Harley Davidson to shift production over European Union tariffs
26 June, 2018, 16:13 | Author: Shannon Aguilar
Milwaukee-based Harley-Davidson Inc. will shift production of motorcycles for Europe to its global facilities to avoid up to $100 million annually in costs from tariffs applied by the European Union.
The company said ramping up production in worldwide plants would require incremental investment and could take at least nine to 18 months to be fully complete.
Harley-Davidson Inc. sold nearly 40,000 motorcycles in the European Union past year, its second-largest market after the United States, according to the company.
The company said in a statement, "Harley-Davidson maintains a strong commitment to US-based manufacturing which is valued by riders globally".
The EU levied the tariffs, which became effective on Friday, in response to increased USA tariffs on European steel and aluminum.
Alden said that given those two compelling economic cases, Harley-Davidson could be just the start of a series of manufacturing relocations outside the US. But since then the company has been counting the costs of his trade policy.
The EU has boosted tariffs on American-made products including Harley-Davidson motorcycles, peanut butter and orange juice in response to President Donald Trump'sdecision to slap tariffs on European steel and aluminum.
"So thank you, Harley-Davidson, for building things in America", Trump said at the time.
Republicans also used the Harley announcement to take a shot at Trump's recent trade attacks on the EU, Canada, and Mexico.
Harley forecast US$30m to US$45m in costs linked to the European Union tariffs for the remainder of 2018.
Harley said it chose to build the Thailand plant after Trump pulled out from the Trans-Pacific Partnership, which would have lowered import tariffs on its bikes in some of the fastest-growing motorcycle markets in Asia.
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The Trump tariffs, which the USA government says are punishment for intellectual property theft, will be enacted in two waves. Mr Trump also has slapped tariffs on steel and aluminium imports from Canada, Mexico and European allies.
For the US, Harley-Davidson production isn't changing: the motorcycles sold in the country will still be made here. Harley-Davidson has denied that.
The problem with his criticism was that it didn't add up - and that U.S.jobs may now be moving to India and other parts of the world because of the trade disputes he has unleashed himself.
The EU said that if the US retaliates, it's prepared to slap additional tariffs on 160 USA products worth roughly $4.3 billion.
Struggling to overcome a slump in US demand, Harley has been aiming to boost sales of its iconic motorcycles overseas to 50 percent of total annual volume from about 43 percent now.
Harley estimated facing US$30 million to US$45 million in costs linked to the tariffs for the remainder of 2018.
Harley-Davidson felt that if it passed on the cost increase to dealers and customers it would have an immediate negative impact on its business in the European Union, including threatening the sustainability of its dealers' businesses.
Harley-Davidson representatives did not immediately return a request for comment.
The company noted that ramping up production in worldwide plants will require incremental investment and take nine to 18 months.
Harley-Davidson, up against spiraling costs from tariffs, will begin to shift the production of motorcycles headed for Europe from the U.S.to factories overseas.
House Speaker Paul Ryan's spokeswoman says that Harley's decision shows how harmful tariffs can be and the best way to help American workers and consumers is to open new markets.
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