Union leaders...the devil's salesmen

By Andrew Snyder, Volume Spike Alert

In case you have not noticed by now, I am not a fan of unions. In fact, I think they are responsible for the demise of this country’s great industrial age. Yes, organized labor groups had their place in history and were once quite valuable. But now, union leaders are the devil’s salesmen.

I think I have the right to discuss this subject. Just look at my hometown of York, Pennsylvania. At one time, this area was the heart of blue-collar, middle-class living. Bustling factories were all over the place.

Then the workers got greedy. First, the line workers at the local Caterpillar (CAT:NYSE) plant went on strike. Their cushy benefits and high hourly wages were not enough. Corporate executives and labor representatives could not come remotely close to a “fair” contract.

Unfortunately, Mexican workers could. Fed up with our high-priced workers, the company locked the plant’s gates and moved the operation to Mexico. Last time I drove by the factory, a team of yellow tractors was tearing chunks out of the enormous building. Ironic, don’t you think?

Since Caterpillar packed its bags and hit the road, a host of other large companies have followed suit. Almost all of them left in search of cheaper labor.

Now, as if to spit in the face of history, hourly wage earners at the county’s last large factory are braving the cold and marching on the picket line. All production at Harley-Davidson’s (HOG:NYSE) York facility has come to a halt.

According to the local media, I am not the only person who believes the strike is a bunch of hogwash (pun intended). Not only are these workers earning some of the best hourly wages in the state, there are also throngs of lower-paid workers ready to step in and take their jobs. Harley is the county’s go-to employer.

But the problems surrounding the strike don’t end in York. No, no. They stretch across the country. Thanks to our local union’s greed (it is fighting not to pay a small share of health insurance costs), folks who work for the supplier’s that feed the York factory are facing layoffs.

Well over 1,000 workers will be laid off if the strike does not end immediately. After all, if the York assembly plant is not producing bikes, the motors, paint, aluminum, steel, leather, tires, and thousands of other parts they consist of are no longer needed. Thanks to the York plants adoption of just-in-time manufacturing technique, there is no warehouse to store surplus parts.

Further down the stakeholder line, Harley investors are being hurt by the strike. In fact, analysts estimate the strike will dock quarterly earnings per share by a penny per day. Before the strike, expectations were for 98 cents per share. Now, all bets are off.

Just today, Harley officials announced the company will no longer be able to meet its goal of shipping 82,000 bikes this quarter.

If you are a Harley shareholder, tighten your seatbelt. It is going to be a long ride. If you aren’t a shareholder, keep an eye on the action. We may see a good buying opportunity soon.

The union employees do have one thing on their side. Nobody will buy a Mexican-made Harley. The union-made label, however, can be painted over.