updated 2/22/2007 3:54:49 PM ET 2007-02-22T20:54:49

Unionized workers at Harley-Davidson Inc.’s largest manufacturing plant overwhelmingly approved a new labor agreement Thursday, ending a strike that halted motorcycle production for three weeks.

Eighty-three percent of those who voted endorsed the contract, which calls for a 12 percent wage increase over three years, the union said in a statement. Starting wages for new employees will be lower, but they will be able to advance to the same maximum rate earned by current employees.

Nearly 2,800 workers at the plant in York had been on strike since Feb. 2. The union rejected a company contract proposal that provided 4 percent annual raises but reduced pay for new hires and lowered health-insurance and pension benefits.

The strike disrupted Harley-Davidson’s national production and had ripple effects as far away as Wisconsin, where 440 employees were laid off Feb. 12. The walkout also forced many Harley suppliers to lay off workers.

Under the new deal, workers won’t pay health care premiums, but their deductibles and co-payments will be higher, the company said. Also, the company will reduce its matching of optional contributions made by new employees to the pension plan.

“The agreement is an important step in managing costs that could be detrimental to the business over the long term if the company doesn’t start to control them now,” said Fred Gates, general manager of Harley-Davidson’s York operations.

“This agreement is a significant improvement over the proposal rejected by workers earlier this month,” said Tom Boger, a union representative with the International Association of Machinists and Aerospace Workers Local 175.

Employees had the option of returning to work as early as Thursday night, and all were expected to resume working on Monday, Boger said.

Thursday’s vote came nearly a week after the company and the union announced a tentative agreement.

The Wisconsin facilities are expected to resume a full production schedule over the next several weeks now that the labor dispute in York has been resolved, the company said.

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