Harley-Davidson To Move More Production Oversees Amid US-EU Trade Tensions
26 June, 2018, 16:16
The United States earlier this month imposed tariffs on steel and aluminum imports from the European Union, provoking a "tit-for-tat" response from the trading bloc against US goods.
Already, Harley had announced plans to close a factory in Missouri and build one in Thailand, after Trump pulled the U.S. out of the Trans-Pacific Partnership, the free-trade agreement with a bloc of Asian countries including New Zealand that would have lowered barriers to key markets.
American President Donald Trump had frequently embraced the firm as an emblematic USA industrial company, but Harley-Davidson's decision to move some work overseas to avoid retaliatory European Union duties left him disappointed.
Harley said in a Monday filing that European Union tariffs on its motorcycles built in the USA just jumped from 6% to 31%, adding roughly $2,200 to the cost of each.
Retaliation by Brussels targeted producers in Republican states where Trump draws much of his support - including bourbon whiskey, Levi's jeans - and is expected to raise the prices of USA goods worth up to €2.8bn (£2.5bn).
A motorcycle is seen at the Harley-Davidson Museum in Milwaukee on August 31, 2013.
Executives in Harley-Davidson were among the first to visit the White House in February 2017 shortly after Trump took office. A trade war, we'd like to remind you, that he promised would be easy to win. But in the short term, further escalation of the trade dispute seems likely.
Harley's desire to improve sales both domestically and abroad predates the Trump administration'stariffs, as does the company's willingness to build assembly facilities overseas to avoid tariffs.
"This latest move is in keeping with Harley's past decisions to open plants outside of North America", President Robert Martinez Jr said in an emailed statement.
Struggling to overcome a slump in U.S. demand, Harley has been aiming to boost sales of its iconic motorcycles overseas to 50% of total annual volume from about 43% now.
Treasury Secretary Steven Mnuchin Monday morning labeled press reports about the forthcoming announcement "fake news" and said any new measures would apply to "all countries that are trying to steal our technology", not just China.
"Increasing global production...is not the company's preference", the statement said. "I expect many other companies will be forced reluctantly to move production as Harley has done in order to maintain their viability".
The company did not say whether any jobs are at risk. A company spokesman did not immediately respond to a request for comment. "Harley must know that they won't be able to sell back into USA without paying a big tax!"
It had already announced plans to close a plant in Kansas City, Missouri - a decision which workers claimed was due to the opening of a new facility in Thailand. "It also announced a future plant in Thailand".
Instead of raising prices for consumers, the company says it will take a hit of $30 million to $45 million in 2018.
Moving production overseas is expected to require nine to 18 months, so in the near-term Harley-Davidson will absorb the costs of European Union tariffs, the company said in a regulatory notice.
Harley-Davidson, which has been focused on expanding its overseas sales, said it remained committed to U.S. manufacturing.
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