Harley-Davidson moves European production out of U.S.

Marco Green
June 27, 2018

In early 2018, the motorcycle manufacturer said it would be forced to close a factory in Kansas City and downsize production at a facility in York, Pennsylvania, a move that cut roughly 260 jobs, due to weakening bike sales overseas. In prepared remarks issued Monday, the Milwaukee-based manufacturer said that "increasing global production to alleviate the European Union tariff burden is not the company's preference, but represents the only sustainable option to make its motorcycles accessible to customers in the European Union and maintain a viable business in Europe", which is called a "critical market". "Their employees and customers are already very angry at them", he wrote on Twitter.

"Of all the companies to go oversees - their biggest selling point is in being American", said Michael Hoskins of Detroit, Mich.

The president also tweeted on Tuesday morning: "A Harley-Davidson should never be built in another country-never!"

"Of course, the consequences are that the American companies ... will react and they will put pressure on the American administration to say 'Hey, hold on a minute".

Chief Executive Officer Matt Levatich said in April that the factory in Thailand was a "Plan B" that Harley employed after the USA abandoned the 11-country Trans-Pacific Partnership free-trade agreement Trump withdrew from past year.

Trump, echoing a top union for Harley workers, claims the company planned to shift some operations to Thailand before the tariffs were announced. But Trump says that's an excuse and threatened the company with a "big tax" if they move their plant. At the very end, using written shouting, he warns Harley-Davidson they will be taxed like never before.

Trump also seems to be unaware that Harley Davidson's entry into India was part of a mangoes-for-motorcycles deal between George Bush and Manmohan Singh, premised on Washington allowing important of Indian mangoes to the USA., a trade that has been mired in bureaucratic red tape.

"Therefore, Harley-Davidson will not raise its manufacturer's suggested retail prices or wholesale prices to its dealers to cover the costs of the retaliatory tariffs".

Apart from being an American brand, Harley-Davidson is also a favorite of Trump's. In the near term, Harley-Davidson will instead absorb most of the cost of moving the production of motorcycles overseas.

For all its woes, JBK at least has not been publicly attacked by the president - which is what is happening to Wisconsin-based Harley-Davidson.

In a similar vein, French Economy Minister Bruno Le Maire said Europe was ready for Round Two if Trump really wanted it. He's followed through on that by imposing a 25% tariff on steel imports and a 10% tariff on aluminum imports from the European Union, Canada, and Mexico - America's first, third and fourth trade partners respectively.

"I think this is only the beginning". "We will now wait for the USA decision on the vehicle tariffs", an official in Germany's economy ministry said.

In the escalating trade war with the U.S., Brussels has a clear message for Donald Trump: It's not backing down.

Trump offered no clarity later in the day when he was asked about tariffs during a White House photo-op with Congress members. Because most of the company's business involves long-term contracts signed years ago, he is stuck delivering products at prices that no longer generate almost as much profit.

Other reports by Click Lancashire

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