Harley-Davidson's Offshoring Move Is Just The Latest In A String Of Overseas Factory Relocations
Motorcycle maker Harley-Davidson Inc. plans to shift the production of its motorcycles to be sold in the European Union out of the United States over the next nine to 18 months. The news prompted a fierce attack from President Donald Trump who took to Twitter to publicly decry the decision Monday and Tuesday.
Surprised that Harley-Davidson, of all companies, would be the first to wave the White Flag. I fought hard for them and ultimately they will not pay tariffs selling into the E.U., which has hurt us badly on trade, down $151 Billion. Taxes just a Harley excuse - be patient! #MAGA— Donald J. Trump (@realDonaldTrump) June 25, 2018
A Harley-Davidson should never be built in another country-never! Their employees and customers are already very angry at them. If they move, watch, it will be the beginning of the end - they surrendered, they quit! The Aura will be gone and they will be taxed like never before!— Donald J. Trump (@realDonaldTrump) June 26, 2018
....When I had Harley-Davidson officials over to the White House, I chided them about tariffs in other countries, like India, being too high. Companies are now coming back to America. Harley must know that they won’t be able to sell back into U.S. without paying a big tax!— Donald J. Trump (@realDonaldTrump) June 26, 2018
The company laid the blame for its plans to relocate operations squarely on the recent increase in EU tariffs on its motorcycles exported from the U.S. from 6% to 31%, CNN reports — these were raised in response to steel and aluminum tariffs imposed by the Trump administration on the EU recently.
"Harley-Davidson expects these tariffs will result in an incremental cost of approximately $2,200 per average motorcycle exported from the U.S. to the EU," the company said in its Securities and Exchange Commission filing.
Though Monday's move by Harley-Davidson might be in response to the recent tariffs, it is also true that the company has been offshoring for a number of years now. The company has opened factories in Brazil, India and Australia in recent years to make hogs for the international market, and plans to operate a new one in Thailand.
Early this year, Harley-Davidson announced plans to close a plant in Kansas City, Missouri, in the wake of falling sales, and shift some of its production to York, Pennsylvania.
Worldwide, retail motorcycle sales have been on the decline, dropping 6.7% in 2017 compared with the year prior. U.S. sales were down 8.5% for the year, while overseas sales dropped 3.9% year over year.
When word of the Kansas City plant closure broke, the International Association of Machinists and Aerospace Workers, which represents workers at the plant, sent a letter to the White House asking the president for his help in saving about 800 jobs in Kansas City. As yet, the president hasn't replied directly to that letter, Vox reports.
The president wasn't the only person who expressed anger at the motorcycle maker's plans to move EU-bound production overseas.
“Harley-Davidson’s announcement today is the latest slap in the face to the loyal, highly-skilled workforce that made Harley an iconic American brand," Machinists and Aerospace Workers International President Robert Martinez Jr. said in a statement.
“Even before the EU’s announcement, Harley made the decision to close its plant in Kansas City... This latest move is in keeping with Harley’s past decisions to open plants outside of North America."
In its SEC filing, the company disagreed with that assessment, asserting that it "maintains a strong commitment to U.S.-based manufacturing, which is valued by riders globally.
"Increasing international production to alleviate the EU tariff burden is not the company’s preference, but represents the only sustainable option to make its motorcycles accessible to customers in the EU and maintain a viable business in Europe. Europe is a critical market for Harley-Davidson."
The Milwaukee-based company did not specify where EU-bound product would be made, or whether the move would result in the closure of any more factories in the United States.