to relocate by mid September.
In Milwaukee, I'm LaToya Dennis for Marketplace.
Businesses need profit to survive, but they need customers to have profit. We have been at a deflation in the dollar value of an honest day's work for 2 decades. And at the same time we are having an inflation in the cost of living. The economy was sustained by having credit cards fill the income gap. Then when that was stretched to the limit they switched to spending the equity in our homes. Now that is used up and we went into recession. Wall street has recovered very nicely but we have a new problem on the horizon. The non-financial sectors are going deeper into recession. And those people we need to spend us out of the recession are losing the income to do it with. It's no wonder that the Federal Reserve is warning that we may be heading into a deflation which will put us in a depression. More wage cuts and off-shoring of jobs, will save a few businesses in the short term, but only deepen the troubles the rest of our economy is in for the long term. We will not get out of this recession and stop the deflation danger by further reducing America's families incomes which will reduce consumer spending and will reduce the customers that business will need to recover. One party is trying to get us spent out of this recession by more government debt, to the great denouncement of the other party. But when the other party offers to help businesses with a tax cut, those businesses use their profits and tax cuts to create jobs overseas. Neither side has a plan that will save America.
