Wisconsin union workers at Harley-Davidson Inc. today approved a seven-year labor contract that will establish a two-tier workforce but will keep the company's production work in the state.

The members of United Steelworkers of America Local 2-209 in Milwaukee and Local 460 of Tomahawk and members of the International Association of Machinists Lodge 78 approved the company's "best and final" contract offer this morning.

Mike Masik, president of United Steelworkers of America Local 2-209, said, "It doesn't feel good now but were happy we kept jobs in Milwaukee. My people will be at work tomorrow and will be making quality engines and transmissions … This contract has no guarantees. "(The company) only said that they will stop their search for a new spot. (The lack of a guarantee is a) big concern."

Harley chief executive officer Keith Wandell sent a letter to the company's 1,400 Wisconsin union employees on Friday, warning them that they will have just one chance to ratify the concessions in wages and benefits.

If the workers did not vote to approve the concessions today, Harley's board of directors would have met on Tuesday and begin the process of moving production out of the state, Wandell's letter warned.

"While we hope to come out of the September 13th vote with ratified contracts, if they are rejected, the board will act the following day on its previous tentative authorization to move and we will immediately move ahead with the process to relocate production operations," Wandell wrote. "Our analysis of alternative sites is essentially complete and we have a short list of finalists. The alternate site options provide the competitive structure, operating system alignment, flexibility and return on investment that we have, including significant annual cost savings …"

Masik said, "They put the people's back to the wall. "(The workers) had to do it (approve the contract)."

The new contract includes the creation of a two-tiered workforce, the elimination of some jobs, severance payments and the hiring of "casual" employees who will receive no benefits

The contract calls for the hiring of seasonal employees who will be paid $16.80 an hour, compared with $30.50 (plus benefits) for regular, full-time employees.

The pact calls for creating a two-tier labor force in which regular employees will see no general wage increases in the second, third and fourth years of the contract. In the sixth and seventh years of the contract, wages could be increased commensurate to prevailing wages in the region. The company will retain the right to terminate the "casual" employees at any time.

Previously, the union had some decision-making input on the day-to-day operations of the company. That is gone with the new contract, and the union is not happy about that, Masik said.

"There's no way of holding the company accountable now," Masik said.

Harley employee Alan Beardsley said, "It's a sad day for the union. Seventy-five years of what we worked for has been dismantled with one vote."

Harley employee Keith Greenwood said, "Look at their advertisements. If Harley stuck by the American worker, we sure got stuck. Harley wants dedication from its riders, but what are they giving us?"

Later today, the company issued the following statement: "Harley-Davidson has been advised by the two unions representing its Milwaukee-area employees that both proposed labor agreements were approved in membership votes today. The Company greatly appreciates the ratification of the agreements by our unionized employees.

The Company does not expect to have the results of a contract vote by employees in Tomahawk until later in the day. Today's outcome in Milwaukee is a significant step toward creating the competitive, flexible operations that are essential to the company's future. Harley-Davidson's Board of Directors will meet September 14th for a final review and decision on the Wisconsin production operations, at which time the Company will provide further information. We thank the union leadership for their hard work in getting to this point, and we appreciate the efforts and dedication of all our employees in building Harley-Davidson's ongoing success as an American manufacturer in a global economy."

The company's updated statement today: "Harley-Davidson has been advised by the unions representing its Wisconsin employees that all three proposed labor agreements were approved in membership votes today. Late this afternoon, the union representing Tomahawk production employees ratified their proposed labor agreement, joining ratifications earlier today by the Company's Milwaukee-area employees. The Company greatly appreciates the ratification of the agreements by our employees. Today's outcome is a significant step toward creating the competitive, flexible operations that are essential to the company's future. Harley-Davidson's Board of Directors will meet September 14th for a final review and decision on the Wisconsin production operations, at which time the Company will provide further information. We thank the union leadership for their hard work in getting to this point, and we appreciate the efforts and dedication of all our employees in building Harley-Davidson's ongoing success as an American manufacturer in a global economy."