Harley-Davidson to move some production out of US

Harley stung by tariffs shifts some production overseas

Harley-Davidson to move some production out of US

President Trump claimed Monday that Harley-Davidson was "the first to wave the White Flag" after the USA motorcycle maker announced it would be moving some production overseas to avoid retaliatory tariffs by the EU.

The Wisconsin-based motorcycle giant said increasing production outside the USA was "not the company's preference" but represented "the only sustainable option to make its motorcycles accessible to customers in the European Union and maintain a viable business in Europe".

In 2017, Harley sold almost 40,000 new motorcycles in Europe which accounted for more than 16 percent of the company's sales.

"Harley-Davidson maintains a strong commitment to US -based manufacturing which is valued by riders globally", the company's filing said.

Harley-Davidson, the dominant player in the heavyweight U.S. motorcycle market said earlier on Monday it would not pass on any retail or wholesale price increases in the European Union and instead focus on shifting some USA production.

Shares of Harley-Davidson fell 3 percent in pre-market trading Monday.

With China and the European Union combining to slap the United States with more than $60 billion in tariffs, the end of the trade war is nowhere in sight and other countries including Canada and Mexico will likely step up their efforts in the coming months.

Harley-Davidson has been relying on Europe and other worldwide markets to help offset declining sales in the United States, where baby boomers that have long bought the vehicles are aging and younger consumers are not taking to the motorcycles in a big way. In January, it said it would consolidate its Kansas City, Missouri, plant into its York, Pennsylvania, facility. The US added a 25 per cent tariff on imported steel and 10 per cent on aluminium. Daimler AG warned last week that escalating tension between the USA and China will impair earnings its Alabama SUV plant and lower profit this year.

It's not like Harley-Davidson only manufactures its products in the USA right now, though. The publication notes that the motorcycle manufacturer doesn't want to raise prices over fears that it will lose customers to its competitors.

The International Association of Machinists and Aerospace Workers (IAM), the union that represents Harley employees in three United States plants, said the offshore move had been planned long in advance.

"Remember, they came to us, for example, pointing out that India had a 100 percent tariff on Harley Davidsons". This year, domestic sales are flat, but foreign sales are up 12 percent, according to the The Wall Street Journal.

"We are now assessing the potential impact on our USA facilities", Harley-Davidson spokesperson Michael Pflughoeft told Bloomberg. Paul Ryan, the Republican speaker of the House of Representatives, hails from Harley's home state of Wisconsin, while Senate Majority Leader Mitch McConnell represents Kentucky, a major maker of bourbon.

Trump has said that "trade wars are good and easy to win", but users of imported steel and aluminum already are feeling the pain of the administration's policies.

The company noted that ramping up production in worldwide plants will require incremental investment and take nine to 18 months.

"The Chinese get a pass and we pay a price", said Skarich.

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